VARADALAKSHMI MILLS LIMITED AND BHAJRAJ TEXTILES MILLS LTD. Vs. THE ASSISTANT COLLECTOR OF CENTRAL EXCISE, THE COLLECTOR OF CENTRAL EXCISE AND UNION OF INDIA (UOI)

JUDGEMENT

(1.) These writ petitions coming on for hearing on this day upon perusing the petition and the respective affidavits filed in support thereof the order of the High Court, dated 17.3.78 and made herein, and the counter and reply affidavits filed herein and the records relating to the order in 1. Order No. 1967/77 dt. 18.5.77 and order No. 970/77 dt. 29.4.77; 2. Order dt. 2.9.76 in CV/18A/ 24 -76 (Appeal No. 1585/76) and dt. 30.6.75. in CV/18A/14/74 (Appeal 118/75) 3. Order dt. 6.4.75 in C.No. V/I8A/30 -2 -75 and dt. 4.5.74 in C.No. V/I8A/30 -5 -8 -73 respectively on the file of the respondents herein and comprised in the return of the said respondents 1 to 3 herein in both the petition to the writ made by the High Court, and upon hearing the arguments of Mr. K.K. Venugopal for M/s. M.N. Krishnamani, K.V. Sridharan and T.K. Rajeswaran Advocates for the petitioner in both the cases, and of Mr. K.N. Balasubramanian Additional Central Government standing Counsel on behalf of the respondents, the Court made the following order:

(2.) Both these writ petitions can be dealt with under a common order. The only question that arises for consideration in these cases is whether it will be open to the Central Excise authorities to indulge in what is called best of judgment assessment proceedings. In order to highlight this question, the following facts require to be noted:

(3.) The petitioner in W.P. No. 868 of 1978 is a registered company registered under the Companies Act, 1956 and the petitioner is engaged in the manufacture of cotton yarn. It is assessed to Central Excise in respect of the yarn manufactured by it. Under item 18 -A of the First Schedule to the Central Excises and Salt Act, 1944, hereinafter referred to as 'the Act', excise duty is levied on cotton twist, yam and thread of all sorts, sized or un sized, in all forms including Skein, hanks, cops, cones etc. Under the Act and the Rules framed thereunder the duty exisable on cotton yarn of less than NF 51 counts is "nil"' and the rate of duty for cotton yarn of 51 to 69 NF counts is 65 paise per kilogram. The petitioner manufactured cotton yarn of NF 50.8 counts and therefore the petitioner is not liable to pay any duty on the yarn so manufactured. A test was conducted on 31.1.1975 and the result of the test was that 908 kgs. of cotton yarn manufactured on that day was found to be 55.8 NF. Concerning this there were checks and re -checks as a result of which the lowest count at which it could be placed was 53.9. NF. Under these circumstances, a show cause notice on 26.6.1975 came to be issued as under: