SSM PROCESSING MILLS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) THE Order of the Court is as follows :- In these writ petitions, the petitioners have challenged the impugned circular issued by the Government of India, Ministry of Finance, dated 27-2-1999.

(2.) THE petitioners are engaged in the process of cotton fabrics. According to the petitioners, the final products of the petitioners had been subjected toad valoremlevied under Sec. 4 of the Central Excise Act, 1944 (hereinafter called the Act).

(3.) LEARNED Senior Counsel appearing for the petitioners submitted that since this clarification is contrary to the scope of the said Act and the notification, the same cannot be sustained in law. According to him, though the Central Board of Excise and Customs has power to issue directions and clarifications under Sec. 37B of the Central Excise Act, 1944, such clarifications can be issued only by way of administrative directions, without any interference with the quasi judicial powers of such authorities. On that basis, the learned Senior Counsel submitted that though the authorities who are assessing the Central Excise are entitled to assess the same strictly in accordance with the provisions and notification, by issuing the impugned clarification, assessing authorities are compelled to take into consideration the gallery portion also, though it is not having any aid in the process of heat setting or drying of fabrics. Explanation I to Rule 3 of the Rules framed under Sec. 3A of the Central Excise Act, 1944 contemplates installation or attachment of float drying machine or any other equipment of like nature. On that basis, learned Senior Counsel submitted that the said explanation makes it clear that "other equipment" mentioned therein must be installed for aiding the process of heating or drying of fabrics so as to take the same into consideration for determining the duty and a mere gallery without any machinery to aid the process of heat setting or drying of fabrics cannot be taken into consideration for determining the annual capacity of production of independent processors for the purpose of levying excise duty.