TAMIL NADU MADRAS STATE HANDLOOM WEAVERS CO OPERATIVE SOCIETY LIMITED Vs. ASSISTANT COLLECTOR OF CENTRAL EXCISE ERODE

JUDGEMENT

(1.) THE petitioner is a society registered under the Tamil nadu Cooperative Societies Act Llli of 1961. lt has a manufacturing unit at cudilore in which cotton fabrics are woven. It has also another unit called the yarn and cloth processing centre at Erode. Under the Central Excises and Salt act, 1944, manufacture of cotton fabrics is liable to excise duty. But notification No. 47 of 1962, dated 24th April, 1962, the Central Government exempted unprocessed cotton fabrics falling under Item No. 19 of the First schedule to the Central Excises and Salt Act if manufactured on a handloom, from the whole of the duty leviable thereon. THE petitioner, Society, as one manufacturing handloom fabrics falling under Item No. 19, therefore, under the said Notification, was exempt from excise duty in respect of cotton fabrics, woven in the Cuddalore unit. By two other Notification Nos. 111 and No. 112 of 1962, dated 13-6-1962, the Central Government, in exercise of their powers under Rule 8 of the Central Excise Rules, 1944, provided for levy at concessional rate in respect of processed fabrics made from grey fabrics when processed by an independent processor. THE concession consisted of two parts. In respect of the first 20, 000 sq. metres of cotton fabrics cleared, the goods were exempt from the whole of excise duty; and in respect of those in excess of 20, 000 sq. metres, a concessional rate of duty at four fifths of the normal rate was levied. But these notifications were subject to the condition that the processing was done by an "independent processor". THE words "independent processor" is defined in the Notification as meaning a manufacturer, who is engaged exclusively in the processing of cloth with the aid of power, and who has not properietary interest in any factory engaged in the spinning of yarn or weaving of cotton fabric. THEre is no dispute that petitioner society is engaged in processing of cloth with the aid of power. But the only dispute is whether the petitioner-society has any proprietary interest in any "factory".

(2.) THE Assistant Collector of Central Excise, Erode consideredthat the existence of its factory in Cuddalore, where weaving cotton fabrics is done, would disentile, the petitioner-society to the concessional levy. He accordingly issued a notice to the petitioner on 27th April, 1966, stating that since the petitionersociety is not an "indepenent processor" within the meaning of the definition in the Notification, it would not be entitled to the concessional levy and that the levy and collection of excise duty at the concessional rate was a mistake. He accordingly demanded the difference between the normal rate of duty and the amount collected at the concessional rate from the petitioner-society for the period from 14-6-1962 to 4-3-1963, which amounted to Rs. 1, 32, 767. 10, be paid by the petitioner. He also ordered that the petitioner-society is liable to pay duty at the normal rate from 5-3-1966.

(3.) WE arc unable to agree with the contention of the learned Counsel. WE are of the view that the words "as being subject to a duty of Excise" in the definition of the term "excisable goods" are only descriptive of the goods specified in the First Schedule, and have no reference to the factum of their Liability to duty. In fact, it is seen that some of the rate of duty as'nil'. It could not be contended that these goods are not'excisable goods'. In this connection, we may also refer to section 3, which is the charging section, which provides for the levy and collection of excise duty on all excisable goods. Produced or manufactured , n India at the rate set forth Schedule'thereby showing that excisable goods in the definition in the section refer only to the description of the goods n column (2) of the first Schedule, and not to the rate of duty in column (3) of that Schedule. The exemption granted by the notification of the Central Government made on 24-4-1962. only exempts handloom fabrics from the levy of excisable duty and it does not change the nature and character of the goods as excisable goods within the meaning the Act. The Notification proceeds an the assumption that the handloom fabrics are excisable goods. If the handloom fabrics are not excisables goods, there was no need or occasion for exempting the same from the levyof excise duty. WE are unable to agree with the learned Counsel for the petitioner that once the handloom fabrics are exempted from excise duty, they cease to be excisable goods. As we have already pointed out, the characteras excisable goods does not depend on the actual levy of duty, but on thedescription as excisable goods in the First Schedule to the Act. WE are, therefore, unable to interfere with the orders of the respondents.