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

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".

(2.) 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.THEAssistant Collector of Central Excise, Erodeconsideredthat 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.So far as the difference in the levy for the period from 14-6-1962 to 4-3-1963 is concerned, it has now been held that Rule 10A is not applicable and that the difference could not also be collected under rule as it is barred by limitation.4.So far as the subsequent period is concerned, the petitioner had paid duty at the normal rate under protest and claimed the benefit of the notifications. THE Assistant Collector of Central Excise heft that since handloom fabrics which are woven in the Cuddalore factory of the petitioner-society are excisable goods coming under Item No. 19 of the First Schedule to the Act, the petitioner is not an "independent processor" within the meaning of that term in the Notification and that, therefore' it is not entitled to concessional levy. That order of the Assistant Collector was confirmed by the Collector of Cent.al Excise and by the Government of India ultimately.5.In this writ petition, the Learned Counsel for the petitioner contends that the factory at Cuddalore owned by the petitioner will not come within the definition of the term in the Act and that, therefore, the petitioner should be deemed to be an "independent processor" in respect of the processing unit at Exode. 'Factory' is defined in section 2(a) of the Act as follows :"Factory" means any permises, including the precints thereof wherein or in any part of which excisable goods other than salt are manufactured of wherein or in any part of which any manufacturingprocess connected with the production of there good is being carried on or is ordinarily carried on "THE term" excisable goods"is defined in section 2(d) of the Act as the following :" Excisable goods "means goods specified in the First Schedule as being subject to a duty of excise and includes salt.'6.It is the contention of the learned Counsel for the petitioner-society that on the exemption of cotton fabrics by Notification No. 47, dated 24-4-1962, the goods ceased to be ' Excisable goods' within themeaning of the term in section 2(d). According to the learned Counsel, in order to be satisfied in the First Schedule, they should also be subject to a duty of excise. He also contends that any other construction will make the words" *as being subject to a duty of excise 'redundant, and it would have been enough to define excisable goods specified in the First Schedule. In other words, specification of the goods as an Item in the First Schedule as also subjecting then to a duty of excise are to be satisfied as cumulative conditions in order to bring the goods within the definition of " excisable goods'.