FLOCKS INDIA PRIVATE LIMITED Vs. GOVERNMENT OF INDIA

JUDGEMENT

(1.) BY this petition under Article 226 of the Constitution, petitioner M/s. Flocks (India) P. Ltd. seeks quashing of the order of the Central Government dated 23rd January, 1978 as also that of the order passed by the Assistant Collector, Central Excise, Kanpur dated 3rd November, 1979. The petitioner further prays for a suitable writ commanding the respondents to levy excise duty on the goods manufactured by it in accordance with Tariff Item No. 19 -1 and to refund the excess duty charged from it under Tariff Item No 19 -111 of the Central Excise Tariff. Petitioner commenced production of flocked valvet, flocked suede and other flocked fabrics with effect from 1st January, 1976. The manufacturing process employed by the petitioner consists of applying adhesive to some cotton based cloth and thereafter processing the same through flocking chamber where flocksare attached to the sticky based cloth by electrostatic force of over one lakh volt. The fabric is then subjected to certain other processes and the entire process from beginning to the end is an integreted continuous process. There was a controversy between the. petitioner and the Central excise authorities with regard to the question as to whether duty payable by the petitioner on the flocked material produced by the petitioner was to be computed under Item No. 19 -111 of the Central Excise Tariff or under Item No. 19 -1 or under Item No. 68 thereof. Whereas the contention of the petitioner was that the said material was dutiable under Item No. 19 -1 or Item No. 68 of the Tariff Manual; the department claimed that the duty in respect thereof was to be levied under Item No. 19 -111 of the Central Excise Tariff. Items No. 19 -1 and 19 -111 of the Tariff run thus : - _________________________________________________________________________________

(2.) THE Assistant Collector, Central Exicse did not accept petitioner's plea and held that the product manufactured by the petitioner fell under item No. 19 -111 of the Tariff and was dutiable accordingly. The petitioner then went up in appeal before the Collector, Central Excise who upheld the order of the Assistant Collector. Aggrieved, the petitioner took the matter in revision before the Central Government which, vide its order dated 23rd January, 1978, observed thus : -

(3.) IMMEDIATELY after issue of the aforementioned trade notices the petitioner applied to the Assistant Collector, Central Excise, Kanpur pointing out that the goods manufactured by it should be classified as falling under tariff item No. 19 -1 and they be made liable to excise duty accordingly. The Assistant Collector, Central Excise, Kanpur, vide his order dated 9th May, 1979 informed the petitioner that its goods shall be cleared under tariff item No. 19 -1 since 1st December, 1978 and that the classification list duly approved was being sent to the Superintendent, Central Excise M.O.R.V., Kanpur for information and necessary action. On receipt of the order dated 9th May, 1979, the Assistant Collector, Central Excise, Kanpur started collecting duty in respect of the goods manufactured by the petitioner in accordance with tariff item No. 19 -1. The petitioner also made an application for refund of the excess amount of excise duty realised from it in the past under alleged mistaken view of law. However, on 3rd November, 1979 the Assistant Collector, Central Excise informed the petitioner thus : -