ION EXCHANGE INDIA LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner No. 1 is a Company registered under the provisions of the Companies Act, 1956 and is engaged in the manufacture of various articles of plastics. The Company has factory at Ambarnath in Thane District where amongst other products, Ion exchange Resins is manufactured. The manufacture of the product is liable to payment of excise duty. Tariff Item no. 15a of the First Schedule to the Central Excises and Salt Act provides for payment of ad valorem duty at the rate of 50% in respect of manufacturer of article or synthetic resins and plastic materials thereof. Tariff Item No. 15a (2) refers to articles made of plastics, all sorts. By notification No. 68/71 dated May 29, 1971, the Central Government exempted articles made of plastics, all sorts falling under Item No. 15a (2) from the whole of the duty of excise payable.

(2.) THE Company filed classification lists on May 5, 1972, March 1, 1974, and August 1, 1974 under Rule 173-B classifying Ion Exchange resins under Tariff Item No. 15-A (2) and claiming exemption under Notification dated May 29, 1971. Each of the classification lists filed by the company was approved by the Excise authorities and the classification list filed on August 1, 1974 was approved on October 1, 1974. Thereafter on October 18, 1975, the Assistant Collector of Central Excise, Kalyan Division, served show cause notice on the Company seeking classification of Ion Exchange resins under residuary Tariff Item No. 68 instead of Item No. 15a (2) of the First Schedule. The Company filed the reply, but the Assistant Collector by order dated April 21, 1976 held that the goods manufactured by the Company attract Tariff Item No. 68. The Assistant Collector then invoked Rule 10a of the Central Excise Rules and modified the earlier approved classification list. The Company filed appeal before the Appellate Collector but the appeal ended in dismissal by order dated August 31, 1976. The revision application filed by the Company before the Government of India, Ministry of Finance, Department of Revenue, met with the same fate by order dated October 16, 1980. The orders of the three authorities below are under challenge in this petition filed under Article 226 of the Constitution of India.

(3.) SHRI Pochkhanawalla, learned counsel appearing on behalf of the petitioners, raised three contentions to challenge the legality of the orders passed by the Excise authorities. The first submission of the learned counsel is that Ion Exchange resin is classifiable under Tariff Item No. 15a (2) and the Company was entitled to avail of the exemption, The learned counsel urged that the conclusion recorded by the authorities below that Tariff Item No. 68 which is a residuary entry is attracted is incorrect : The second submission of the learned counsel is that the conclusion of the Assistant Collector that Ion Exchange resin is liable to payment of excise duty under Tariff Item No. 68 can be only prospective and consequently, the provisions of Rule 10a are not attracted and the Assistant Collector could not have demanded duty under Tariff Item No. 68 for the period commencing from March 1, 1975 and ending with April 25, 1976. The third submission of the learned counsel is that even assuming that the provisions of Rule 10a are attracted, still as statutory requirements of the Rule are not complied with the action of the assistant Collector demanding duty cannot be sustained. In our judgment, it is not necessary to examine the first two submissions as the Company must succeed on the third submission as regards failure to comply with the statutory requirements of Rule 10a before demanding escaped duty from the Company.