SWAN MILLS LTD Vs. H R AMARNANI

JUDGEMENT

(1.) By the impugned order dated November 20, 1978, the Assistant Collector of Central Excise, Bombay, held that the products covered by the classification list filed by the petitioners herein Messrs Swan Mills Limited in respect of unprocessed Rayon multifold yarn and H.D.P.E. yarn was classifiable under Tariff Item No. 68 and consequently duty at 5% ad valorem on the entire value under section 4 of the Central Excise Act was payable by the manufacturer. Aggrieved by the said order the petitioners have filed this petition under Article 226 of the Constitution challenging the validity of the said order on various grounds set out in the petition. After notice of this petition was served upon the respondents, the Superintendent of Central Excise issued to the petitioners notice (Exhibit G to this petition) to show cause why central excise duty as stated in paragraph (a) of the said notice and as to why penalty as stated in paragraph (b) of the said notice should not be demanded and recovered. On receipt of the said show cause notice, the petitioners amended this petition challenging the validity of the said notice and seeking reliefs also on the basis thereof.

(2.) When this petition was called out for final hearing, Mr. M.I. Sethna, learned Counsel for the respondents, raised a preliminary objection to the effect that the petitioners had not adopted the procedures prescribed under the Central Excise Act in pursuance either of the order of November 20, 1978 or of the show cause notice (Exhibit G to this petition). He also submitted that as at this stage, there is no material before this Court to properly appreciate, consider and adjudicate the rival contentions on the questions raised in this petition. Mr. S.T. Thakore, learned Counsel for the petitioners, has, on the other hand, submitted that it was unnecessary for the petitioners to go through the gamut of departmental procedures particularly in view of a Division Bench ruling of this Court in Garware Nylons Limited v. Union of India & others, 1980 Excise Law Times 249, which, according to the learned Counsel, really concludes the question involved in this petition in favour of the petitioners and against the respondents. On behalf of the petitioners, he submitted that if, as held in the aforesaid ruling, nylon twine is nothing but nylon yarn other than textile yarn in spite of the same (nylon yarn) being dealt with in the manner referred to in the said ruling, then there is no reason why in this case the yarn in question which would be man-made non-cellulosic other than textured within the meaning of Tariff Item No. 18, should not remain the same after doubling thereof. Submission is that the aforesaid Division Bench ruling as also the rulings referred to and relied upon in the said Division Bench ruling cover the case of the petitioners in their favour. In these circumstances, it would be a futile exercise to go through the gamut of departmental procedures when this Court has already decided a virtually similar matter in the above ruling in Garware Nylons' case.

(3.) There is substance in the contention advanced by the learned Counsel for the petitioners. Going through the ruling in Garware Nylons' case I find that the ratio thereof does support the petitioners' contention. I also find that the cases relied upon in Garware Nylons' case also go to support the case and contentions of the petitioners herein. Mr. Sethna submitted, however, that in Garware Nylons' case itself one of the learned Judges (Masodkar J.) has in fact made certain observations in favour of the excise authorities and the said observations would go against the petitioners' contentions herein. Though factually that does appear to be so, it also cannot be ignored that Masodkar J. has also made extensive observations which go to support the case of the petitioners herein. It has also been observed by Masodkar J. that benefit of doubt, if any, must go to the assessee. And ultimately Masodkar J. has also agreed with the conclusions reached in the main judgment delivered by Mrs. Sujata Manohar J. The ruling in Garware Nylons' case, on a fair reading thereof, does lend support to the petitioners' contentions.