JASMINE MILLS LIMITED Vs. A V VENKATESHWARAN

JUDGEMENT

(1.) By this writ petition filed under Articles 226 and 227 of the Constitutions, the petitioners, M/s. Jasmine Mills, challenged the legality of the two Notices of Demand Nos. 13/67 dated September 13, 1967 and 14/67 dated October 25, 1967 for payment of Excise Duty made respectively under Rule 10-A and Rule 9 of the Central Excise Rules, 1944, (hereinafter referred to as "the Rules") framed under the Central Excises and Salt Act, 1944 (hereinafter referred to as "the Act") and the order for payment of the sum of Rs. 10,371/- in pursuance of the said notices. The demand seems to have been made in the alternative under Rule 10-A or Rule 9. The few material facts may be stated as follows :---

(2.) We are concerned here with six lots goods so cleared on Gate-Passes bearing Nos. B.M. 3, 4, 7, 8, 12 and 13. These processed goods were allowed to be cleared from the factory after taking a declaration from the petitioners on the Gate-Passes that the goods contained less than 40 per cent cotton. Simultaneously, samples were drawn by the authority concerned from these consignments and sent to the Deputy Chief Chemist for a test report as to the percentage of the cotton contents in the P.V.C. processed goods. This was done as the fabric attracted Excise Duty at the rate of 25 Paise per square metre, if the cotton contents were 40 per cent or more. This is the result of a decision of the Central Board of Revenue which was publicised in the form of Trade Notice No. 65 (MP) Cotton Fabrics/1963 and clarified in the Trade Notice No. 135 (MP) Cotton Fabrics (5)/63. The test reports received from the Deputy Chief Chemist in respect of the samples drawn from the six lots cleared under the Gate-Passes revealed that the cotton contents of the P.V.C. processed goods were 40 per cent and above. The petitioners were, therefore, served with Demand Notice No. 13/67 dated September 13, 1967 under Rule 10-A, which reads as under: <FRM>JUDGEMENT_469_UCR(BOM)_1975Html1.htm</FRM> It appears that the Inspector of Central Excise (respondent No. 4 revised his demand and a fresh Demand Notice No. 14/67 dated October 25, 1967 under Rule 9 was served on the petitioners and it is in these word :--- <FRM>JUDGEMENT_469_UCR(BOM)_1975Html2.htm</FRM>

(3.) The petitioners made a representation to the Assistant Collector of Central Excise, Bombay (respondent No. 3 against the first Demand Notice No. 13/67 dated September 13, 1977. They also made a representation to the same authority against the second Demand Notice No. 14/67 dated October 25, 1967. Respondent No. 3 however, took into consideration only the second Demand Notice and by his order dated April 8, 1968, he confirmed the demand made by respondent No. 4. Against that order, the petitioners filed an appeal before the Collector of Central Excise, Bombay (respondent No. 2). Respondent No. 2 dismissed the appeal on January 13, 1970 and confirmed the order of respondent No. 3. Against the order of the Collector of Central Excise, Bombay, the petitioners submitted an application in revision to the Joint Secretary to the Government of India in the Ministry of Finance (Department of Revenue and Insurance), New Delhi (respondent No. 1 as representing the Central Government. He also dismissed the revision application on August 29, 1970. All these authorities held that as the cotton content of the P.V.C. cloth cleared exceeded 40% it was liable to duty at the rate of 25 paise per square metre and for this, they obviously relied upon the decision of the Central Board of Revenue publicised in the two Trade Notices already referred to. The petitioners have paid under protest the sum of Rs. 10,371/- claimed in the two Demand Notices and have now filed this writ petition on February 18,1971, challenging the legality of the two Notices of Demand, and for setting aside the orders of the various authorities upholding the legality of the Demand Notices and for the refund of the amount which has been paid under protest.