KAMALA MILLS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners are a composite textile mill in Greater Bombay. The petitioners manufacture, inter alia, cotton yarn as well as cotton fabrics out of cotton yarn manufactured by them. Under the provisions of the Central excises and Salt Act the petitioners are liable to pay excise duty on cotton yarn manufactured by them as well as on cotton fabrics manufactured by them out of the said cotton yarn.

(2.) At the material time Central Excise Rules of 1944 contained a special procedure for payment of excise duty, inter alia, on cotton yarn and cotton fabrics in the case of a manufacturer who manufactures cotton yarn and uses it in the manufacture of cotton fabrics. The relevant rules in this connection were rule 96V and rule 96W (Since repealed in June 1977). Under rule 96V

(3.) The petitioners at the material time paid and duty on cotton yarn in accordance with the provisions of rules 96V and 96W. The petitioners also paid duty on cotton fabrics. However, while calculating the duty on cotton fabrics, the petitioners did not include the excise duty on yarn in the value of cotton fabrics.