MAHINDRA RE-ROLLS INDUSTRIES Vs. UNION OF INDIA

JUDGEMENT

(1.) This writ petition, under Article 226 of the Constitution of India, is directed against the show cause notice dated 26-10-1981 - hereinafter referred to as "Exhibit-M" or "the notice."

(2.) The questions that arise for determination in this petition have to be considered in the following background :- Petitioners are engaged in the manufacture of iron and steel products at Jalna. The products manufactured by petitioners and others like them, are subject to payment of Excise Duty, which is governed by Tariffs issued under the Central Excises and Salt Act, 1944 - hereinafter referred to as "the Act". One of the products manufactured by the petitioners, is a flat product of iron and steel of less than 3 mm in thickness and less than 125 mm. in width. The process by which this product is manufactured is known as "Hot Rolling". The manufacture is by using six rolling stands of six passes. Rollers of the first four stands have oval types of groves between the pair of rolls in contact forming the passes, through which the material is not rolled gradually and successively, changing the size and shape of the cross section and length. In relation to the ovel groove section, the same is much reduced at the fourth pass vis-a-vis that at the first pass. At the fifth and sixth stands of the rollers, the whole section is rolled through the plain barrel which is horizontal. There is no facility for the cooling of the product or the shearing of the edges at the end of the rolling process. No vertical plain rolls are fitted to the mills at any of the six stands mentioned above. The products aforementioned was described as falling under Tariff Item No. 26AA, sub-item (ii) and/or (iii). Classification lists were also filed by petitioners to this effect, as required by Rule 173B of the Central Excise Rules, 1944 - hereinafter referred to as the "Rules". In the classification list, the product which was actually a "flat bar" was described as a "Balling Hoop and Strip". According to petitioners, this was a mis-description based upon a mistake of law. At a later stage, the petitioners questioned the correctness of the description and the levy of Excise Duty by an appeal to the appellate Collector, Central Excise and Customs, Bombay. The Appellate Collector, Mr. V.K. Ashtana, delivered his verdict upholding the contention raised by the petitioner on 18-7-1978. A copy of that verdict is at Exhibit-D. As this verdict is of some importance in the determination of the questions that arise for consideration in this petition, we are reproducing the relevant excerpts therefrom :-

(3.) It is petitioners case that the product under consideration fell under Tariff Item No. 26AA(ii) - hereinafter referred to as "(ii)" and not under Tariff Item No. 26AA(ia) - hereinafter referred to as "(ia)". To that effect was the decision of Mr. Ashtana, and the same had been reiterated by Mr. Patil. The first decision had not been got reversed by recourse to the higher authorities under the revisionary powers vested by the Act upon different authorities. There had been no statutory changes either. In relation to the order passed by Mr. Patil, assuming that the matter was open for further consideration at a higher stage, the time limit, within which that power could be exercised, was six months. The show cause notice not having been issued within this period, it was bad in law. Therefore, on merits, as also on the ground of lack of power, the attempted enquiry to get over the adverse verdict, in the guise of the show cause notice, could not be countenanced. The petitioners prayed for a writ to quash Exhibit-K and another writ to restrain the respondents from levying excise on their product in contravention of the verdict of Messers Asthana and Patil.