MAHENDRA ELECTRICALS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners carry on the business of manufacturing P.V.C. underground and overground telephone cables in their factory situated at Nadiad in the State of Gujarat. The factory was established in the year 1962 after obtaining the requisite industrial licence in May-October of the year 1960. The industrial licence granted to the petitioners is for the manufacture of P.V.C. insulated cables. The petitioners manufacture diverse kinds of P.V.C. insulated cables including cables, both for overground and underground use in the telecommunications and for the purpose of telephones. The petitioners have supplied the cables not only to the Government of India Undertakings such as Indian Drugs and Pharmaceuticals Ltd., the Indian Ordnance Factories at Kirkee, Bhabha Atomic Research Centre, but also to other manufacturers.

(2.) The Government of India, Ministry of Finance, in exercise of powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 issued exemption Notification No. 50 of 1968 dated March 23, 1968 exempting wires and cables falling under Item No. 33-B of the first Schedule of the Central Excises and Salt Act, 1944 from so much of the duty of excise leviable thereon as is in excess of that specified in Column (3) of the Table annexed to the Notification. The duty of 5% ad valorem was fixed in respect of (a) underground telecommunication wires and cables, and (b) overground (laid on the ground) telecommunication wires and cables supplied on specific demands for telecommunication purposes. The exemption Notification was amended from time to time, but the amendments only refered to the variations of duty payable and the duty was raised from 5% ad valorem to 10% ad valorem from time to time.

(3.) On May 31, 1968, the petitioners filed classification list claiming exemption in respect of manufacture of P.V.C. cables. The Superintendent of Central Excise rejected the classification list holding that the claim of the petitioners that the manufactured goods fall under Serial No. 2(ii) and (iii) which are the items set out at (a) and (b) above is not correct but the goods manufactured by the petitioners fall under Serial No. 3 of the Notification and attracts duty of 12% ad valorem. Serial No. 3 of the Notification reads as under:- "All electric wires and cables, excluding those specified against Serial No. 1 and Serial No. 2 of this table manufactured by an industrial undertaking to which the industries (Development and Regulation) Act, 1951 does not apply." The petitioners challenged the order by filing an appeal before the Appellate Collector, but the appeal ended in dismissal by an order dated May 20, 1970. The petitioners filed Revision Application before the Government of India but that application also ended in dismissal by an order dated May 30, 1977. In the meanwhile, on June 25, 1973, the petitioners filed refund claim for Rs. 99,175.60 for cables cleared between March 28, 1968 and May 29, 1973. Against the order of the Central Government rejecting the Revision Petition, the petitioners approached Gujarat High Court by filing Writ Petition being Special Civil Application No. 315 of 1978 and the Gujarat High Court by order dated August 25, 1980 set aside the order of the revisional authority and remitted the matter back to the Appellate Collector for de novo adjudication. After the matter was remitted back to the appellate authority, the Collector, Central Excise (Appeals), Bombay, by order dated February 27, 1982 dismissed the appeal of the petitioner holding that the cables and wires described in the classification list were not eligible to concessional rate of duty of 5% ad valorem. The order of the Collector, Central Excise (Appeals), Bombay, is under challenge in this petition.