SHEEL THERMOPLASTICS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners manufacture PVC leather cloth also known as supported cellular vinyl sheeting. The process of manufacture is briefly as under : PVC paste is applied in many layers on thin cotton fabric which is the base. The base fabric is first treated with non-thermo-plastic compound which fills instrinsic holes and makes it suitable for carrying the PVC. Several layers of PVC are applied on it. In the end product PVC compound is 6 to 10 times in weight as compared to the base cotton fabric. The percentage of cotton fabric in the final product is only 8% to 15%. The end product has special properties and has characteristics of foamed plastic. The petitioners are registered with Polymers and Plastic Department of the Directorate of Trade and Industry.

(2.) In September, 1981 or thereabouts the petitioners commenced manufacture of PVC leather cloth. On 5th August 1981 the Excise Department provisionally classified the product under tariff item 19(ii) of the 1st Schedule to the Central Excises and Salt Act, 1944. The petitioners have thereafter been clearing the goods manufactured by them by paying excise duty under tariff item 19(iii).

(3.) In view of the judgment of the Supreme Court in the case of Union of India and Others v. Ahmedabad Manufacturing and Calico Printing Co., Ltd., reported in 1985 (21) E.L.T. 633 (S.C) which was delivered in August 1985 the petitioners realized that they had paid excise duty under tariff item 19(iii) wrongly and under a mistake of law. In October 1985 they applied for refund of excise duty so paid under a mistake of law. On 21st October, 1985 the petitioners also filed a revised classification list classifying their product under tariff item 68. On 26th November, 1985 the petitioners filed a refund claim for duty paid upto 31st October, 1985. The petitioners' claim was rejected by an order dated 20th March, 1986. The petitioners have also been issued a show cause notice which is annexed as Exhibit 'J' to show cause why their claim should not be rejected on the basis of the findings in the earlier order and in view of the claim being beyond the period prescribed under Section 11B of the Central Excises and Salt Act 1944. Hence the petition.