JAY ENGINEERING WORKS LTD Vs. GOVERNMENT OF INDIA

JUDGEMENT

(1.) This Writ Appeal is preferred against the judgment of Gangadhara Rao, J., dismissing the writ petition.

(2.) The petitioner-appellant manufactures, inter alia, electric fans. Two of the components, namely stators and rotors, are not manufactured by the appellant but are purchased from others who manufacture them. The electric fans are subject to the levy of Central Excise Duty, having been mentioned in Entry 33 of Schedule I to the Central Excise and Salt Act, 1944 (hereinafter referred to as "the Act"). Stators and rotors also were mentioned under the same Entry 33, until 1-3-1969. The Finance Act, 1969, however, took them out of Entry 33 and placed them under Entry 30. It may be noticed that in November 1971, the position was restored and the stators and rotors again came to be mentioned under Entry 33. The present dispute has arisen because of the said change in law. The Rules framed under Section 37 of the Act provide for, inter alia, levy, refund and exemption from excise duty. We will first refer to Rule 56-A in this behalf. The said rule provides for a special procedure for movement of duty-paid materials or component parts for use in the manufacture of finished excisable goods. Sub Rule (1) says that, notwithstanding anything contained in these Rules, the Central Government may, by notification in the Official Gazette, specify the excisable goods in respect of which the procedure laid down in sub-rule (2) shall apply. It is necessary to set out sub-rule (2) in full:

(3.) Until 1-3-1969 the petitioner-appellant was availing of the facility mentioned in Rule 56-A. The duty paid by him oa the purchase of stators and rotors was being deducted from out of the duty payable on the electric fans manufactured by it Because of the Finance Act, 1969 placing the stators and rotors under Entry 30, the petitioner became ineligible for the said facility under Rule 56-A (and the said deduction) because of sub-clause (a) in clause (ii), in sub-rule (2) thereof. Bur, it appears that the appellant continued to avail of the said facility and the deductions even after 1-3-1969 and until June 1970 when the said error was discovered and, thereafter, the said facility was discontinued. The Assistant Collector of Central Excise then issued a notice dated 26-10-1971, calling upon the petitioner to show cause as to why the total duty amounting to Rs. 42,345-06 Ps. should not be demanded from it, and also why it should not be made liable for 'penalty in that behalf.