MADHUMILAN SYNTEX PVT LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner No. 1, Madhumilan Syntex Private Ltd. which is a company registered under the Companies Act, 1956 and of whom petitioner No. 2 is the Managing Director owns a factory at Biora wherein they manufacture spun yarn. This product is covered by Item 18, Schedule 1 of the Central Excises and Salt Act, 1944.

(2.) ACCORDING to the petitioners in the manufacture of their product, they use as raw material cellulosic fibre and non-cellulosic waste. By blending and processing of these raw materials, the final products spun yarn is produced. Therefore, the product falls in para (i) of Item 18-III of the First Schedule of the Central Excises and Salt Act. Further according to the petitioners their product does not contain any man-made fibre of non cellulosic origin and, therefore, they have been classifying the product by paying the duty in accordance with the Tariff Item 18-III (i) of the said Act.

(3.) THAT respondent No. 4 by a demand notice dated 7th February, 1984 (Annexure A) without any prior notice or hearing, raised a demand asking the petitioners to pay within 10 days a sum of Rs. 26,47,749. 39 on the assumption that the product cleared by the petitioners during the period from 15th August, 1983 to 6th February, 1984 was covered under Tariff Item No. 18-III (ii); that on the same day i. e. 7th February, 1984, vide Annexure B respondent No. 4, Superintendent of Central Excise, Ujjain sent a memo to the effect that the product classified by the petitioners is in reality an item falling under Tariff Item No. 18-III (ii) and shall be cleared only on payment of duty accordingly. The petitioners have therefore, filed this petition challenging the said order.