UNIVERSAL CABLES LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) BY this petition under article 226 of the Constitution the petitioner, Universal Cables Ltd. , calls into question 13 orders passed by the Collector, Central Excise, Nagpur on 10th/11th September, 1975, under Rule 173q of the Central Excise Rules, 1944, imposing penalty to the tune of nearly Rs. 2andfrac12; crores in respect of properzi rods removed by the petitioner from its properzi mill from 1st May, 1970 to 23rd May, 1971. The petitioner also prays for quashing of 15 show cause notices which were issued by the Assistant Collector before the said 13 orders were passed by the Collector.

(2.) THE petitioner is an existing Company within the meaning of the Companies Act, 1956. The petitioner carries on business of manufacturing and dealing in cables and conductors required for transmission of electricity. The petitioner has its cable factory at Satna. For the purpose of manufacturing cables and conductors, the petitioner requires aluminium wire rods commonly known as properzi rods as an essential raw-material. The petitioner has a properzi mill at Satna for converting aluminium ingots into properzi rods. The petitioner acquires aluminium ingot primarily from two leading manufacturers in India, namely, Hindustan Aluminium Corporation Ltd. , Renukoot (Hindalco) and Indian Aluminium Co. Ltd. , Belgaum (India ). The petitioner converts the aluminium ingots into rods and uses them in its cables factory. In order to fully utilise the capacity of the properzi mill, the petitioner also converts aluminium ingots belonging to other cable or conductor manufacturers. These others manufacturers send aluminium ingots of Hindalco or Indal Brand to the petitioner who converts the ingots into rods and realises conversion charges.

(3.) BEFORE 1st March, 1970, excise duty on aluminium including ingots, wire rods etc. , was linked with weight. As the duty was the same on ingots and wire rods, on duty was payable on the manufacture of properzi rods from duty-paid aluminium ingots. From 1st March, 1970, excise duty on aluminium ingots, wire bars and wire rods became leviable on the basis of rate ad valorem. However, by a notification dated 1st March, 1970, exemption from duty was granted in respect of aluminium ingots, wire bars, wire rods etc. By this exemption, no excise duty was payable on the manufacture of aluminium wire bars and rods including properzi rods. But by another notification issued on 26th March, 1970, exemption granted in respect of aluminium wire bars and wire rods including properzi rods was withdrawn. The result, therefore, was that from 26th of March, 1970, excise duty became leviable on properzi rods on ad valorem basis. There was some confusion for certain period about the effect of the withdrawal of this exemption and the procedure laid down for removal of properzi rods under the Central Excise Rules was not strtictly followed till 26th April, 1970. We are, however, not concerned with this period in this petition.