SUTLEJ COTTON MILLS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) PETITIONER has challenged the order dated 10.10.79 passed by the Assistant Collector, Central Excise, Kota and the order dated 25.2.80 passed by the Appellate Collector, Central Excise, New Delhi. It has also prayed that demand for recovery of a sum of Rs. 4,17,472.19 and Rs. 70,035.68 raised by the Central Excise Department may be quashed and the goods manufactured by the petitioner may be ordered to be classified under tariff item Nos. 18 and 18 -E.

(2.) PETITIONER has stated that it is manufacturing single yarn of viscose and polyester and their blends and also cotton yarn. The petitioner purchases rayon filament yarn (duty -paid), which is used for obtaining certain type of fancy yarn. The fancy yarn does not result in manufacture of any distinct commercial commodity and no manufacturing process is involved. According to the petitioner, since no manufacturing process is involved, it is not liable to pay any duty on the fancy yarn. According to the petitioner, this commodity is covered by tariff item Nos. 18 and 18 -E. Petitioner (sic) had been classified under tariff items Nos. 18 and 18 -E and, therefore, no duty was payable on fancy yarn. By a communication dated 1.4.79 the petitioner was informed that fancy yarn is classifiable under tariff item No. 68 of Ist Schedule of the Central Excises and Salt Act, 1944. A reply dated 10.4.79 was submitted by the petitioner. Thereafter, the Assistant Collector vide his letter dated 17.4.79 (Annexure -3) informed the petitioner that the Collector, Central Excise has ordered that the duty should be levied on fancy yarn under tariff item No. 68. The Superintendent, Central Excise issued a demand notice dated 16.7.79 to the petitioner and asked to deposit a sum of Rs. 4,17,792.19 as duty on fancy yarn. In his communication, the Superintendent stated that the Assistant Collector has by his order dated 2.7.79 finalised the classification. Certified copy of order dated 2.7.79 was not made available to the petitioner. Petitioner made a representation to the Collector, Central Excise, Jaipur but he was informed that by letter dated 17.4.79 of the Assistant Collector the classification has already been intimated. Petitioner was asked to point out whether it wanted personal hearing. On 17.7.79 the petitioner requested to the Collector to give personal hearing. The Assistant Collector called the petitioner on 14.7.79 (sic). He thereafter passed an order dated 10.10.79 and confirmed the demand raised by the Superintendent, Central Excise. An appeal was preferred by the petitioner against the order dated 10.10.79. This appeal has been decided by the appellate authority vide its order dated 25.2.80 and the appeal has been dismissed.

(3.) RESPONDENTS have contested the writ petition and have in the first instance urged that the petitioner has failed to avail alternative remedy available to it under Section 36 [Section 35?] of 1944 Act. It has also been stated that the claim of refund of excise duty cannot be entertained in a writ petition filed under Articles 226 and 227 of the Constitution of India. It has then been stated that the fancy yarn obtained by twisting the duty -paid polyester and viscose yarn is a distinct commercial commodity and it is obtained by a manufacturing process. It has been denied that no inquiry was held regarding classification of fancy yarn. Initially the classification list of fancy yarn was approved provisionally under tariff item Nos. 18 and 18 -E. After making proper inquiry, the fancy yarn was classified under tariff item No. 68. The Assistant Collector had given opportunity of personal hearing and then held that classification of fancy yarn under tariff item No. 68 was valid. As to the assertion of the petitioner that Assistant Collector, Central Excise, Kota had passed an order under dictates of the Collector, Central Excise, it has been stated that it is merely a coincidence that Assistant Collector, Central Excise, Kota also held the same view about classification of fancy yarn as held by the Collector, Central Excise. It has also been stated that the Assistant Collector is empowered to make modifications in the rate of duty as per Rules 173(B)(2) and 173(B)(5) of the Central Excise Rules. The modification letter was issued on 2.7.79 calling upon the petitioner to pay duty of fancy yarn under tariff item No. 68. Notice of demand was thereafter issued to the petitioner. The respondents have denied the allegation of violation of the principles of natural justice on different counts which have been specified in the writ petition.