MUNDRA SALT AND CHEMICAL INDUSTRIES Vs. PARAMJIT SINGH

JUDGEMENT

(1.) THE petitioner -company Shreeram Mills Limited (hereinafter the company) is having three separate departments consisting of spinning, weaving and processing departments respectively. In the spinning department yarn is manufactured which yarn intended to be used for the manufacture of fabrics is cleared into the weaving department in which latter department it is woven into cloth whereafter the same is cleared into the processing department where the cloth is intended to be cleared as processed cloth. The articles manufactured by the company viz., cellulosic spun yarn, cotton yarn and cotton fabrics are excisable goods falling under Tariff Item Nos. 18, 18 -A and 19 respectively of the First Schedule to the Central Excises and Salt Act, 1944. Now, under rule 8 of the Central Excise Rules, the Central Government is authorised to exempt, subject to such conditions as may be specified in the notification, any excisable goods from the whole or part of the duty leviable on such goods. In exercise of this power under the said rule 8, the Central Government issued on June 18, 1977 Notification No. 131 of 1977 granting partial exemption to cotton yarn and cellulosic spun yarn falling under Tariff Item Nos. 18A and 18 -III from payment of excise duty. Composite mills such as the company herein were, however, excluded from the operation of the said Notification No. 131 of 1977 by reason of proviso (vii) to the said notification, under which proviso : '...nothing contained in this notification shall apply to any yarn which is used for weaving in a composite mill.' The company here, which is a composite mill, was thus excluded from the operation of Notification No. 131 of 1977. Simultaneously, the Central Government also issued another notification on the same day June 18, 197 being Notification No. 132 of 1977 by which cellulosic spun yarn falling under Tariff Item No. 18 -III(i) and cotton yarn falling under Tariff Item No. 18 -A(i) were exempted from the whole of the duty of excise leviable thereon when used for weaving cotton fabrics falling under Tariff item No. 19 in a composite mill. Again, on the same day June 18, 1977 the Central Government issued a third notification bearing No. 135 of 1977 granting exemption to cotton fabrics falling under Tariff Item No. 19(I) of the Schedule to the said Act. Net effect of the aforesaid notifications was that duty on cellulosic spun yarn and cotton yarn covered by Notification No. 132 of 1977 and applicable to composite mills stood wholly exempted and duty on cotton fabrics falling under Tariff Item No. 19(I) stood partially exempted to the extent indicated in Notification No. 135 of 1977.

(2.) ABOUT a month later of July 15, 1977 the Central Government issued four further notifications being Notification Nos. 224, 225, 226 and 228 of 1977. Under Notification No. 224 of 1977 clause (vii) of the proviso and Explanation II of Notification No. 131 of 1977 were omitted. By Notification No. 225 of 1977 the earlier Notification No. 132 of 1977 under which cellulosic spun yarn and cotton yarn falling under sub -item III(i) of Tariff item No. 18 and Tariff Item No. 18A(i) respectively of the First Schedule to the Central Excises and Salt Act, 1944, falling under Tariff Item No. 19 in a composite mill, were exempted from the whole of the duty of excise leviable thereon, was rescinded. Under Notification No. 226 of 1977 the earlier notification No. 135 of 1977 was superseded and a new set of partial exemptions was prescribed as stated therein. Under Notification No. 228 of 1977 exemption was granted qua cotton fabrics produced in composite mills from so much of the duty of excise as was equivalent to the duty leviable with reference to the part of value which represented duty on yarn paid by composite mills under Notification No. 131 of 197.

(3.) IN support of the petition, I have heard Mr. K.H. Bhabha, learned Counsel for the petitioner -company. The respondents - Union of India and others - though served have not chosen to appear at the time of hearing of this petition. I have, therefore, not had the benefit of their arguments.