V. BALAKRISHNA ERADI - (1.) THIS appeal by special leave is directed against an Order dated 3/08/1978 passed by the Government of India under Section 36 of the Central Excises and Salt Act. 1944 (hereinafter referred to as the Act). rejecting a Revision Petition filed by the present appellant and confirming the view taken by the Appellate Collector of Excise. Bombay, that the appellant, herein is not entitled to the benefit of the exemption from duty of excise conferred by a Notification No. 4/68-CE dated 20/01/1968.
(2.) THE appellant-Company which has its factories at Sion East and Andheri East in Bombay is engaged in the manufacture of various process chemicals required for the Textile Industry Amongst the process chemicals so manufactured by them are substances known as emulsifiers and wetting out agents. THEse products fall within the scope of Tariff Item 15-AA of the First Schedule to the Act. which reads: 'Organic Surface Active Agents (other than soap)) : Surface Active preparations and washing preparations. whether or not containing soap." For use as raw-material for the manufacture of the emulsifiers/wetting out agents. the appellant-Company had purchased a total quantity of 1.64.500 kgs. of organic surface active agents from another company called 'THE Industrial General Products Private Limited'. THE aforesaid organic surface active agents sold to the appellant by the Industrial General Products Private Limited had not been subjected to the levy of excise duty inasmuch as the said supplier Company was eligible for exemption from payment of excise duty on account of the fact that the goods were manufactured by it without the aid of power. Emulsifiers/wetting out agents etc. intended for use in any industrial process were exempted from the levy of duty under Entry 15-AA of the First Schedule to the Act. subject to certain conditions, by a Notification dated 20/01/1968 issued by the Government of India. The relevant part of that Notification is in the following terms: "The Central Government has exempted the excisable goods specified in Column (2) of the Table hereto annexed and falling under this Item from the whole of the duty of excise leviable thereon subject to the conditions laid down in the corresponding entries in Column (3) of the said Table. TABLE JUDGEMENT_277_4_1981Html1.htm It is common ground that the organic surface active agents used by the appellant as raw-material for the manufacture of emulsifiers/wetting out agents were purchased by it subsequent to the 20th day of January, 1968. The Central Excise authorities originally treated the manufactured product. namely the emulsifiers etc. as exempt from levy of duty by virtue of the Notification dated 20/01/1968. But, subsequently, by a notice dated 6/08/1974, issued by the Superintendent of Central Excise Inspection Group No. 1. Bombay Division V. the appellant-Company was directed to show cause why an amount of Rupees 1,21,709.57 should not be recovered from the Company by way of excise duty in respect of the period August, 197 3/02/1974 on the ground that the said amount represented escaped duty in respect of the emulsifiers/ wetting out agents manufactured by the petitioner-Company during the afore said period.
(3.) IN reply to the said notice, the appellant-Company objected to the said demand contending that it was entitled to the benefit of exemption from levy of duty in respect of the manufactured products under the Notification dated 20/01/1968 inasmuch as surface active agents used in the manufacture of the emulsifiers/wetting out agents had been purchased by the appellant from the open market after the 20th day of January, 1968. This contention was rejected by the concerned Assistant Collector. He took the view that, in order to attract the exemption provided for in the aforesaid Notification, duty should actually have been paid in respect of the surface active agents used as raw-material and since the appellant had purchased the raw-material from a manufacturing unit which was exempt from the levy of excise duty for the reason that the manufacture was carried out by it without the aid of power, the conditions prescribed in the Notification were not fulfilled. The said order was confirmed by the appellate Collector of Central Excise. Bombay, before whom the matter was carried in appeal by the present appellant. While upholding the view taken by the Assistant Collector that the benefit of the exemption granted by the Notification would be available only in cases where the raw-material. namely. the surface active agents had been subjected to duty at the primary stage. The Appellate Collector went further and held that the purchase of the aforesaid raw-material effected by the appellant from M/s. INdustrial General Products Private Limited could not be regarded as "purchased from the open market" and that for this additional reason also. The appellant was ineligible to claim the benefit of the exemption. A Revision Petition filed by the appellant before the Government of India was rejected by the Order (Exh. 'A') dated 3/08/1978, wherein the Central Government took the view that "purchases made from a particular manufacturer, the production from whose factory is exempt from payment of duty being manufactured without the aid of power. cannot be treated at par with purchases made from the open market." It is against this order of the Government of India that the appellant has come up to this Court with this appeal.;