V.N. Mehrotra, J. - (1.) This writ petition has been filed under Article 226 of the Constitution of India praying for quashing the orders dated 28th April, 1980 and 30th June, 1979, passed by the Appellate Collector, Central Excise, New Delhi and Assistant Collector of Central Excise, Ghaziabad respectively. The petitioners have also prayed for suitable writ, order or direction restraining the respondents from realising the excise duty on the formed coal briquettes and formed coke briquettes from the petitioners under Entry No. 68 of the First Schedule of the Central Excise Act and also for directing the respondents to refund a sum of Rs. 3,29,000/- paid by the petitioners as excise duty under Entry No. 68 of the First Schedule of the Act. It has also been prayed that the respondents be directed to refund the excise duty as and when realised by them in future after 21st June, 1979.
(2.) The petitioners have alleged that petitioner No. 1 is a Private Limited Company, incorporated under the Indian Companies Act, 1956. The petitioner No. 2 is one of the directors of the petitioner No. 1. The petitioners have their factory at Ghaziabad. They are preparing Formed Coal and Formed Coke briquettes from coal. The process for preparation of the Formed Coal and Formed Coke briquettes has been narrated in para 3 of the writ petition. They have asserted that the contents of the formed coke and formed coal briquettes remain the same as in any other coal and coke and hence they do not cease to be coal and coke on account of mere change in the shape by mechanical pressing process. They have asserted that coal and coke briquettes is only a preparation of coal in the same manner as soft coke under the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act). The coal and coke were not classified prior to 1978 for the purposes of levying excise duty. The petitioners had commenced preparation of Formed Coal and Formed Coke in December, 1976. These items were not covered under Tariff Entry No. 68 of the Schedule I of the Act. However, subsequently on 18th June, 1977, the Government of India revised the criteria for levy of duty under Tariff Entry No. 68. The petitioners had been paying duty under Tariff Entry No. 68 since that time. Subsequently, with effect from 1st March, 1978, a new Item 11D "Coal (excluding Lignite and Coke not elsewhere specified)" was included in the First Schedule to the Central Excises and Salt Act attracting a duty of Rs. 10/- per metric tonne. On the same day, i.e. 1st March, 1978, itself, the Central Government issued a notification exempting all excisable goods falling under Tariff Item 11D other than coal raised from the mines, and coke of all sorts not elsewhere specified. On the introduction of Tariff Item 11D, the coal and coke could not have been taxed under the residuary Tariff Item 68; and the coal and coke briquettes manufactured and sold by the petitioners were also covered by Tariff Item 11D. By notification dated 27th April, 1978 issued by the Central Government, coke of all sorts was exempted from payment of excise duty and the coal was also exempted other than the coal raised from the mines. Subsequently, by notification dated 18th July, 1979 all the goods falling under Item No. 11D of the First Schedule were exempted from payment of excise duty by the Central Government. The petitioners have asserted that in this view of the matter, they were not liable to pay excise duty under Tariff Entry 68 but were liable to pay excise duty under Tariff Item 11D during that period only. However, even though excise duty was not payable under Entry No. 68, the respondents demanded the same which was paid by the petitioners under protest. The petitioners made a representation in respect of the same to the Assistant Collector, Central Excise, Ghaziabad but no decision was taken in the matter. The petitioners were, however, forced to pay the excise duty under Item No. 68. The petitioners, thereafter filed writ petition No. 278 of 1979, M/s. Kakar Fuels Private Ltd. and Anr. v. Union of India and Ors., in this Court. In that case, it was directed that the application moved by the petitioners for classification should be decided. In view of this direction, the Assistant Collector, Central Excise, Ghaziabad proceeded to decide the matter. The earlier writ petition was then dismissed on the ground of alternative remedy as an appeal lay against the order of the Assistant Collector. The petitioners filed an appeal against the order by the Assistant Collector holding that the excise duty was leviable under Entry No. 68 in respect of formed coal and formed coke briquettes. The Appellate Collector, however, dismissed the appeal taking the same view which was earlier taken by the Assistant Collector. The petitioners have asserted that the orders passed by the Assistant Collector and the Appellate Collector were not legal and should be quashed. It is asserted that the excise duty could not be levied under Item No. 68 in respect of formed coal and formed coke briquettes prepared by the petitioners from coal.
(3.) The contention on behalf of the respondents is that the petitioners manufactured formed coal and formed coke briquettes by using the manufacturing process. The manufactured product, which is formed coal or formed coke, cannot be said to be the same as the coal or coke. Molasses and clay are also added during manufacturing process while preparing the formed coal and formed coke briquettes. These manufactured articles are not covered by Entry Item No. 11D of the Schedule First of the Act, but excise duty will be payable under Item No. 68 which is the residuary article. The petitioners were in the circumstances liable to pay the excise duty in respect of the article manufactured by them under Item No. 68. The Assistant Collector as well as the Appellate Collector, Central Excise have rightly held that the excise duty was payable by the petitioners under Item No. 68.;