R.R.Misra, J. - (1.) Lohia Machines Limited, Kanpur (hereinafter referred to as the petitioner) is a Company registered under the Indian Companies Act and is engaged in the manufacture of Nylon filament yarn at one of its units which is called Upper India Polymers. The petitioner manufactures Nylon filament yarn from Nylon chips which, in turn, it manufactures from Caprolactum, which is the basic raw material. This Nylon filament yarn manufactured from Caprolactum is known commercially by the Excise Authorities as Partially Oriented Yarn (hereinafter referred to in short as P.O.Y.) This is subject to Central Excise Duty under Tariff Item No. 18(ii)(i)(a) of the First Schedule to the Central Excises and Salt Act, 1944.
(2.) Till 31st May 1985 the petitioner was clearing the said P.O.Y. on sale from its factory after payment of appropriate central excise duty. However, with effect from 1st June 1985 part of the said goods was cleared on sale after payment of central excise duty and part of it was sent to certain Texsturising Units for converting the said P.O.Y. into textured Yarn.
(3.) The petitioner, however, made an application dated 18/19th December 1984 to the Assistant Collector, Central Excise, Kanpur (respondent No. 3) for permission to be granted under Rule 56-B of the Central Excise Rules (hereinafter referred to as the Rules). The ground taken was that the P.O.Y. which was to be sent for texturisation was in the state of semi-finished goods and till the time texturisation of the yarn was complete the excise duty had to be deferred. This had to be so because the petitioner did not possess the facility for texturising the yarn at the unit where the P.O.Y. was manufactured and hence had to remove the P.O.Y. to other units which were engaged in the business of texturising yarn. The Assistant Collector, Central Excise, Kanpur acting on the said representation, granted the said permission vide his letter dated 8th January 1985. It was communicated to the petitioner by a letter dated 9th January 1985 from the Superintendent, Customs and Central Excuse. Kanpur, addressed to M/s. Upper India Polymers, a unit of the petitioner. This permission as originally granted on 8th Jan., 1985 by the Asstt. Collector, Central Excise, Kanpur, was on a temporary basis and was valid upto 7th July 1985 as mentioned in the order. Subsequently a letter dated 5th June, 1985 was also sent to the petitioner stating the fact that the permission under Rule 56-B of the Rules is valid upto 7th July 1985, a copy whereof has been filed as Annexure 4 to the writ petition. Since the permission granted under Rule 56-B was limited upto 7th July 1985, this led the petitioner to write a letter dated 15th June 1985 addressed to the Superintendent, Central Excise, stating that the permission granted under Rule 56-B should be on permanent basis. A true copy of the said letter has been filed as Annexure 6 to the writ petition. Thereafter on 4th July 1985 the permission was extended by another Collector in the same office only for a further period of six months that is upto 7th January 1986. Communication to this effect was made by the Superintendent, Customs and Central Excise, vide his letter dated 5th July 1985 addressed to the Upper India polymers a unit of the petitioner, a copy whereof has been filed as Annexure 7 to the writ .petition.;