Ashok Kumar Mathur, C.J. - (1.) This is an appeal directed against the order dated 13th March, 1993 whereby the learned Single Judge has allowed the writ petition and set aside the impugned order dated 21st April, 1992 and notices dated 17th February, 1992 and 31st March, 1992. It has been held by the learned Single Judge that the respondent shall allow exemption benefit to the petitioner under Notification No. 65/87-C.E. in respect of polythene liner jute bags manufactured by the petitioner.
(2.) The brief facts which are necessary for the disposal of the appeal are that the petition is a manufacturer of jute bags. This jute bags are classified under sub-heading 6301.00 of Chapter 63, Section XI to the Schedule of the Central Excise Tariff Act, 1985 (hereinafter referred to as the Act). Subheading 6301.00 relates to textile articles not elsewhere specified including blankets (other than wool), tarpaulins, tents, sails for boats, The prescribed rate of duty against the sub-heading is 12% ad valorem. The Notification No. 65/87-C.E., dated 1-3-1987 exempted various goods described in the notification from so much of the duty of excise leviable thereon as was in excess of the amount laid down in the corresponding entry in Column 5 of the table to the notification. The relevant entry reads as under : -------------------------------------------------------------------------------- Sl. No. Heading No. or sub-heading No. Description of goods Rate Conditions -------------------------------------------------------------------------------- 06 63.01 Sacks and bags of jute Rs. 660 per tonne --------------------------------------------------------------------------------
(3.) In other words, the maximum excise duty on sacks and bags of jute was Rs. 660/- per tonne. The petitioner submitted the classification lists claiming exemption under the said notification in respect of the said polythene lined jute bags and the same was permitted to be effective from 17-2-91, 5-4-91, 8-4-91 and 19-8-91. It is alleged that the last three classification lists were approved by the Respondent No. 1, though the first classification was not approved. A notice was issued pertaining to first classification that is 17-2-91 that the bags containing polythene lining under sub-heading 6301.00 claiming assessment in terms of the said classification is not correct and the petitioner is not entitled to the benefits and was accordingly asked to show cause why excise duty at the 12% ad valorem plus 5% special on the baste plus cess at the rate of Rs. 132/- per metric tonne should not be realised in respect of the said bags for the relevant period. The petitioner replied to the said show cause notice on 12th March, 1992. It was submitted by the petitioner that the polythene bags are purchased by the petitioner from outside and were inserted in the jute bags manufactured by the petitioners and the same is stitched therein. It was also submitted that the weight of the jute bags including the weight of the jute twine used sewing worked out to 453 grams against the weight of the polythene bags the weight of which was 12 grams. It was submitted that the jute bags retained their essential identity. Attention was also invited to the subsequent classification for subsequent period which was approved by the authorities. The respondent by its order dated 21st April, 1992 rejected the contention of the petitioner. It was held by the Respondent No. 1 that the polythene lining was inserted inside the bag before baling. It was observed that the operation of insertion of the polythene liner was therefore ancillary to the completion of the finished product and was covered by Section 2(f) of the Central Excise and Salt Act, 1944. Secondly it was also held that the jute bags are made with polythene liner inserted and it is only after insertion of the polythene liner with the jute bags it could be considered as a finished product for marketing. Therefore, it was held that it is an essential ingredient for the purpose of completion of manufactured and the finished product as such these jute bags are not covered by the notification. In substance the Respondent No. 1 held that for the purpose of levy of duty the bags were required to be made only of jute. Consequently, the respondent rejected the application of the petitioner in classification. As a result of this order the Respondent No. 1 amended the rate relating to classification list dated 17th May, 1991. Thereafter the petitioner also received a subsequent show cause/demand notices dated 17-2-91 and 31st March, 1992 respectively in respect of the period 1-9-91 to 30-11-91 and for the period of 1-12-91 to 31-1-92. The petitioner thereafter filed the present writ petition challenging the order resulting the show cause notices for the subsequent periods. The writ petition was opposed by the respondent.;