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Collector of Central Excise Vs. Oswal Woollen Mills Ltd. - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1990)(49)ELT69TriDel
AppellantCollector of Central Excise
RespondentOswal Woollen Mills Ltd.
Excerpt:
.....central excise tariff schedule with reference to their liability to additional (countervailing) duty of customs. the basic stand of the department was that they were classifiable under sub-item iv of item 18 of the central excise tariff schedule, which covers "non-cellulosic wastes, all sorts". the respondents have strongly contested this and contended that no countervailing duty was leviable on the goods.7. the sequence of events in brief, as seen from a specimen bill of entry shown to us (no. 002583 dated 8-4-1982), was that the goods, described as "machine compressed bales synthetic waste" were imported in several consignments by the respective respondents at bombay and were warehoused under section 60, customs act. the into-bond bill of entry showed not only the basic customs duty.....
Judgment:
1. These are 44 appeals of the Collector of Central Excise, Chandigarh, arising out of the combined Order-in-Appeal No. 999 to 1044/CH/83 dated 30-11-1983 passed by the Collector of Customs (Appeals), New Delhi.

2. Each order in the combined Order-in-Appeal arises out of a consignment of the imported goods covered by an ex-bond bill of entry.

25 of the appeals relate to bills of entry of Messrs Oswal Woollen Mills Ltd., 17 to bills of entry of Messrs Punjab Processors Ltd., and two to bills of entry of Messrs Gandharav Trading & Investment Co. Pvt.

Ltd. 3. Although the Collector's Order was a combined one, it does not contain a complete list of the appeals covered by it, with reference to the bill of entry and other particulars. Separate lists are annexed to the copies endorsed to each of the three respondents. The list of appeals of Messrs Oswal Woollen Mills relates to 25 consignments, that of Messrs Punjab Processors to 18 consignments and that of Messrs Gandharav Trading & Investment Co. Pvt. Ltd. to two consignments, making 45 in all. (The serial numbers given to the combined Order-in-Appeal, viz. 999 to 1044, show that there were 46 appeals, but Appeal No. CH/33/83 of M/s. Oswal was dismissed as infructuous, as it was a duplicate of Appeal No. CH/25/83. Thus effectively there were only 45 appeals before the Collector).

4. We have also noted that the list pertaining to Messrs Punjab Processors covers 18 appeals, whereas we have before us only 17 appeals relating to Messrs Punjab Processors. This is evidently because Appeal No. CH/53/83 was rejected as time-barred, as it was not filed within the extended time allowed by the High Court.

5. In the circumstances, our order would relate to 44 out of the 46 orders contained in the combined Order-in-Appeal of the Collector (Appeals), viz. all except the orders on Appeal Nos. CH/33/83 and CH/53/83.

6. The question which was considered and discussed in great detail by the Collector (Appeals) was the correct classification of the goods under the Central Excise Tariff Schedule with reference to their liability to additional (countervailing) duty of customs. The basic stand of the Department was that they were classifiable under sub-item IV of Item 18 of the Central Excise Tariff Schedule, which covers "Non-cellulosic wastes, all sorts". The respondents have strongly contested this and contended that no countervailing duty was leviable on the goods.

7. The sequence of events in brief, as seen from a specimen bill of entry shown to us (No. 002583 dated 8-4-1982), was that the goods, described as "machine compressed bales synthetic waste" were imported in several consignments by the respective respondents at Bombay and were warehoused under Section 60, Customs Act. The into-bond bill of entry showed not only the basic customs duty under Heading 56.04/06, Customs Tariff Act, but also the additional duty at Rs. 11.25 per kg., corresponding to Item 18IV of the Central Excise Tariff. The goods were transported for warehousing to the inland bonded warehouse at Ludhiana.

Thereafter, the respondents filed writ petitions to the High Court for the States of Punjab and Haryana at Chandigarh, seeking various reliefs, one of which was that landing charges could not be included in the assessable value for computing customs duty. Another ground was that no countervailing duty should be charged on the goods. In its order dated 22-3-1983 on Civil Writ Petition No. 2613 of 1982, the High Court observed that the ground regarding levy of landing charges was given up. The Hon'ble High Court also observed that the alternative remedy of appeal under the Customs Act had not been availed of. It was conceded by the advocate for the respondents that as regards the challenge to countervailing duty writ proceedings were not the appropriate remedy, as a determination thereof would necessarily involve an enquiry into disputed questions of fact. In the result, the Hon'ble High Court relegated the respondents (the petitioners before it) to the statutory remedy of appeal under the Customs Act, taking note of the assurance of counsel for the Revenue that no objection on the ground of limitation in the filing of appeals would be raised, if the appeals were filed within one month.

8. Pending the hearing of the Writ Petitions, the Hon'ble High Court passed interim orders. A copy of the order dated 9-6-1982 in CWP No.2613 of 1982 was filed before us. The relevant part of the order was as follows :- "Goods may be released on furnishing Bank Guarantee for the Central duty." It appears that orders to this effect or with slight variations, were given covering all the consignments in question. In pursuance of these orders, the respondents were allowed clearance ex-bond of their goods after they had satisfied the conditions in the High Court's order.

Thus, in the specimen case referred to in para 7, they furnished a bank guarantee equal to the amount of (duty on) landing charges, and countervailing duty.

9. Following the final orders of the High Court, the respondents filed appeals to the Collector of Customs (Appeals), which were disposed of by him in his combined Order, to which reference has already been made.

10. As already observed, the Collector's Order is a very detailed one.

The record shows that personal hearings in the appeals took place on six days. The Department was also represented before the Collector through Shri H.K.L. Nayar, Superintendent, Customs Range VII, Ludhiana and Sarvashri S.P. Sobti and B.L. Quatra, Inspectors. On 11-11-1983, Shri R.S. Venkataraman, Chemical Examiner, was also present and made fairly detailed submissions on behalf of the Department. He inter alia sought to explain the test reports of the Customs Laboratories on samples drawn from various consignments; both at Bombay and at Ludhiana.

11. A substantial part of the Collector's Order was devoted to the interpretation of the Explanation to sub-item IV of Item 18, which states that "this item includes only wastes arising in or in relation to the manufacture of man-made fibres (other than mineral fibres) and man-made filament yarn". After examining the question in detail, the Collector inferred that the wastes covered by the sub-item should be relatable to the Heading, namely man-made fibres and filament yarn, and that cellulosic wastes relatable to spun yarn should be excluded from the scope of the sub-item. He held that the sub-item would cover only waste arising in the process of manufacture of man-made fibre and filament yarn (and not wastes arising in the spinning of yarn).

12. In the light of his very detailed discussion, the Collector concluded his order by stating in para 19.0 thereof that the 44 appeals were disposed of with the following directions :- "(i) Landing charges are includable in the assessable value to be determined in the relevant bills of entry for the purpose of levy of Customs duties and Additional Customs duties.

(ii) The imported synthetic waste do not fall within the purview of 18(IV) of the Central Excise Tariff.

(iii) Such imported wastes may be assessed under any other appropriate item of the Central Excise Tariff as deemed fit by the assessing authority for purposes of levy of Additional duties of Customs.

(iv) Wherever duties have been collected in excess consequential refunds are also ordered to be sanctioned." 13. Along with the appeals, stay applications were also filed on behalf of the Collector of Central Excise, Chandigarh. In these applications a prayer was made for grant of stay against the operation of the Orders-in-Appeal till the final decision of the Tribunal. The stay applications were disposed of by the combined stay order Nos. 221 to 264/84D dated 31-8-1984. Taking note of the offer made by the learned advocate for the respondents, the Bench ordered that the respondents should furnish bank guarantees operative for a period of six months for the amount of countervailing duty calculated on the basis of the rate of duty under Item 68. This order was also conditional on the Department returning the bank guarantees which were lying with them but had since expired or stood discharged.

14. When the matters again came up on 30-10-1984, Shri A.K. Jain, SDR, raised a preliminary point that the respondents had not so far executed bank guarantees as they were required to do in terms of the Tribunal's stay order dated 31-8-84. On this, Shri Harbans Singh, appearing for the respondents, submitted that they were not able to get the bank to furnish the guarantees until the old guarantees had been duly returned, which was done only on 27-10-84. Shri Harbans Singh gave an assurance on behalf of the three respondents that the guarantees would be executed within a week, that is by 6-11-84. The Bench considered that in the circumstances this was reasonable and proceeded with the matter, after making it clear that any decision would be announced only after the bank guarantees had been executed.

15. Shri Jain then raised a further point. According to him, there was no question of an appeal to the Tribunal at this stage, since there was no original assessment on the basis of which a dispute could have been said to arise. He submitted that the goods had been released on the basis of the directions of the Punjab and Haryana High Court without any assessment by the Customs authorities. When it was pointed out to him that we had before us the Order-in-Appeal of the Collector (Appeals), in which the issues were extensively discussed, Shri Jain submitted that the Collector (Appeals) also should not have entertained the appeals since there was no original assessment to countervailing duty. He submitted that at this stage what was called for was an original assessment by the proper officer. On the Bench pointing out that, since the highest officer in the Collectorate, namely the Collector, had already expressed his views in the appeal authorisations, any lower officer would find it difficult to take an unbiased view, Shri Jain submitted that this difficulty could be overcome by specially allocating the cases to some officer not subordinate to the Collector of Central Excise, Chandigarh. On our further pointing to the categorical statement in para 11 of the Collector's order that the bill of entry had been assessed to duty in terms of assessment order passed in respect of each of them by the Superintendent and duly countersigned by the Assistant Collector of Customs and Central Excise (Ludhiana) Shri Jain stated that his instructions were otherwise and the Collector must have been mistaken.

16. As regards Shri Jain's objection, Shri Harbans Singh submitted that this point had not been taken by the Department before the Collector (Appeals). He further submitted that there was clearly an assessment done on the ex-bond bills of entry, in that the amount of duty, which according to the Department was leviable, was determined for the purpose of taking a bank guarantee. There had been no direction from the High Court as regards the manner of assessment. Shri Harbans Singh further stated that during the personal hearing before the Collector (Appeals), the Superintendent had stated that he had applied his mind in the matter.

17. Shri Harbans Singh showed us the ex-bond bill of entry No. 002583 dated 8-4-1982 relating to the specimen consignment referred to in para 7 above. It was found that the amount of additional duty had been indicated therein and that the bill of entry had been signed by the Superintendent of Central Excise and Customs, Range VII, Ludhiana, and countersigned by the Assistant Collector of Central Excise and Customs, Ludhiana. The additional duty and the duty on landing charges were worked out and shown on the bill of entry, together with an endorsement signed by the Superintendent that the bank guarantee equal to amount of (duty? not clear) of Rs.27018.25 was taken as per the direction of the Punjab and Haryana High Court in CWP 2613 of 1982 dated 24-6-82.

18. We also noted that in its order dated 9-6-82 on CWP No. 2613 of 1982 (reproduced in para 8 above) the High Court had not given any indication or direction whatsoever as to how the duty should be calculated. It was the Department at the level of the Assistant Collector which had calculated the duty amount. Whether or not this could be called an "assessment", it was certainly a decision at the level of the Assistant Collector. Therefore an appeal clearly lay to the Collector (Appeals) and a further appeal lay from his order to the Tribunal. Further, there was a specific direction from the High Court that appeals would be filed to the Collector (Appeals) and would be entertained if filed within a month. In these circumstances we did not find substance in the objection of Shri Jain. We, therefore, overruled the objection and asked him to argue the merits of the case.

19. As regards the merits, Shri Jain stated that he would not argue before us that sub-item IV of Item 18 was applicable to the goods.

However, according to him, the goods would be classifiable under sub-item I of Item 18. In this context he referred to para 12.0 of the Collector's order in which it was stated that the case for classification under Item 18 I or under Item 18 IV should fail. He wished to argue in favour of sub-item I of Item 18.

20. It was pointed out by the Bench to Shri Jain that reference had also been made to Notification No. 53/72, to be read along with Item 181. Shri Jain stated that the question of applicability of this notification would arise later.

21. We then pointed out to Shri Jain that, irrespective of what might have been said by the Collector in the course of his very detailed Order, his final directions were very specifically set out in para 19.0 thereof. In that paragraph, while ruling out Item 18 IV, he had left it to the assessing authority to assess the goods under any other appropriate Item of the Central Excise Tariff as deemed fit by that authority. Since Shri Jain had now stated that he was not seeking classification under Item 18 IV, there did not appear to be anything left in the appeal.

22. With reference to these observations, Shri Harbans Singh submitted that although in para 19.0 only Item 18IV had been referred to, in para 12.0 Item 181 had also been ruled out. According to him, the appeals should be withdrawn by the Department and if this was not done they should be dismissed. Shri Jain submitted that the Department would have no objection to proceeding in terms of para 19.0 of the Order-in-Appeal, so long as there were no directions with reference to the applicability of Item 18-1.

23. At this stage we indicated our tentative conclusion that, since the Department had given up its stand that classification should have been under Item 18 IV, the appeals would have to be rejected. However, we felt it expedient to adjourn the matter to 13-11-84, when Shri Harbans Singh could apprise us regarding the execution of the bank guarantees by 6-11-84 as undertaken by him. Directions were also given to both sides to file certain other documents required for the completion of the record.

24. When the matters came up on 13-11-84, Shri A.K. Jain was not present for the appellant, nor was any reason given for his absence.

However, S/Shri K. Chandramouli and H.L. Verma, SDRs, were present and we, therefore, took up the matters, noting that the substantial arguments had already been heard. Shri Harbans Singh informed us that, although some difficulties had been experienced because of unsettled conditions in the intervening period, bank guarantees for the amounts intimated by the Customs authorities in terms of the Tribunal's order dated 31-8-84 had been executed and had also been filed with the Customs authorities at Ludhiana. He showed us the letters from the Customs authorities intimating the amounts, as well as copies of the bank guarantees said to have been furnished for those amounts. These were also seen by the learned Senior Departmental Representatives.

While positive that the bank guarantees had been duly filed with the Customs authorities, Shri Harbans Singh undertook that Shri N.D. Jain, who was authorised to act on behalf of all three respondents, would file an affidavit in the course of the day to this effect (this has subsequently been done). On this understanding we proceeded with the matters from the point where they were left on the last occasion. We had already on the last occasion, indicated our tentative conclusion.

Seeing no reason to change our tentative conclusion, we are disposing of the various appeals as shown below :- (1) The appeal filed on behalf of the Collector is lengthy, and the relief claimed has not been clearly set out in the final "prayer".

However, the stand of the Collector, for which he seeks our approval, has been stated in Item No. (xii) of the grounds of appeal, which reads as follows :- "Even presuming, but not admitting, that "soft waste" does not fall within the ambit of T.I. 18-IV the same would be assessable under T.I. 18-IV (i) read with Notification No. 52/72-C.E. as stated earlier." However, Shri Jain, representing the appellant before us, had categorically stated that he was not seeking classification under sub-item IV of Item 18. He indicated that the Department was now in favour of classification under sub-item I ibid. As regards Notification No. 53/72-C.E. he stated that this would arise later.

(2) The Collector's order is also a very detailed one, which runs into 31 pages exclusive of the Annexures. However, the Collector has been careful to set out in para 19.0 of his order his directions.

The relevant directions are the following:- (ii) The imported synthetic waste do not fall within the purview of Item 18(IV) of the Central Excise Tariff.

(iii) Such imported wastes may be assessed under any other appropriate item of the Central Excise Tariff as deemed fit by the assessing authority for purposes of levy of Additional duties of Customs.

In accordance with these directions the matter has to go back to the assessing authority who would be free to order assessment of additional duties of customs under any appropriate Item of the Central Excise Tariff other than sub-item IV of Item 18.

(3) We, therefore, find that the view now advanced by Shri Jain on behalf of the Department does not conflict with the directions given by the Collector in para 19.0 of his order. As already observed, the order is a very detailed one and contains many other observations, from which either party might seek to derive support. The operative part of the order is however contained in para 19.0. Since the reliefs now prayed for the Department are in no way contrary to the operative part of the order, no modification of the order is called for, and we therefore refrain from going into the question of classification. In the result, the appeal does not survive and accordingly rejected. The result of this order will be that the appropriate assessing authority will be at liberty to take further action in pursuance of the directions contained in para 19.0 of the Collector's order, without being bound by the Collector's observations elsewhere in the order.

These 24 supplementary appeals are directed against the orders of the Collector (Appeals) on the 24 other appeals of Messrs Oswal Woollen Mills Ltd., which were before him. They are in identical terms. The appeals themselves do not state any grounds, but a cross-reference has been made to the detailed grounds mentioned in the accompanying authorisation dated 11-5-84 of the Collector of Customs and Central Excise, Chandigarh. This authorisation is identical to the authorisation given by the Collector in Appeal No. 262/84-D. The grounds are basically the same as those given in that appeal.

Accordingly, these 24 appeals are rejected in the same terms as appeal No. 263/84-D.Although the issue is basically the same as in Appeal No. 263/84-D relating to Messrs Oswal Woollen Mills Ltd., the grounds set out in the appeal are slightly different. The relevant ground (b) is reproduced below :- "The Collector of Customs (Appeals), New Delhi has decided the issue of classification of goods in question for the purpose of levy of Additional duty under Section 3 of the Customs Tariff Act, 1975 has erred in placing reliance on evidence produced by the party and completely ignoring the Chemical Examiner's report. As per result of the sample, the goods were "undyed Acrylic Staple Fibre" and liable to Additional duty under T.I. 18(1) of Central Excise Tariff. The findings of Collector (Appeals) that the goods in question are synthetic waste and not covered by T.1.18(1) of Central Excise Tariff are not based on physical properties of the goods in question as has been revealed by the test result." This appeal, therefore, differs from appeal No. 263/84-D, in that it has been alleged that the Collector (Appeals) erred in "ignoring" the Chemical Examiner's report, in terms of which the classification was under Item 18 I. It therefore appears that in this case the Department seeks classification under Item 181. For the reasons given in para 21 above, as well as in our order on Appeal No. 263/84-D in the case of M/s. Oswal, the relief prayed for is in no way contrary to the operative part of the Collector's order, and therefore no modification of the order is called for. This appeal is therefore rejected.

This appeal is in similar terms to appeal No. 248/84-D and is rejected in the same terms.

This appeal is similar to appeal No.263/84D relating to Messrs Oswal Woollen Mills Ltd., and is rejected in the same terms, These 14 supplementary appeals are similar to the 24 supplementary appeals Nos. 552/84-D to 575/84-D relating to Messrs Oswal Woollen Mills Ltd., and are rejected in the same terms.

This appeal is similar to appeal No. 248/84-D relating to Messrs Punjab Processors Ltd., and is rejected in the same terms.

This appeal is similar to appeal No. 263/84-D relating to Messrs Oswal Woollen Mills Ltd., and is rejected in the same terms.

25. In the result, all the 44 appeals before us stand rejected, the appropriate assessing authority being at liberty in each case to take further action in pursuance of the directions contained in para 19.0 of the Order of the Collector (Appeals), without being bound by the Collector's observations elsewhere in the Order.


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