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Jhaveri Thanavala Corporation Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)LC1781DTri(Delhi)
AppellantJhaveri Thanavala Corporation
RespondentCollector of Central Excise
.....thane, bombay, firstly dated 9-6-1978 informing that their products, such as insulating tapes, fibre glass reinforcement grinding wheels, discs, etc. were classifiable under tariff entry 22f of the cet and requiring them to obtain l 4 licence accordingly. this communication was followed by another order dated 21/22-6-1978 whereby the assistant collector intimated to the appellant that all their products (eleven in number), had been classified under item 22f of the cet and they were required to pay differential duty accordingly, although they were also advised that in case they wanted, they could take up the matter in appeal or in the meantime pay duty under protest. the appellant went in appeal but the collector of central excise (appeals), bombay, confirmed the classification.....
1. This matter was before the Central Government by way of Revision Petition having been filed against the Order passed by Collector of Central Excise (Appeals), Bombay on 27-7-1981. It has since been received in the Tribunal by virtue of provisions of Section 35P of the Central Excises and Salt Act, 1944 and is being disposed of as such.

2. The controversy arose when the appellant received communication from the Asstt. Collector, Central Excise, Thane, Bombay, firstly dated 9-6-1978 informing that their products, such as insulating tapes, fibre glass reinforcement grinding wheels, discs, etc. were classifiable under Tariff Entry 22F of the CET and requiring them to obtain L 4 licence accordingly. This communication was followed by another order dated 21/22-6-1978 whereby the Assistant Collector intimated to the appellant that all their products (eleven in number), had been classified under Item 22F of the CET and they were required to pay differential duty accordingly, although they were also advised that in case they wanted, they could take up the matter in appeal or in the meantime pay duty under protest. The appellant went in appeal but the Collector of Central Excise (Appeals), Bombay, confirmed the classification determined by the Assistant Collector, rejecting contentions of the appellant to the effect that the goods manufactured by them could not be considered to be such goods which fell within the contemplation of Item 22F, Explanation (iv) of the CET, and that they were goods of different compositions, and were primarily being marketed as fibre glass reinforced plastic articles. After considering the wording of the Tariff Entry, as it existed at the relevant time, namely, in the year 1978, the Appellate Collector, expressed the clear view that sub-clause (iv) of the Explanation related to all "manufactures containing mineral fibre and yarn other than asbestos cement products", and since these goods admittedly comprised of glass fibre which was another name for mineral fibre, these had been correctly classified by the Assistant Collector, to be falling under Item 22F(iv). He did take note of the argument of the appellant that glass fibre was only one of the constituents of their products, and that besides this, number of other materials went into their making but held the view that prior to the amendment in 1979 which introduced the concept of pre-dominance in this Entry, sub-clause (iv) of the Explanation appended to Item 22F, took in its sweep, all manufactures of mineral glass fibre, irrespective of the percentage thereof. He accordingly dismissed the appeal.

3. The present appeal is directed against this order, and the contentions put forward by the appellant as contained in the grounds of appeal, are to the effect that the view taken by the Assistant Collector as well as Appellate Collector was irrational and unwarranted. They pleaded that although the matter related to the classification list for the year 1978, but by the time the Appellate Collector came to decide the matter, the amendment providing the test of "pre-dominance" had already come into being and that the Appellate Collector ought to have taken notice thereof, as this was being clear indication of the intention of the Legislature, that only those goods were to be covered by Explanation (iv) which were pre-dominantly made of mineral or glass fibre and not goods which were compositions of other material, and particularly it was specifically pleaded by them that their products were of different types, like varnished sleevings, insulated rods, plates, braided cords, pipes etc., with high resins content, and were classifiable as articles of plastics falling under Tariff Entry 15-A(2) of the CET., and as such entitled to exemption provided by Notification No. 87/76-C.E., dated 16-3-1976. They also made reference to a Trade Notice issued in this regard by the Bombay Collectorate dated. 7-8-1978 whereby clarifications had been issued, and it was directed that "glass fibre reinforced plastics" do not come within the purview of Item 22F of the CET., and such articles were appropriately liable to fall under Item 15A(2) of the CET, as articles of Plastics.

4. The thrust of their pleas, however, was that the Assistant Collector unilaterally and arbitrarily revised the Classification List, which had been filed on 1-3-1978, duly approved by the Superintendent on 1-3-1978 and thus violated all principles of natural justice and that the Appellate Collector ought to have directed reconsideration of the matter after due hearing being accorded to the appellant, and that it was a case where the Central Government with whom revision petition was filed ordered de novo determination of the issue.

5. However, on the date of hearing, when Shri D.N. Kohli appeared for the appellant and his attention was drawn to the plea as to violation of principles of natural justice, he categorically stated that he wanted the matter to be decided on merits and did not press the plea for de novo adjudication with reference to principles of natural justice.

6. The matter was accordingly heard when Shri D.N. Kohli, Consultant addressed detailed arguments for the appellant and the respondent was represented by Shri K.D. Tayal, Senior Departmental Representative.

Shri Kohli reiterated the arguments that the products manufactured by the appellant company were of different varieties; the common factor being only that they were all reinforcements of fibre glass and plastics with varying percentages, ranging from 5% to 39.5% so far as fibre glass was concerned, but he contended that plastics content in all cases was 50%. He also made reference to certain test reports which, according to him, bore out his contention that the glass fibre content in all of their products was less than 50% whereas resins content was greater and that in view of the fact that the legislature itself thought it fit to elucidate the matter by bringing in an amendment in the year 1979 and provided specifically that only manufactures consisting predominently of mineral fibre or yarn were to be classifiable under Tariff Entry 22F, it ought to be held that this intention was always there, and what the legislature did was only to make express what was already implied, and that for the same reason even the Trade Advice was issued by the Bombay Collectorate itself that articles which were glass fibre reinforced plastics did not come within the purview of Item 22F and were appropriately liable to excise duty under Item 15(2) as articles of Plastics. He accordingly pleaded that even the classification lists filed earlier under Tariff Item 68 were due to error and that even the Assistant Collector in a subsequent matter has taken note of the Trade Advice and bifurcated the demand and for the period subsequent to the trade notice, the same very goods had been treated to be falling under Item 15A(2) but because of the Order-in-Appeal, the goods of the date prior thereto have been continued to be held liable to excise duty under Item 22F(iv). He accordingly pleaded that it was a clear case where a uniform classification was called for and in view of the action of the Excise authorities themselves subsequently, in rectifying the classification, the goods of date prior thereof be also held to be not covered by Tariff Entry 22F.7. Shri K.D. Tayal controverted these arguments and urged that the amendment referred to by the learned Consultant, the Trade Notice and the later order of the Assistant Collector were all pertaining to the dates subsequent to the date of the classification list in dispute and that in view of the clear wording of Explanation (iv) of Tariff Entry 22-F, there was no escape. He further pointed out that the test reports relied upon by the learned Consultant were from samples drawn on dates subsequent to the period in dispute and could not be taken into consideration for the purpose of determining the classification for the previous period. He thus argued that goods have been rightly held by the Appellate Collector to be classifiable, so far as the year 1978 was concerned, under T.I. 22F.8. We have given our very careful thought to the matter and have gone through all the relevant material, particularly the classification list, the Order-in-Appeal, as well as the Order-in-Original and also the Trade Notice and test reports relied upon by the appellant. We find that there is no dispute about the fact that at the relevant time, Tariff Entry 22F was so worded that by virtue of Clause (iv) of the Explanation to this Entry 22F, all "manufactures containing minerals other than asbestos products" were to be deemed to be included in this Tariff Heading of the "Mineral Fibres or Yarn" and manufacture therefrom". It is also beyond the pale of controversy that all the products, contained some percentage or the other of glass fibre which is synonymous with the term 'mineral fibre'. The date of amendment which introduced test of predominance, is admittedly in the year 1979.

It is a known principle of interpretation of statutes that unless a retrospective operation is given to a statutory amendment, it takes effect from the date of introduction thereof. In the amending clause, there is no deeming provision that what was being said by way of amendment was, by any process of intendment, to be taken as having been always impliedly there. The result may be inequitous, that as contended by the appellant, the same type of goods were being classified under different headings, but the amendments are brought in only to remove the inequities and unless they are given a retrospective operation it cannot be said by process of inference that the period prior to the amendment ought also to be covered. The trade notices which are only by way of clarification of position, also take effect by way of guidelines for the concerned authorities from the date of issuance thereof and cannot override the plain wording of the statute, when they come to be interpreted by the Courts or Tribunals. We also find force in the contention of the learned Senior Departmental Representative that the test reports cover goods produced during the subsequent period and cannot be considered to be pertaining to the goods produced during the preceding year. Even the List relied upon by the appellant, copy whereof is at Page 38 of the file, reveals that glass fibre is the basic material for all these products, the majority of the goods have even their name after "fibre glass" as the certificates on Page 56 of the paper book as well as on Page 57, indicate. On these descriptions, the goods are to be treated as nothing but "manufactures of glass fibre" and because of unexceptional wording of the Explanation (iv), as it prevailed at the relevant time, there is no escape from the classification under Entry 22F of the CET. We do not, therefore, find any infirmity in the view taken by the Appellate Collector, and dismiss the appeal accordingly.

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