1. The only question which has been argued in this petition is whether Beta Naphthol is excisable under Item 14D of the Central Excise Tariff or under Item 68. The petitioners who are manufacturers of various chemicals and dyes including dye-intermediates and dye-stuffs were up to November 1969 importing Beta Naphthol. They started the manufacture of Beta Naphthol in November 1969 and when a question arose as to under what tariff item the said product fell, the Assistant Collector of Central Excise, Kalyan Division, informed the Petitioners by a Communication dated 24th September, 1971 that Beta Naphthol was excisable under Item 14D of the Central Excise. Item 14D of the Central Excise Tariff reads as follows :-
'Synthetic organic dyestuffs (including pigment dyestuffs) and synthetic organic derivatives used in any dyeing process.'
This view of the Assistant Collector was challenged by the petitioners by an appeal which came to be decided by the Appellate Collector, Central Excise, on 27th December, 1974. The Appellate Collector also took the view that Beta Naphthol fell within the scope of Item 14D even though it was also used as an intermediate in synthetic organic derivatives. He, however, accepted the contention raised on behalf of the manufacturers that Beta Naphthol obtained in the continuous manufacturing process of Bon Acid in liquid form and utilised at a temperature of about 120 degree C cannot be treated as Beta Naphthol which is marketable and known to the trader as such. The Appellate Collector, therefore, held :-
'I, therefore, hold that 'Beta Naphthol' in liquid form used by the appellants in the manufacture of Bon Acid does not fall within the scope of Item 14D of the said schedule. This however, does not apply to 'Beta Naphthol' cleared by the appellants in the form of flakes.'
With the latter part of the finding the petitioners were aggrieved and they filed a revision application before the union Government. The Union Government sought to suo motu revise the finding of the Appellate Collector in so far as the other finding was concerned that Beta Naphthol in liquid form used by the petitioners in the manufacture of Bon Acid did not fall within the scope of Item 14D of the Schedule.
2. The suo motu proceedings and the revision filed by the petitioners came to be decided by a common order under the signature of the Joint Secretary to the Government of India. The Union of India took the view that Beta Naphthol in the liquid form and used for captive consumption cannot be treated as outside the purview of Item 14D and it found that once Beta Naphthol is manufactured, it attracts duty whether it was liquid or solid. Consequently the order passed by the Assistant Collector was confirmed and the order in appeal passed by the Appellate Collector was modified to the effect that Beta Naphthol in liquid form used in the manufacture of Bon Acid was held to fall under Item 14D. Thus the revision application filed by the petitioners came to be rejected. This view of the Union Government is now challenged in this petition.
3. It appears that it is wholly unnecessary for us to go into the details of the controversy as to whether Beta Naphthol is excisable under Tariff Item 14D or under Tariff Item 68 because it appears that the Department itself has now accepted the fact that Beta Naphthol is assessable to duty under Item 68 of the Central Excise Tariff and not under Item 14D. The petitioners have now filed a supplementary affidavit in which they have referred to the proceedings of the Conference of the Collectors of Central Excise, West Zone, held at Bombay on 13/14th March, 1978 in which it was accepted by the Collectors that Beta Naphthol will be classified under Item No. 68. The petitioners have also stated that since 24th July, 1978, the Excise Department at Kalyan is finally assessing Beta Naphthol under Item 68 and it is recovering duty from the petitioners on the basis that Beta Naphthol is a dye intermediate falling under Item 68 and the petitioners were accordingly paying the duty on flakes at the rates applicable under Item 68 from time to time. The petitioners also produced trade notice to the effect that Beta Naphthol would be assessable to duty under Item 68 of the Central Excise Tariff and not under Item 14D. Such trade notices have been issued by several Collectors of Central Excise such as Madras, Ahmedabad, Madurai, Chandigarh, Delhi, Calcutta, Baroda, Poona, Bombay, etc.
4. It, therefore, now seems to be the accepted position even on the part of the Department that Beta Naphthol is excisable under Tariff Item 68 and not under Item 14D. That this is the correct position and has been so accepted by the Department is not disputed by Mr. Tipnis appearing on behalf of the respondents. If the Department has now accepted the contention of the petitioners that Beta Naphthol is not excisable under Tariff Item 14D, then it is really for the Department to sustain the earlier view that it was so excisable under tariff item 14D. Thus the learned Counsel for the respondents has found impossible to do in the face of the view which is taken by the Department itself in the subsequent trade notices. No justification is, therefore, available to the Department for treating Beta Naphthol differently at earlier points of time, as has been done by the Union of India and the Assistant Collector and the Collector of Customs.
5. On the view taken subsequently by the Department itself, we must quash the decision of the Union of India, the Appellate Collector of Customs and the Assistant Collector who had taken the view that Beta Naphthol was excisable under Tariff Item 14D. We must also consequently quash the demand notice issued on 27th August, 1976 which is made on the footing that Beta Naphthol was excisable under Tariff Item 14D. Consequently the petitioners should be entitled to the refund of such duty as has been recovered from them on the footing that Beta Naphthol was excisable under Item 14D. The petitioners to get the costs of this petition.