1. This matter which was a revision petition before the Government of India directed against the Order-in-Appeal No. 951/78 dated 17-6-1978 passed by the Collector of Customs & Central Excise, Madras, is now before us as an appeal having been received by transfer to the Tribunal under Section 35P of the Central Excises a id Salt Act, 1944, and is being taken up for disposal as such. It first came up before the Bench on 29th July, 1983.
2. Shri K.K. Kapoor, Consultant appeared for the appellants whereas Department was represented by Shri Hem Prakash, JDR. It was observed that the only controversy raised before the lower authorities by the appellants, was as to entitlement to the benefit of exemption Notifications; being Notifications Nos. 54/75-C.E., dated 1-3-1975 and No. 105/76-C.E., dated 16-3-1976. Both these Notifications have reference to the number of workers employed in a factory during a particular period and in order to get the benefit thereof, the manufacturers had to establish that the number of workers employed with them did not exceed 49.
3. The controversy related to the period covered by the assessment years 1975-76 and 1976-77 and it was confined to the question as to whether certain categories of persons employed in the appellant's unit could be treated as "workers" for the purpose of the aforesaid two Notifications. Whereas the appellants contended that the two despatchers, one carpenter and one cartman could not be deemed to be a worker so as to connect them with the manufacture of "excisable goods", the Department held otherwise, and finally by means of the impugned Order-in-Appeal passed on 17-6-1978, the learned Appellate Collector came to the finding that so far as the period 1975-76 was concerned, the number of workers employed in the appellant's factory certainly exceeded 49 and to that extent the appeal was dismissed wholly relating to said period. However, so far as the period 1976-77 was concerned, it was split up so as to hold that for the period April, 1976 to October, 1976, it was again clear that the number of workers employed exceeded 49 and so the appellants were held not entitled to exemption, but position in relation to the whole of the financial year April, 1976 to March, 1977 was held to be not beyond doubt, and it was thus directed that Superintendent will examine the question of eligibility of the appellants for exemption during the period November, 1976 to March, 1977 de novo, with reference to the workers actually employed during the related period.
4. The Appellants in the grounds of appeal had agitated again the same question, namely that the lower authorities had erred in holding the despatcher, or the carpenter or the cartman to be 'workers', and that if these four persons were to be excluded, then the number of workers would remain below 49 during the entire period in dispute so as to make them eligible for the benefit of Exemption Notifications. However, at the time of hearing, the learned Consultant sought permission to raise another point which, according to him, could not be urged at the time the matter was being fought out before the lower authorities; but this issue, according to him, was entirely on point of law, and would not entail any fresh appreciation of facts, and that in view of the judgment of Gujarat High Court in Darshan Hosiery Works v. Union of India, 1980 ELT 390 (Guj.) which was delivered on 11-4-1980, these goods which the appellant was manufacturing, could not at all be taken to fall under Tariff Heading 68, and in case this plea is allowed then the question of considering the benefit of Exemption Notifications, according to him, would not arise. Since the learned Departmental Representative expressed reservation, to this point being raised at this stage, it was thought appropriate to give short adjournment to enable the learned Consultant to look up the legal position in this regard, and hence the appeal was adjourned and fixed for today.
5. After hearing Shri Kapoor on this preliminary point for a short while, and after going through the Order-in-Original as well as the notice to show cause, it was observed that there is no dispute on the question of fact, namely, as to the nature of goods being manufactured by the appellants because these are described in the Order-in-original itself as "hosiery garments". That being so, and finding that no further evidence on facts would be required in order to appreciate the arguments of the appellant which is now sought to be raised, we decided to allow this plea being taken up, because we felt that any ground based purely on point of law can be urged at any stage. We accordingly called upon Shri Kapoor to first address arguments on this aspect.
6. Shri K.K. Kapoor, at the outset, invited attention to the observation in the notice to show cause as well as in the orders where the appellants are throughout described as "manufacturers of hosiery garments". He stated, that the items being produced by them are 'Jangias' and 'Banians', and that the appellants had staked their claim to the exemption based on the two Notifications relatable to the number of workers on the assumption, which was then prevailing uniformly, that these articles of hosiery having been excluded from the scope of Tariff Entry 22D of the C.E.T., would automatically go to the Residuary Item 68, and that on this assumption, the appellants had claimed benefit of the Exemption Notifications. He pleaded that this was a wrong assumption on everybody's part, and that the matter has been set at rest by the Gujarat High Court in the case of Darshan Hosiery Works v.Union of India reported in 1980 E.L.T. 390 (Guj.) where their Lordships held that any goods which have reference in any of the specific tariif entry, even by way of exclusion, has to be treated to be article, as specified in the C.E.T., with the result that once an articles finds mention in any context in any Tariff Entry, it cannot be taken to the Residuary Item 68, which covers the goods: "not elsewhere specified".
7. This reported case has pointed reference to the same items, namely, 'Banians' and 'Jangias' and it was held that since "articles of hosiery" were statutorily exempt from excise duty under Item 22D of the C.E.T., they would not attract any other provision of the said Tariff, and so the general residuary provision of 68 would not apply. The learned consultant, therefore, argued that this judgment having placed the matter beyond all doubt, and having laid down that once the goods find reference under any Tariff Heading, even though by way of exclusion, they have to be treated to be covered by that tariff entry, and then the intention cannot be negated by taking them to the Residuary Item 68. The learned Consultant also stated that this view of the Gujarat High Court has been accepted by the Government so much so that an amendment had to be introduced by way of an Explanation to Tariff Item 68 by means of Finance Act, 1980 which, of course, would not have retrospective operation but it made it clear that the view expressed in the judgment was not challenged in any manner, and only solution sought or action taken was to make an amendment for future purposes.
8. When asked, the learned Departmental Representative did not controvert this position, namely, that this judgment was not taken up in appeal nor was there any other judgment to the contrary. He only sought to get out of this situation by urging that what was excluded from Tariff Entry 22D was "articles of hosiery" whereas what was being manufactured by the appellant were 'hosiery garments', which, according to him, were distinct from 'articles of hosiery'.
9. We do not feel impressed with this subtle distinction brought out by the learned Departmental Representative, particularly when we find that what was before the Gujarat High Court were the very same items, namely, 'Jangias' and 'Banians' which are the items being manufactured by the appellant. We, therefore, are of the considered view that on the authority of the Gujarat High Court judgment, it will not be possible to treat these hosiery garments to be goods covered by Tariff Item 68 during the period prior to the amendment to this Tariff Entry by Finance Act, 1980. That being so, the goods will have to be taken as statutorily exempt from tariff, having been excluded from Entry 22D, and not being covered under any other Tariff Heading. Any other question regarding their entitlement to exemption from excisability would not, therefore, survive. We, therefore, think it a fit case to allow the appeal on the short ground that the goods are exempt from excise duty, having been excluded as articles of hosiery, from Tariff Item 22D, and appellants do not have to have recourse to any other Exemption Notification. The appeal is accordingly allowed, with all consequential relief by way of refund whatever may fall due to them.