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Punj Sons P. Ltd. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)LC1928DTri(Delhi)
AppellantPunj Sons P. Ltd.
RespondentCollector of Central Excise
.....slagwool was a mineral fibre which did not occur naturally. in that sense, it was a man-made fibre. mineral fibres could be natural, such as asbestos, or man-made, such as glasswool, slagwcol etc. as regards the appellants' plea that no show cause notice was issued to them, he stated that the dd-2 was issued to the appellants on 14-5-73. they represented to the asstt. collector against it on 2-6-73 and 6-12-73. it was only after considering their objections that the asstt. collector passed the impugned order-in-original on 15-12-73. thus, they had been duly heard before the demand for duty was confirmed against them and there was no substance in their plea that principles of natural justice were violated.5. availing their right of reply, the appellants stated that the rule that.....
1. The short point involved in this appeal is whether Slagwool was classifiable under item 18 of the Central Excise Tariff which at the material time covered rayon and synthetic fibres and yarn.

2. The appellants are aggrieved against the demand for duty of Rs. 6,800/- in respect of the Slagwool cleared by them from 1-5-73 to 3-5-73. Slagwool was exempt from payment of duty by virtue of an exemption notification before 30-4-73. However, a fresh notification No. 115/73-C.E. issued on that date withdrew the earlier full exemption and laid down a concessional rate of duty for Slagwool. The appellants cleared some quantity of Slagwool from 1 -5-73 to 3-5-73 without payment of duty. The appellants' main plea is that Slagwool was not covered by the Tariff Entry No. 18 itself and the exemption notification No. 115/73-C.E. could not reverse this position. They were heard at length by us on 1-8-1983. They put forth their arguments as under:- (1) Slagwool is manufactured from the waste product called slag thrown away by the primary steel mills. The slag is mixed with fluxing agents like limestone and melted in a cupola with bard coke.

The molten mass is given a spin by a centrifugal by which process it takes the shape of a woolly substance called slagwool. There is no dispute that slagwool is not rayon fibre. The dispute is only whether it could be classified as synthetic fibre. The appellants maintained that slagwool was a natural mineral fibre. For this, they relied on Note 1 to Chapter 51 of the BTN which put slagwool under Chapter 68 as a mineral wool or mineral substance. The revised Customs Tariff also followed the BTN scheme. Even the Central Excise Tariff was later on amended and slagwool was put under a new item 22F as a mineral fibre. Tata Me. Graw Hill Dictionary listed slagwool as a natural fibre of mineral origin. The Complete Encyclopaedia of Textile Materials by Barve described slagwool as a synthetic mineral at one place, at another place the same publication described it as a patural fibre. This author was, therefore, not a reliable authority, asserted the appellants.

Synthetic materials were only those which were synthesised in a laboratory. Slagwool was, therefore, not a synthetic fibre as is clear from its input material and the process of manufacture.

(2) The appellants' attention was drawn to the definition of rayon and synthetic fibres and yarn contained in the Tariff entry itself according to which this entry was to be deemed to include inter alia, man-made fibres. They were asked to address their arguments as to why slagwool cannot be considered a man-made fibre. The appellants stated that the treatise "Man-made Fibres" by R.W. Moncrieff listed a large number of fibres but slagwool did not figure therein. Slagwool fibres were very small and brittle and could not be spun into yarn. For this reason, it could not be said to be belonging to the family of textiles.

(3) No show cause notice was issued to the appellants. Instead a DD2 demanding duty was issued to them straightaway.

3. We alse find from the records that the appellants submitted an affidavit on 8-2-1983, pursuant to a direction given by this Bench as then constituted, in which they stated that 34 M.T. of slagwool cleared by them from 1-5-73 to 3-5-73 included a quantity of 10.5. M.T. which attracted 'nil' duty before issue of notification No. 115/73-C.E. as it had been manufactured prior to 30-4-73. The appellants presumably meant that this quantity of 10.5 M.T. should not in any case be charged to duty as it was manufactured at a time when slagwool was fully exempt from duty. This point was however, not specifically put forth by the appellants before the reconstituted Bench on 1-8-83 when they argued the entire matter afresh.

4. The Department's representative stated that it was not open to the appellants to challenge the validity of notification No. 115/ for that would mean that the earlier notifications which gave full exemption to slagwool under tariff item 18, and which exemption the appellants enjoyed so long, were also invalid or redundant. Statutory provisions could not be inter preted in a manner so as to invalidate them or to defeat their purpose [1983 E.L.T. 947 (Madras) Kanpha Labs v. U.O.T.], [1983 E.L.T. 1017 (CEGAT) -Hercules Tyre and Rubber Industries v. C.C.E., Chandigarh]. He stated that the Central Excise Tariff did not follow he scheme of the BTN or the Customs Tariff Act.

It was not, therefore, correct to interpret the former in the light of what the latter said. It was also not correct to look to the technical books or dictionaries and ignore the plain meaning of the tariff expression on [1981 E.L.T. 325 (SC)]. In plain terms, 'synthetic' referred to something which did not occur naturally. Slagwool was a mineral fibre which did not occur naturally. In that sense, it was a man-made fibre. Mineral fibres could be natural, such as asbestos, or man-made, such as glasswool, slagwcol etc. As regards the appellants' plea that no show cause notice was issued to them, he stated that the DD-2 was issued to the appellants on 14-5-73. They represented to the Asstt. Collector against it on 2-6-73 and 6-12-73. It was only after considering their objections that the Asstt. Collector passed the impugned Order-in-Original on 15-12-73. Thus, they had been duly heard before the demand for duty was confirmed against them and there was no substance in their plea that principles of natural justice were violated.

5. Availing their right of reply, the appellants stated that the rule that words and expressions used in fiscal statutes should be interpreted as understood in common parlance was not all pervasive and resort could be had to technical books and dictionaries for interpreting scientific terms and expressions [1982 E.L.T. 917 (Bom.)].

6. We have given our earnest consideration to the matter. The appellants have a point when they say that slagwool cannot be called a synthetic fibre because it is not produced by any chemical synthesis.

But they overlook the point that the tariff entry itself gives an inclusive definition whereby man-made fibres are deemed to be synthetic fibres and further that the entry does riot say that man-made fibres included therein are restricted to those of chemical origin or to those used in textile industry for spinning of yarn. As regards its meaning, the expression 'man-made fibre' is a simple expression quite capable of being understood without resort to technical books or dictionaries.

Construed in plain terms, it means fibres which do not occur naturally but which are made by man, i.e., other than natural fibres. Examples of natural fibres are cotton, jute, wool etc. which are either grown as a commercial crop or occur on the skin of animals. Slagwool cannot be called a natural fibre in that sense. No doubt, it is a mineral fibre.

But, as rightly pointed out by the Department's representative, mineral fibres can be both natural as well as man made. Asbestos is a natural mineral fibre as it occurs naturally and is simply to be mined or extracted. On the other hand, slagwool and glasswool are man-made mineral fibres because they do not occur naturally and they have to be manufactured by man in factories. The appellants have pointed out that the list of man-made fibres compiled by R.W. Moncrieff does not include slagwool. It may be so. This particular author, as we see from his compilation, is described as a pioneer in the weaving of artificial fibres. The word "weaving" suggests that the author was connected with textile industry and he has evidently compiled his list in the context of that industry. The appellants have stated that slagwool fibres are very small and brittle and cannot be spun into yarn. They claim their product as suitable for use in thermal insulation only. It is, therefore, quite possible that Mr. R.W. Moncrieff did not list slagwool in his compilation because it does not find use as a textile material.

But that would not mean that slagwool is not a man-made fibre. We find from the record that the appellants themselves describe slagwool as a fibre. Again, as pointed out by the appellants, item 22-F of the Central Excise Tariff, as it now stands, also categorises slagwool as a mineral fibre. Thus, there is no dispute that slagwool is a fibre. As we have discussed earlier, since it is manufactured in factories, there is no doubt that it is a man-made fibre and not a natural fibre. Once we reach this conclusion, the inclusive definition of the tariff entry would squarely include man-made fibres in the category of synthetic fibres. Since there is no stipulation in the tariff entry as to the use to which man-made fibres should be capable of being put, the fact that slagwool is usable only for thermal insulation and not for spinning of yarn will, not stand in its way of being classified under tariff entry 7. As regards the appellants, objection that no show cause notice was issued to them, we agree with the Department's representative that they were duly heard before the impugned Order-in-Original confirming the demand was passed by the Asstt. Collector. There was thus no breach of principles of natural justice.

8. Finally, in so far as the appellants' claim regarding exemption of the pre-duty quantity of 10.5 M.T. is concerned, we find that in view of the authorities mentioned below it is now well established that, according to Rule 9-A of the Central Excise Rules, 1944, it is the rate of duty applicable on the date of removal of the goods which applies in a case of the type as in the present appeal and not the rate in force on the date of manufacture of the goods: -

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