Bal Raj Tuli, J.
1. The judgment will dispose of Civil Writ No. 2856 of 1970, Ajay Enterprises v. The Superintendent of Central Excise and Ors. and 2857 of 1970, Lee la Devi Tapuriah v. The Superintendent, Central Excise and Ors., as common questions of law and facts arise in both these petitions.
2. Ajay Enterprises are the manufacturers of rotors, while Leela Devi Tapuriah manufactures stators. The rotors and stators are parts of the electric motors, which are used in the electric fans. The petitioners took licences for the manufacture of these parts in January, 1970, but did not comply with the rules contained in Chapter V1I-A of the Central Excise Rules, 1944 (hereinafter called the Rules), particularly Rule 173-B with the result that the factories of the petitioners were raided on August 7, 1970, in order to find out the articles which were being manufactured by them. The raid was organised by respondents 2, 3 and 4. On August 20, 1970 respondent no. 1 issued a letter to the petitioners stating that they were manufacturing, processing and clearing excisable goods and directed them to submit a list in Form 1 under Rule 173-B of the Rules and to explain the reasons for alleged non-compliance of the said Rules. The petitioners were also directed to submit a return under Rule 173-G of the Rules. In reply to that letter, the petitioners informed respondent no. 1 that they did not manufacture or produce any excisable goods and were not liable to submit any particulars under Rule 173-B of the Rules. They also denied their liability to submit any return under Rule 173-G on the ground that they were not manufacturing any excisable goods. This plea of the petitioners did not prevail with respondent no. 1 and on August 29, 1970, respondent no. 2 issued an order directing the petitioners to inform him about the prices of rotors and stators being manufactured by them. The petitioners denied that they were manufacturing those goods by letter dated September 1, 1970. On the same date respondent no. 1 passed an order that the rotors and stators being manufactured by the petitioners were exciseable under item 30 in the First Schedule to the Central Excises and Salt Act, 1944. The petitioners then filed the present petitions on the ground that the goods manufactured by them were not excisable goods under that item.
3. Written statements have been filed by the respondents and to those written statements the petitioners have filed replications.
4. One of the points raised in the petitions is that the petitioners are not the manufacturers of rotors and stators, which are parts of the electric motors used in electric fans, but they only perform a part of the process in the manufacture of those goods. The stand of the respondents is that the petitioners are the manufacturers of rotors and stators and it is incorrect that they only perform a part of the process of manufacture. It is quite evident that there is a dispute with regard to the nature of the goods being manufactured by the petitioners and it is a matter which is within the jurisdiction of the departmental authorities to determine in the first instance. This Court cannot determine that matter in a petition under Article 226 of the Constitution. The learned Counsel for the petitioners, therefore, argued the case on the basis that the petitioners were manufacturing complete rotors and stators, but his submission is that these goods are exempt from the payment of excise duty. Reliance is placed on item No. 33 in the First Schedule to the Central Excises and Salt Act, 1944, and it is submitted that item No. 30 of that Schedule has no applicability. Item No. 33, before its amendment with effect from April 1, 1969 read as follows:
_____________________________________________________________________Description of goods Rates of duty______________________________________________________________________Electric fans, including air circulators but excluding those which are designedfor use in an industrial system as partsindispensable for its operation andhave been given for that purpose somespecial shape or quality which wouldnot be essential for their use for anyother purpose, parts of such electric fans-(1) Table, cabin, carriage, pedestal and Seven rupees & fifty air circulator fans, not exceeding naye paise per fan.40.6 centimetres. (2) All other fans. Fifteen rupees per fan.(3) Parts of fans above, the following namely, complete motors, statorsand rotors-(a) if designed for use in respect ofany fan falling within sub-item(1)(i) Complete motors. Five rupees and twenty-five naye paise per motor.(ii) Stators. Two rupees and sixty-five naye paise per sta-tors.(iii) Rotors. Two rupees and sixty-five naye paise per rotor.(b) If designed for use in respect ofany fan falling within sub-item(2)-(i) Complete motors. Ten rupees and fiftynaye paise per motor.(ii) Stators. Five rupees and twenty-five naye paise perstator.(iii) Rotors. Five rupees and twenty-five naye paise per rotor.____________________________________________________________________________________
With effect from April 1, 1969, this item was amended to read as under:-
___________________________________________________________________________________Description of goods Rate of duty____________________________________________________________________________________Electric fans, including air circulatorsbut excluding those which are designedfor use in an industrial system as partsindispensable for its operation and havebeen given for that purpose some spe-cial shape or quality which would notbe essential for their use for any otherpurpose.(i) Table, cabin, carriage, pedestal and Six Percentair circulator fans, not exceeding ad volerem40.6 centimetres.(2) All other fans. Eight and a half per cent ad valo-rem.___________________________________________________________________________________
5. The learned Counsel on the basis of the amended item 33 submits that the parts of electric fans have been completely exempted from the payment of excise duty. The case of the respondents, on the other hand, is that the amendment has only rationalised excisable goods under item 30 and 33. Previous to amendment the excise duty payable was per piece under item 33, while under item 30 the excise duty payable was on ad valorem basis The purpose of the amendment was to levy excise duty on the electric fans under item 33 also on ad valorem basis and, therefore, Clause (iii) of that item had become redundant in view of Clause (iv) in item 30, which related to all kinds of electric motors. Reference has been made to Notes on clauses of the Finance Act, 1969, whereby this amendment was made. Sub-clause (xxiv) relates to the amendment of item 33 and in the Notes on Clauses it is mentioned-
Sub-clause (xxiv) seeks to change the assessment of electric fans to ad valorem basis and to omit parts of electric fans from the item relating to electric fans.
Reference has also been made to the speech of the Deputy Prime Minister, who was also the Minister of Finance, with regard to this item. The extract from his speech concerning this item is as under :
Coming to excise duties, it is now generally recognised that ad valorem duties are more rational than specific duties whose incidence declines during periods of rising prices and increases when prices fall. Ad valorem duties can also act as a spur to reduction in costs and prices. J propose, therefore, to convert the existing specific rates into ad valorem rates for cement, vegetable products, electric fans, lighting bulbs and tubes, soaps, soda ash, caustic soda and sodium silicate. Despite the necessity of rounding, 1 have resisted the temptation of collecting in the process any appreciable crumps for the exchequer.
6. On behalf of the respondents, the extracts from the office notings have been produced to show that the purpose of the amendment was to recover the duty on the parts of electric motors under item 30 (iv) and not to exempt them from the payment of excise duty as is contended for by the petitioners. I am afraid, these office notings cannot be referred to determine the scope of the amendment and the matter has to be decided Ion the basis of the amendment made and in order to properly interpret [the amendment a reference can be made to the Notes on clauses.
7. After carefully considering the two items, that is, items 30 and 33 before amendment, I am of the opinion that item 33 referred to electric fans and their parts including the electric motors and their parts used in the manufacture of fans. A specific provision had to be made for them because the duty was being imposed on per piece basis and not on ad valorem basis. The electric motors used in electric fans were also covered under item 30 (iv) but under that clause the duty payable was on ad valorem basis. A special provision was, therefore, made in item 33 (iii) with regard to electric motors and their parts used in the manufacture of electric fans. Once it was decided to levy the duty on electric fans and their parts on ad valorem basis, the retention of item 33 (iii) was unnecessary. The excise duty on the parts of electric motors used in the manufacture of electric fans would be) charged under item 30 (iv). The note on Sub-clause (xxiv) relating to this amendment also shows that the parts of electric fans were omitted from the item relating to electric fans and were not exempted from the payment of excise duty under any other item if they fall under it. The amendment,] therefore, does not have the effect of exempting the parts of electric motors from the payment of excise duty under item 30 (iv).
8. On behalf of the respondents, it has been vehemently argued that the petitioners should have exhausted the remedies provided under the Act before filing the present petitions in this Court as it is within the jurisdiction of the departmental authorities to determine under which item the excisable goods fall and whether they are excisable or not. The petitioners should have placed the entire matter before the departmental authorities and if the decision by the first authority was against them, they could have gone up in further appeals and revisions so that the facts could have been thrashed out, particularly when it is alleged that they do not manufacture the stators and rotors in entirety and only perform some of the processes thereon. In reply to this submission, the learned Counsel for the petitioners has submitted that the petitioners were entitled to file the petitions because their case is that the goods manufactured by them are not at all excisable under any item of the schedule to the Act. I have, therefore, considered the matter whether the rotors and stators being manufactured by the petitioners are excisable under item 30 (iv) on the hypothesis that the petitioners manufacture these parts.
9. The learned Counsel for the petitioners has then argued that in case the petitioners are required to pay the excise duty on the rotors and stators manufactured by them, these goods will suffer double taxation when the electric fans, in which these parts are used, are sold by the manufacturers of the fans, because each electric fan as a unit is assessable to excise duty under item 33. This argument is of no avail to the petitioners because the manufacturers of electric fans in which the rotors and stators manufactured by the petitioners are used, may be able to get the adjustment of the duty paid by the petitioners towards the excise duty due from them. A provision to that effect exists in the Rules. That is no ground for the petitioners to urge that the excise duty should not be recovered from them because the goods manufactured by them are to be used by the manufacturers of electric fans and the electric fans so manufactured will suffer duty.
10. No other matter has been argued before me and, therefore, I have not dealt with any other matter raised in the petitions but not argued at the hearing. It will be open to the petitioners to urge any other points before the departmental authorities in appropriate proceedings.
11. For the reasons given above, these petitions are dismissed with costs. Counsel's fee Rs. 200/- in each writ petition.