P Govindan Nair, C.J.
1. The question raised by the six petitioners herein, who are all engaged in the business of manufacturing or producing plywood, is whether the goods produced by them, which were admittedly chargeable to the duty of excise, should be classified as falling under Clause (I) of item 16B tothe First Schedule to the Central Excises and Salt Act, 1944 (in short the Act), or whether those foods should be classified under Clause (ii) of item 16B to the First Schedule to the Act. The complaint, briefly stated, is that the goods in question have been classified as falling under both those items, one for the purpose of applying the rate of duty and the other for the purpose of applying the tariff value fixed for the goods. We shall explain this aspect by reference to Section 3(2) and the third column in the First Schedule to the Act, the charging Section 3(1), the power of exemption under Rule 8 of Chapter III of the Central Excise Rules, 1944, dealing with levy and refund of and exemption from duty.
2. The charging section is Section 3(1) which is in these terms :
'There shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in India and a duty on salt manufactured in, or imported by land into, any part of India as, and at the rates, set forth in the First Schedule'.
3. The First Schedule referred to in the above sub-section deals with various items and those items are described in column 2 and the rates of duty for such items are specified in column 3. We are only concerned in this petition with item 16B, which we shall extract in full.
'Item No. Description of Goods Rate of duty
16B Plywood, Blackboard, Laminboard,
Batternboard, Hard or Soft Wall
Boards or Insulating Board and
Veneered Panels: Whether or not
containing any material other than
wood; cellular wood panels; milding
boards of wood pulp or of vegetable
fibre, whether of not bonded with
natural or artificial resins or with
similar binders; and artificial or
reconstituted wood being wood shavings,
wood ships, saw dust, wood flour or
other lingneons waste agglomerated with
natural or artificial beings or other
organic binding substances in sheets,
blocks, boards or the like
(i) plyood for tea-chests when cut to size
in panels or shocks and packed in sets.
(ii) All others Fifteen per
cent ad valorem.'
4. The rate of duty specified in the 3rd column of the, First Schedule is subject to alteration by virtue of the power conferred on the Central Government under Rule 8(1) and on the Central Board of Revenue in exercise of the limited power under Rule 8(2) in Chapter III of the Rules already referred to. We shall extract these rules as well.
''8. Power to authorise exemption from duty in special cases.-(1). The Central Government may time to time,, by notification in the Official Gazette, exempt subject to such conditions as may be specified in the notifiation any excisable goods from whole or any part of duty leviable on such goods.
(2) The Central Board of Revenue may by special order in each case exempt from the payment of duty, under circumstances of unexceptional nature any excisable goods'.
The rate of duty alone is not sufficient for quantifying the amount of duty payable by a person liable to charge of duty under the Act. Section 3(2) has therefore provided for the fixation of tariff value. It is necessary to read that sub-section as well as the next sub-section.
'3. (2) The Central Government may, by notification in the Official Gazette, fix for the purpose of levying the said duties, tariff values of any articles enumerated, either specifically or under general headings, in the First Schedule as chargeable with duty ad valorem and may alter any tariff values for the time being in force.
(3) Different tariff values may be fixed for different classes or descriptions of the same article'.
We may pause here to mention that values have to be fixed for the articles enumerated in the First Schedule. Such enumeration may be specific or may be under general headings. If it is under the general headings it appears to us that Sub-Section (3) of the Section will have to be applied because there may be different classes or descriptions of the same articles. In regard to articles which are clearly specified in the First Schedule, specific valuation will have to be fixed. That is how the provisions have been understood by the Central Government, is evident from the two notifications, one bearing No. 148/1973 produced as Ext. P12 along with the reply affidavit filed by the petitioners and the other No. 91 of the year 1975, Ext. P3. produced along with the petition. In order to make matters clear we will also refer to the relevant parts of the notifications. The table given in Ext P12 runs thus:
SI. No. Description Tariff value in rupees per
(1) (2) (3)
1. Commercial Plywood -
(a) In area 5,625 square centimetres 3.50 (where the thickness
or less is 4 millimetre
(b) in area exceeding 5,625 square 5.35 (where the thickness
centimetres. is 4 millimetres)
2. Plywood for tea chests 5.20
3. Non-decorative hardboards -
(a) Plain surface standard hard 3.80 (where the thickness
Boards is 3 millimetres)
(b) Embossed bardboards 5.95 (where the thickness
is 3 Millimetres)
(c) Oil tempered hardboards 6.70 (where the thickness
is 3 millimetres)
4. Insulation boards made from Bagasse, 10.55 (where the thickness
straw, jute waste or jute stricks is 12 millimetres)
5. Insulation boards made from wood 1.60 (where the thickness
wool is 4 millimetres)
Similar is the table in Ext P3 notification No. 91/1975
SI. Description No. Tariff value in rupees per
(1) (2) (3)
1. Commercial Plywood-
(a) in area 5,625 square centimetres 6.00 (where the thickness
or less; is 4 millimetres)
(b) in area exceeding 5,625 square 8.50 (where the
centimetres thickness is 4 millimetres)
2. Plywood for the tea chests when cutto size in
panels or shooks and packed in sets 7.50
3. Non-decorative hardboards-
(a) Plain surface standard hardboards 6.25 (where the thickness is 3
(b) Embossed hardboards 9.25 (where the thickness is 3
(c) Oil-tempered bardboards 9.00 (where the thickness is 3
4. Insulation on board made from bagasse,
straw, Jute waste or jute stricks,
plain in natural colour. 15.40 (where the thickness is 12
5. Insulation boards made from wood wool. 3.00 (where the thickness is 4
5. It will be seen from these tables that 'plywood for tea chests' is treated different from commercial plywood; the former being charged at tariff value of Rs. 5.20 per square metre and the latter, commercial plywood, being charged at the rate of Rs. 3.50 per square metre, when the area is less than 5,625 square centimetres and at Rs 5.35 when the area exceeds 5,625 square centimetres. The values have been charged-actually enhanced by Ext. P3 notification No. 91/1935-but the pattern is the same, though the latter notification is more precise in dealing with plywood for tea chests, and the description in this notification, of plywood for tea chests, is the same as that in column (2) item 108(1) of the schedule. The description in the latter notification specifically mentions 'plywood for tea chest when cut to size in pannels or shooks and packed in sets'. This is the next description in item 10B (i) of the Schedule.
6. The tariff value of an item or a sub-item in the Schedule, having been fixed, normally the rate of duty in column (3) of the Schedule would have to be applied, unless exempted by a notification under Rule 8(1) of the Rules, by the Central Government. There has been a notification issued under Rule 8(1) by the Central Government in regard to 'plywood for tea chests'. This, notification is Ext P1 and serial number 1 is described as'plywood tea chests, and the extent of exemption under column 3 of the notification is 'duty in excess of 7 1/2 per cent ad valorem.' There has been a subsequent Notification No. 189/72 dated 26th August, 1972 by which the description in serial number 1, we just now read, has been altered and for the words 'plywood for tea chests', the words 'plywood for tea chests when cut to size in panels or shooks and packed in sets' were substituted. We do not think Ext. P2 notification altered Ext. P1 notification as regards the item 'plywood for tea chests' described therein. Ext. P2 notification is only a clarification. By Ext. P2 the words used in item 16B(i) of the Schedule have been fully adopted in the notification of exemption. This not only clarifies Ext. P1, but also indicates clearly what was meant by 'plywood for the chests' in serial number 1 of Ext. P1 notification.
7. Having looked at the provisions which are necessary for determining the duty on the articles which are manufactured or produced by the petitioners, which is admitted to be plywood and plywood alone, and nothing else, one would have thought that the matter is simple and all that was required was to decide whether the goods produced by the petitioners fell under item 16B(i) or under l6B(ii) of the First Schedule; the question which we posed at the beginning of the judgment. But unfortunately the determination of duty has given rise to a good deal of complications and the appeals taken against the modifications made to the lists filed by the petitioners in accordance with Rule 173B,' by exercise of the power under Section 173B(2), turned futile. We shall read Rule 173B(1) and (2);
'173B. Assessee to file fist of goods for approval of the proper officer.-(1) Before removing any excisable goods, every assessee shall file with proper Officer for approval a list in such form as the collector may direct, in quadruplicate, showing :-
(a) the full description, of (i) and all excisable goods produced or manufactured by him (ii) all other goods produced or manufactured by him and intended to be removed from his factory, and (iii) all the excisable goods already deposited or likely to be1 deposited from time to time without payment of duty in his warehouse;
(b) the item number and sub-item, if any, of the First Schedule to the Act under which each such goods fall;
(c) the rate of duty leviable on each such goods; and
(d) such other particulars as the Collector may direct.
(2) The proper Officer shall, after such inquiry as he deems fit, approve the list with such modifications as are considered necessary and return one copy of the approved list to the assessee who shall, unless otherwise directed by the proper Officer, determine, the duty payable on the goods, intended to be removed in accordance with such list.'
8. The list filed by the petitioners were modified by the 1st respondent and the modifications are evidenced by Ext. P5 series, produced along with the petition. It is necessary to refer to the first item, serial number 1 in Ext. P5(a).
1 2 3 4 4a 5 6
1. Plywood for 16B(i) 17 1/2 per cent of the 10 per cent Notification
tea chests tariff value of Rs. 5.20 of basic 16/68 as
when cut to per square metre duty as per amended by
size in (tariff value Rs 5.20 notification notification
1 2 3 4 4a 5 6
panels or shocks per square metre No. 55/74, No. 189/72,
and packed in where the thickness in dated 1st dated 26th
sets (not 4 mm fixed as per March, August,
approved notification No. 148/ 1974. 1972.
by ISI). 73 dated 21st July,
1973, in case the
clearance are direct
to tea factories other-
wise the plywood for
tea chest shall be
classified under 16B(ii)
and appropriate rate
of duty thereof
but tariff value fixed
for tea chest shall be
adopted for assess ment purpose.
9. The other exhibits in the series have followed the same pattern. When we look at the entry under column 4 we find that the tariff value of Rs. 5.20 fixed for the goods described as 'Plywood for tea chests' in Ext. P-12 notification under Section 3(2) was to apply 'in case the clearance are direct to tea factories'. In such cases the duty was to be 7 1/2 per cent, in accordance apparently with the notification issued under Rule 8(1) by the Central Government, which is Ext. P1. The insistence that for the particular commodity of goods the rate of duty prescribed by the Schedule and exempted by Ext. P1 would apply only in case the clearance is direct to tea factories is an addition made by the 1st respondent apparently under instructions from the Board of Revenue. The duty of excise is a duty on production or manufacture. Normally the destination of the goods or the persons who buy it or the use to which such goods are put by the purchaser are not material in determining the duty. Whatever that be, the Act and the Schedule to the Act, and the relevant statutory notifications fixing the tariff value, and granting exemption have not attached any importance to the destination of the goods. The only question that can arise therefore is whether the goods produced are identifiable and could be classified as falling under item 16B(i). We think, therefore, the addition of the words 'in case the clearance are direct to tea factories' is quite unjustified. When we consider the further statements under column 4 it appears to us that the provisions of the Act and the Rules have been forgotten and a method has been adopted which is opposed to the scheme and the provisions of the Act and the Rules and notifications. What is stated is that in case the clearance are not. direct to tea factories the 'plywood for tea chests' shall be classified under item 16B(ii), i.e. 'any other''; necessarily any other plywood. Having said so, it is further stated that the duty will be duty applicable to goods that will fall under item 16B(ii). Apart from the fact that a classification based on the destination of the goods is thoroughly unwarranted, having brought the goods by what we may call 'the destination principle' under item 16B(ii) to state this was only for the purpose of the 'appropriate rate of duty' but 'tariff value fixed for tea chest shall be adopted for assessment purposes' would be the adoption of a procedure not sanctioned by the Act and the Rules and the notifications. The scheme of the Act and the provisions in the charging section and the purport of the levy and the destination sought to be made in relation to various goods in the case of imposition of excise duty and the different rates of duty prescribed fordifferent classes of goods and different tariff value for different items' will have to be borne in mind. There cannot be a case where specified goods come under two items in the Schedule. Item 16B(i) is a specified item. Either the goods will fall under that or not. If the goods do not fall under item 16B(i), then the goods will have to fall under item 16B(ii) and that for both purposes of tariff value and rate of duty. To treat plywood for tea chests as coming under item 16B(i) by applying the 'destination principled itself is wrong and having brought it under item 16B(ii) to apply 'the tariff value for plywood for tea chests ' would be to treat the particular goods as falling under both sub-clauses of item 16B. What has been done is to classify the goods claimed by the petitioners to be 'plywood for chests' merely on the 'principle of destination' under 'any other' item 16B(i) and then to take it back to item 16B(i) for the purpose of applying the higher tariff value. Thus the higher rate of duty under item 16B(ii) as well as the higher tariff value under item 16B(i) have been applied to the same goods. This we think is patently wrong and an illegal procedure.
10. Counsel on behalf of the Revenue contended at the initial stage that we should dismiss this writ petition on the ground that another remedy was available under Section 36 and on the ground that there has been delay in filing this petition and on the further ground that some memorandum has been filed before the Central Government which is under consideration of the Central Government, and on the final ground that Ext. P1 notification having been issued by the Central Government, and the provisional power under Section 36 being vested in the Central Government, it is the Central Government that should first consider the notification, Ext. P1. We deferred consideration of these aspects in order to clarify the question raised in this petition. After all there is no Alaska in which a writ under Article 226 will not run. Whether the jurisdiction should be exercised would depend upon a variety of factors. One of the aspects to be considered is whether the act or the order complained of is patently wrong and illegal and without jurisdiction. If the error is patent and the act complained of was done without jurisdiction and the remedy under the statute is neither expeditious or adequate this court should and must interfere. The power of revision is not as wide as an appellate power, is well established. We have been warned that this court should not exercise its jurisdiction under Article 226 of the Constitution when there is another remedy available. It was so said only very recently by this court in the judgment in O.P. No. 6662 of 1975. But there is no rule that whenever there is another remedy there, should be no interference at all. In view of the assertions that are contained in paragraph 14 of the counter-affidavit, that the Central Board of Excise and Customs have issued executive instructions and this has been repeated in paragraph 19 of the counter-affidavit, it appears that the view has been taken by the authorities . who have to function under the Act that it is the procedure adopted in Ext. PS series that should be adopted. One cannot expect the Central Government to function without advertence to and without relying at least to some extent on the views of its own. Central Board in this matter of classifications regarding which they seem to have issued specific instructions as stated in more than one. place in the counter-affidavit. We do not think that in the circumstances the remedy under Section 36 would be a bar for exercise of jurisdiction under Article 226 of the Constitution. Nor are we impressed by the argument that there has been delay in filing this O.P. This petition was filed on the 11th of November last year. The petitioners had appealed from the classifications evidenced in Ext. P5 series and those were rejected by Ext P7 series Those orders were dated 17th of July, 1975. Those orders, it is admitted by counsel, were received by the petitioners before the end of July. So going by the rule of 90 days which we have been following as a convention in this court this petition should have been filebefore the end of October, but they have been filed only on the 11th of November. We notice however that the orders Ext. P7 allowed 180 days for taking the revision before the Central Government. We must also mention that fresh modified lists were issued by the 1st respondent as evidenced by Ext. P9 series only in August 1975. Counsel submitted that the petitioners who belong to an association required time to consider the next slept to be taken, seek and get legal opinion and then get the petition prepared and all that took larger time than 90 days from the dates on which Ext. P7 orders were passed and that they have filed the petition within 90 days of the issuing of the fresh list Ext. P9. We are not prepared to say that in all the circumstances of the case the delay is such that we should decline to exercise jurisdiction under Article 226. The memorandum cannot stand in the way of exercise of jurisdiction by this Court. Nor are we convinced that the fact that the notification under Rule 8(1) was issued by the Central Government necessitates the matter being dealt with by the Central Government. In fact we do not find any difficulty whatever in understanding this notification, Ext. P1, even without reference to Ext. P2. Ext. P1 even without reference to Ext. P2 must necessarily and clearly refer to item 16B(i) of the Schedule. The notification under Section 8(1) was issued fixing the tax payable on a specified item. No question of interpretation of that notification arises in the case.
11. In the appeal, as is evidenced by Ext. P6 series, a specific contention had been raised that the goods cannot be brought under both items 16B(i) and (ii), one for the purpose of applying the higher tariff value and the other for the purpose of applying the higher duty. Curiously this matter was not adverted to or considered or dealt with in Ext. P7 series. As we indicated earlier, in making modifications, new conditions have been imposed by the 1st respondent in Ext. P5 series based on destination of the goods. All these are clearly against the provisions of law and palpably incorrect. In these circumstances we have no alternative but to exercise jurisdiction under Article 226 of the Constitution and to quash the appellate orders. Ext. P7 series, the modified lists Ext. P5 series and the latest lists Ext. P9 series.
12. We make it clear that we express no opinion whatever as to whether the goods produced by the petitioners fall under item 16B(i) or 16B(ii). This is a matter to be considered by the authorities under the statute and we leave it to them. In this connection we would like to add that a contention has been raised before us. and only before us, because this aspect has not been mentioned either in the modified lists Ext. P5 sense or the later lists Ext. P9 series or in the appellate orders passed by the 2nd respondent Ext. P7 series, that the goods will not fall under item 16B(i) because the goods did not confirm to the standards prescribed by the Indian Standards Institution constituted by the Indian Standards Institution (Certification Marks) Act, 1952. The petitioners have produced as Exts. P10 and P11 the specification for tea chests prescribed by the Indian Standards Institution Whether these have any relevancy in determining whether goods fell under item 16B(i) or hot is a matter for the authorities to decide. All that we would like to point out is that these specifications do not adhere to any rigid standard size because various sizes are mentioned and what is more important the size has also been made to depend on the requirement; of the purchaser. Whether these specifications should be applied and applied whether it could be said that the goods will fall or will not fall under item 16B(i) are matters to be considered by the authorities. We allow this petition and set aside Ext. P9 series, Ext. P7 series and Ext. P5 series. Fresh modified lists should be prepared and duty payable determined in the light of what we have stated in this judgment. There will be no order as to costs.