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Punit Ghar Ganti Vs. Union of India and anr. - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtGujarat High Court
Decided On
Case NumberSpecial Civil Application No. 936 of 1977
Judge
Reported in1981(8)ELT121(Guj)
ActsCentral Excise Rules, 1944 - Rule 8
AppellantPunit Ghar Ganti
RespondentUnion of India and anr.
Appellant Advocate R.R. Shah, Adv.
Respondent Advocate H.M. Mehta, Adv.
Excerpt:
- - ' that decision, will clearly apply to this case also, as the facts of this case be identical with the facts of the aforesaid cases. and the order passed by the first responder is bad is bad in law......can be worked either by applying manual labour or with the help of an electric motor. each of the flour mills manufactured by the petitioner contains a facility for housing an electric motor but the petitioner is neither manufacturing electric motors nor are all the flour mills manufactured by them fitted with electric motors. if there is a specific demand made by a customer to supply him the appliance fitted with an electric motor, the petitioner would purchase an electric motor from the market and fix the same in the appliance manufactured by it. after item no. 33-c was added in the first schedule to the central excises and salt act, 1944 (hereafter referred to as the act), the classification lists submitted by the petitioner were approved on the basis that the flour mills.....
Judgment:

G.T. Nanavati, J.

1. The petitioner firm is a manufacturer of flour grinding mills known as Punit Char Ghanti. They contain V-Belt pully system. They can be worked either by applying manual labour or with the help of an electric motor. Each of the flour mills manufactured by the petitioner contains a facility for housing an electric motor but the petitioner is neither manufacturing electric motors nor are all the flour mills manufactured by them fitted with electric motors. If there is a specific demand made by a customer to supply him the appliance fitted with an electric motor, the petitioner would purchase an electric motor from the market and fix the same in the appliance manufactured by it. After Item No. 33-C was added in the First Schedule to the Central Excises and Salt Act, 1944 (hereafter referred to as the Act), the classification lists submitted by the petitioner were approved on the basis that the flour mills manufactured by the petitioner were domestic electrical appliances as contemplated by Item No. 33-C and chargeable to excise duty as such. The petitioner went on paying excise duty till February 17, 1971. Then by a letter dated February 17, 1971, it was informed by respondent No. 2 that the flour mills manufactured by it were really not chargeable to excise duty. The petitioner, therefore, stopped paying excise duty on flour mills manufactured by it. However, on October 12, 1971 the petitioner was again informed by the second respondent that the petitioner was liable to pay excise duty on the domestic flour mills manufactured by it. For the period between 17-2-1971 and 12-10-1971, obviously the petitioner did not pay any excise duty. Respondent No. 2 worked out the duty payable as Rs. 10,207.80 Ps. and issued a demand notice dated 4-8-1975 calling upon the petitioner to pay the said amount; and also threatened the petitioner with recovery proceedings. The said notice was challenged by the petitioner by filing special civil application No. 1315 of 1975 in this court. This court held that the domestic flour mill manufactured by the petitioner was not chargeable to excise duty; and, therefore, quashed the said notice of demand. However, in the meanwhile, on May 29, 1973, the petitioner had filed an application for revision of classification list before the second respondent stating therein that the domestic flour mill manufactured by the petitioner was not covered by Item 33C of the First Schedule to the Act. That application was rejected by the second respondent by his order dated July 25, 1973. The petitioner preferred an appeal against the said order, but the appeal was also dismissed, by the Appellate Collector of Central Excise, Bombay by his order dated December 18, 1974. The petitioner, thereafter applied to the Government of India respondent No. 1, but the said revision application was also rejected. The petitioner has, therefore, approached this court by way of this petition and prays for quashing the order passed by the first respondent on February 8, 1977.

2. Mr. Shah submitted that the order passed by the first respondent is not a valid and a legal order. He submitted that the domestic flour mill manufactured by the petitioner cannot be said to be a domestic electrical appliance within the meaning of Tariff Item No. 33-C. What is manufactured by the petitioner is really a mechanical appliance, because there is no electrical device contained therein to operate it instantaneously. He further submitted that though an electric motor can be fitted therein and then the whole appliance can work with electric power, it cannot be said to be domestic electrical appliance. The petitioner is not manufacturing electric motors. The appliance manufactured by it is not invariably fitted with an electric motor when it is sold in the open market. The petitioner would fix an electric motor in the domestic flour mill manufactured by it only if there is a specific demand from the customer for supply of a domestic flour mill fitted with an electric motor. That too is done by the petitioner after purchasing an electric motor from market. Even in the affidavit in reply filed by D. N. Anerao, Assistant Collector, Central Excise, Ahmedabad, it has been stated that 'the petitioner provides electric motor (fitted in the appliance itself) purchased from market to all the customers almost invariably. Mr. Shah, therefore, submitted that the domestic flour mill manufactured by the petitioner cannot be said to be a domestic electrical appliance as contemplated by Tariff Item No. 33C.

3. In support of his submission, he has relied upon the decision of this court in special civil application No. 1251 of 1972 and others decided on December 18, 1974, by J. B. Mehta and B. K. Mehta, JJ. In that case also the domestic flour grinding mills manufactured by the petitioners in those petitions did not have any inbuilt electric power motor. Considering the relevant entries in the Schedule and the notifications issued under rule 8 by the Central Government, this court observed as under :-

'In fact, all these Schedule entries make one thing clear that all these appliances are completely assembled appliances and, therefore, they would have the electric element or electrical motor fitted with them. Unless the manufacturer has manufactured a complete domestic electrical appliance, which falls under any of these 20 items of the Schedule, in view of this exemption and the entry 33C, duty under this item would not be attracted. If, therefore, the manufacturer has only produced domestic appliance, which can by properly fitting into it a separate electric motor be converted into a domestic electric grinder, excise duty in question would not be attracted. The excise duty falls on the manufacture or production of the goods in question. It is not a duty on the sales. Therefore, whatever may have happened at the stage of sale, as in this case, that a particular manufacturer at the time of sales is supplying to the customer, at his request, electric unit manufactured by some other manufacturer or the customer at his place gets the electric motor fitted into this unit, it is obvious that what was manufactured by the petitioners was not all electrical appliance, but what can be completed into one whole electrical appliance after purchasing a separate electric motor manufactured by another manufacturer.'

This court further pointed out in the aforesaid decision that 'It is this electric element or motor or rotor or starter which gives the specific character to the goods of this description as 'electrical' appliances. Unless electrical part is fitted into it by which the said appliance works, the rest of the assemblage would be only a domestic appliance which could not fall within the specific tariff item of electrical appliances, but would be any other kind of power driven domestic grinder. It is only when the electric motor is fitted into it, that it becomes a domestic electric grinder so as to attract duty under item 33C.' That decision, will clearly apply to this case also, as the facts of this case be identical with the facts of the aforesaid cases.

4. Mr. Shah also drew our attention to the fact that in the case of the petitioner firm itself, this court has taken a view that domestic flour mills manufactured by it are not covered by tariff item No. 33C of the First Schedule to the Act. As mentioned earlier, a demand notice dated 4-8-1975 was issued by the second respondent on the basis that the domestic flour mills manufactured by the petitioner were chargeable to excise duty. That notice was challenged by the petitioner by filing special civil application No. 1315 of 1975. In that case, this court upheld the contention raised on behalf of the petitioner that the domestic flour mills manufactured by it were not covered by tariff item 33C. The demand notice, therefore, was quashed and consequential orders were made. It is really unfortunate that inspite of the decision of this court, the first respondent has taken a contrary view and subjected a citizen to an unnecessary litigation. It has been stated by the petitioner in the petition that the decision of this court in special civil application No. 1315 of 1975 was referred to by the petitioner in the written statement filed by it before the first respondent.

5. For the reasons stated above, we are of the opinion that the flour grinding mills manufactured by the petitioner and in respect of which classification list was submitted by the petitioner were not covered by Item No. 33C of the First Schedule to the Act; and the order passed by the first responder is bad is bad in law.

6. In that view of the matter, this petition is allowed by quashing the impugned order dated 8-2-1977; and it is declared that the domestic flow mills manufactured by the petitioner do not attract duty under tariff item No. 33C of the First Schedule to the Act. A writ of mandamus shall also issue directing the respondents to desist or forbear from recovering excise duty on domestic flour mills manufactured by the petitioner. The rule is mad absolute and the respondents are directed to pay to the petitioner cost of this petition.


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