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Madura Coats Ltd. Vs. Assistant Collector of Central Excise and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtChennai High Court
Decided On
Case NumberWrit Petition No. 4230 of 1974
Judge
Reported in1979CENCUS17D; 1978(2)ELT511(Mad)
ActsGeneral Clauses Act, 1897 - Sections 6 and 24; Companies Act, 1913 - Sections 3; Mines Act, 1923 - Sections 29; Mines (Amendment) Act, 1952 - Sections 57 and 58; Companies Act, 1956 - Sections 10 and 75; Finance Act, 1972 - Sections 64; Arms Act, 1878 - Sections 15
AppellantMadura Coats Ltd.
RespondentAssistant Collector of Central Excise and ors.
DispositionPetition allowed
Cases ReferredAct. In Neel v. State of West Bengal
Excerpt:
central excises and salt act, 1944 - section 3--schedule i--tariff item 18 and 18e--exemption to hard waste under a notification issued u-i/18 continues even on change of classification to t-i/18egeneral glauses act, 1897 section 24b - a notification continues to be in force until superseded. - .....no. 59/1965-central excise, dated 1.4.1965, exempting waste staple fibre yarn known as hard waste, falling under tariff item no. 18, from the whole of the duty leviable thereon with effect from 1.4.1965. this exemption notification was issued by the government in exercise of the powers conferred by rule 8(1) of the central excise rules, 1944.2. by section. 64(c) of the finance act 1972, the central excise item no. 18 was amended and a new tariff item no. 18-e was introduced. varieties of mixed yarn were carved out from old item no. 18 and included in item no. 18-e which reads as follows -'yarn, all sorts not elsewhere specified . . . and containing any two or more of the following fibres, namely, (i) cotton, (ii) silk; (iii) wool; (iv) jute; (v) man-made fibres.'the effect of.....
Judgment:

Ramanujam, J.

1. The petitioner herein is a manufacturer of cotton terene blend and synthetic fibre yarn. In the case of waste cotton yarn arising out of the manufacture of cotton yarn, an exemption has been granted for excise duty. On the basis of such exemption, representations were made that the waste yarn arising out of the spinning of staple fibre yarns should also be allowed exemption from duty as in the case of cotton yarn. This was acceded to by the Government of India by issuing a Notification No. 59/1965-Central Excise, dated 1.4.1965, exempting waste staple fibre yarn known as hard waste, falling under Tariff item No. 18, from the whole of the duty leviable thereon with effect from 1.4.1965. This exemption notification was issued by the Government in exercise of the powers conferred by Rule 8(1) of the Central Excise Rules, 1944.

2. By Section. 64(c) of the Finance Act 1972, the Central Excise item No. 18 was amended and a new Tariff item No. 18-E was introduced. Varieties of mixed yarn were carved out from old item No. 18 and included in item No. 18-E which reads as follows -

'Yarn, all sorts not elsewhere specified . . . and containing any two or more of the following fibres, namely, (i) cotton, (ii) silk; (iii) Wool; (iv) jute; (v) Man-made fibres.'

The effect of this amendment was that the terene/cotton yarn which was originally covered under item 18 will now fall under the new Tariff item 18-E. After introducing item 18-E by the said Finance Act, a specific Notification exemption waste staple fibre yarn (hard waste) was issued by Notification No 172/1972-Central Excise, dated 24.7.1972, from the whole of the duty leviable thereunder. This notification also has been issued in exercise of the powers conferred on the Central Government by Rule 8(1) of the Central Excise Rules.

3. The Finance Act of 1972 came into force on 17.3.1972. But the Notification No. 172/1972 has been issued exempting waste staple fibre yarn (hard waste) from the duty of excise was made only on 24.7.1972. In between 17.3.1972, upto 24.7.1972, the petitioner had been allowed to clear without payment of duty three consignments on the following dates from the factory, the hard waste of the quality and quantity noted against those dates, presumably on the basis that the exemption granted by Notification No. 59 of 1965 continued to be in force :-

Gate Pass Number Blend Blend Total Kgsand date 67/35 50/50Kgs Kgs.116 31.5.1972 4.8 - 4.8206 20.7.1672 417.0 156.0 573.0215 23.7.2972 99.6 ... 99.6521.4 156.0 677.4

5. Against the said order, the petitioner preferred an appeal to the Appellate Collector, Central Excise, Madras, the second respondent. But the Appellate Collector took the view that the staple yarn became chargeable to duty under Tariff item No. 18-E, with effect from 17.3.1972 and that in the absence of any modification under the said Tariff item exempting hard waste from duty, the petitioner was liable to pay duty for the stocks of hard waste cleared during May-July, 1972. He however held that the adoption of the uniform rate of Rs. 15 per kg. without reference to the blend of the hard waste cannot be sustained. He therefore issued a direction to the Inspector, Central Excise, to adopt Rs. 15 for blend 67/33 and Rs. 10 for blend 50/50.

6. Against the order of the second respondent, the petitioner preferred a revision to the Government, the third respondent. But the revisional authority held that the Notification No. 59/1965 exempts goods assessable only under item 18 and it cannot be construed as exempting the hard waste assessable under item 18-E after the Finance Act, 1972.

7. The petitioner has challenged the view taken by all the authorities as regards the effect of the Notification No. 59 of 1965 dated 1.4.1965. The learned counsel for the petitioner submits that the respondents have completely overlooked the provision in Section 24 of the General Clauses Act, 1897, and that in the case of repeal and re-enactment of a statute, all notifications issued under the repealed statute should be taken to have been issued under the corresponding provisions of the statute as renacted until it is superseded by a fresh notification issued under the new enactment. I am inclined to accept the contention put forward by the learned counsel for the petitioner. It is no doubt true that in this case the hard waste was chargeable to duty under item 18 before the Finance Act of 1972 came into force. Subsequently, hard waste became liable to duty under item 18-E, after the Finance Act. The hard waste was exempted from duty by issue of an exemption notification under Rule 8 with effect from 1.4.1965. After the Finance Act came into force, the hard waste was again exempted from payment of duty under item 18-E by issuing another notification under Rule 8. The question is what is the position during the interregnum. According to the petitioner, till the earlier exemption notification issued in 1965 exempting hard waste is withdrawn or superseded by a fresh notification, it should be deemed to continue in view of S. 24 of the General Clauses Act. According to the Revenue, however, the exemption given under the 1965 notification from payment of duty was only in relation to the duty payable under item 18 and that the said notification cannot be construed as giving exemption for hard waste from the duty payable under item 18-E. The stand taken by the revenue completely nullifies the purpose for which Section 24 of the General Clauses Act has been enacted. Section 24 says that where any Central Act is repealed and re-enacted with or without modification, then, unless it is otherwise expressly provided, any notification issued under the repealed Act shall, so far as it is not inconsistent with the provisions re-enacted, continue in force and be deemed to have been issued under the provisions so re-enacted unless and until it is superseded by any notification issued under the provisions so re-enacted. In this case, even after the Finance Act of 1972, the power to issue an exemption notification is contained only in Rule 8 of the Central Excise Rules. Admittedly the exemption notification of the year 1965 has not been superseded. Though the hard waste was assessable under item 18 previous to the Finance Act of 1972, and was assessable under item 18-E after the said Act, the exemption notification issued in the year 1965 will continue to have the same effect as it has been issued in respect of the duty payable on hard waste, originally under item 18 but subsequently under item 18-E.

8. The scope of Section 24 of the General Clauses Act came up for consideration in K.S.V.N. and Sons v. State of Madas, A.I.R. 1959 Mad. 334. In that case, Chief Justice Rajamannar held that a notification conferring jurisdiction on the District Courts under Section 3 of the Companies Act, 1913, continued to operate by virtue of Section 24 of the General Clauses Act, as one made under Section 10 of the Companies Act, 1956 and that, therefore, the District Court had jurisdiction to entertain applications under Section 75 of the Act of 1956, In Chief Inspector of Mines v. K.C. Thaper, A.I.R, 1962 SC. 838, it was held that Section 24 of the General Clauses Act will keep alive the regulations made under repealed enactment till they have been superseded by regulations made under the re-enactment. Certain regulations called Coal Mines Regulations have been made under the Mines Act, 1923. The said Act was repealed and re-enacted by the Mines Act of 1952. The question arose whether the regulations issued under the 1923 Act, will continue in force even after that Act had been repealed. The Supreme Court expressed the view-

'The present is a case, where the Mines Act, 1923 was repealed and was re-enacted with modifications as the Mines Act, 1952; Section 29 of the 1923 Act empowering the Central Government to make regulations onsis-tent with the Act for specified purposes was re-enacted in the 1952 Act as Section 57 regulations were made in 1926 under Section 29 of the 1923 Act; but at the relevant date in 1955, no regulations had been made under Section 57 of the 1952 Act, so that in 1955 the Mines Regulations 1926 had not been superseded by any regulations made under the re-enacted provisions of Section 57 of the 1952 Act. Therefore if Section 24 of the General Clauses Act is operative, the Mines Regulations of 1926 were in force at the relevant date in 1955, and shall be deemed to have been made under Section 57 of the 1952 Act, as there is no provision 'express or otherwise, in the later Act to the contrary and the regulations are not inconsistent with the re-enacted provisions.'

9. The same view has been taken by the Supreme Court in Mohanlal v. State of West Bengal, : AIR1962SC1543 , wherein the Mines Creche Rules of 1946 framed under the Mines Act of 1923, were deemed to be rules framed under Section 58(d) of the 1952 Act. In Neel v. State of West Bengal, : [1973]1SCR675 , a notification of 1923 issued under Section 15 of the Arms Act of 1878 was held to be in force after the Arms Act has been repealed and re-enacted by Arms Act of 1959, as one issued under Section 4 of the new Act by virtue of the combined effect of Section. 6 and 24 of the General Clauses Act.

10. Though the Tariff Rate in relation to the hard waste was changed under the Finance Act, the exemption notification issued as regards the duty payable under the unamended provision shall be deemed to continue in force after the Finance Act of 1972 till a fresh notification was issued after it came into force. In my view, therefore, since the exemption notification of the year 1955 continued to be in force till 24.7.1972, when the new exemption notification was issued, the demand in question cannot be sustained. The writ petition is therefore allowed, and the demand quashed. There will be no order as to


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