Skip to content


Indian Rayon Corporation Ltd. Vs. Union of India (Uoi) - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtKolkata High Court
Decided On
Case NumberCivil Rule No. 814 W of 1978
Judge
Reported in1994LC258(Calcutta),1992(58)ELT178(Cal)
ActsCentral Excises Act, 1944; ;Finance Act, 1961; ;Finance Act, 1975; ;Finance Act, 1979; ;Central Excise Rules - Rule 8
AppellantIndian Rayon Corporation Ltd.
RespondentUnion of India (Uoi)
Appellant AdvocateR.N. Bajoria, ;B.P. Gupta, ;S.K. Bagaria and ;Padam Khaitan, Advs.
Respondent AdvocateD.K. Sen, ;H.K. Deb Burman and ;Amitabha Dutta, Advs.
Cases ReferredNilsin Co. v. Collector
Excerpt:
held: classification - electric insulators consisting of both porcelain and metal parts--common parlance to decide whether porcelain parts of insulators are porcelain wares falling under ti 23b--matter remanded for fresh decision.petition allowed by remand. - .....and metal parts. the petitioner no. 1 under self-removal procedure prescribed under the central excise rules, used to remove the said articles during the period april, 1970 upto the date of issue of this rule, the respondents had assessed excise duty upon insulators manufactured by the petitioner no. 1 at the rate specified under item no. 23b of the first schedule of the central excises and salt act, 1944. the said item no. 23b which was inserted by finance act, 1961, imposed duty upon chinaware and porcelainware of all sorts. until the time mentioned hereinafter, the central excise authorities were of the view that electrical insulators were porcelainware and, therefore, were liable to excise duty under item no. 23b of the first schedule of the central excises and salt act, 1944.2......
Judgment:

Chittatosh Mukerjee, J.

1. The petitioner No. 1 at the material time had been manufacturing various kinds of insulators which, according to them, consisted of both porcelain and metal parts. The petitioner No. 1 under self-removal procedure prescribed under the Central Excise Rules, used to remove the said articles during the period April, 1970 upto the date of issue of this Rule, the respondents had assessed excise duty upon insulators manufactured by the petitioner No. 1 at the rate specified under Item No. 23B of the First Schedule of the Central Excises and Salt Act, 1944. The said Item No. 23B which was inserted by Finance Act, 1961, imposed duty upon Chinaware and Porcelainware of all sorts. Until the time mentioned hereinafter, the Central Excise Authorities were of the view that electrical insulators were porcelainware and, therefore, were liable to excise duty under Item No. 23B of the First Schedule of the Central Excises and Salt Act, 1944.

2. By two notifications respectively dated 26th July, 1971 and 1st March, 1975, the Central Government, in exercise of powers under Rule 8 of the Central Excise Rules, had exempted electrical insulators made of porcelain so much of duty as was in excess of the percentages mentioned in the said notifications. The parties have drawn my attention to two trade notices issued by the Central Board of Excise and Customs indicating the manner in which the excise duty was to be assessed upon insulators which consisted both of porcelain and metal parts. A Division Bench decision of the Madras High Court in English Electric Co. of India Ltd. v. Superintendent, Central Excise and Ors. : 1979(4)ELT36(Mad) , held that electric insulators were not .porcelainware and therefore, were not liable to be assessed under Item No. 23B of the First Schedule of the Central Excises and Salt Act, 1944. The Division Bench of the Madras High Court however, had no occasion to consider whether the porcelainware used in making electric insulators could be considered as an independent products and whether the same were liable to be assessed to excise duty under the said Item No. 23B.

3. Since the passing of the Finance Act, 1975, the residuary Item No. 68 has been inserted in the First Schedule of the Central Excises and Salt Act, 1944 for levy of excise duty on all other goods, not elsewhere specified, manufactured in a factory. The Central Excise Authorities no longer dispute that insulators consisting both of porcelain and metal parts were not assessable under Item No. 23B. But at the same time the Central Excise Authorities contend that the porcelain part of the insulators, were liable to levy of excise duty/under the said Item No. 23B of the First Schedule of the Act (Vide Trade Notice No. 215/China and Porcelainware-1/CE/77).

4. By filing this writ petition the petitioners prayed that the assessments of excise duty under Item No. 23B of the First Schedule of the Central Excises and Salt Act, 1944, made upon electric insulators manufactured by them be quashed and the respondents be commanded to refund all excise duties already recovered. On 6th February, 1978 the learned Judge who issued the Rule, made an interim order in terms of prayer (f) of the writ petition. The Finance Act, 1979 had added to Item 23B the following Explanation II:-

'This item does not include electrical insulators or electrical insulating fittings or parts of such insulators or insulating fittings'.

In this Rule, I am, however, not concerned with the effect of inserting the said Explanation II to Item No. 23B of the First Schedule of the Central Excises and Salt Act, 1944 and I am not called upon to determine the petitioners' liability to pay excise duty on electric insulators for the period subsequent to the date of issue of this Rule. The subject-matter of this Rule is the assessment made from April, 1970 upto the date of the instant Rule.

5. The respondents have urged that the porcelain parts of the insulators manufactured by the petitioner No. 1 are independent products and were liable to be assessed to excise duty under Item No. 23B. The petitioners have disputed this assertion made on behalf of the respondents. For the reasons presently indicated, I do not propose to myself decide the above question. Only after evidence is given about the popular meaning of the expression 'porcelainware' used in Item No. 23B of the First Schedule of the Act, it would be possible to pronounce whether the porcelain part of the insulators were independent and separate goods which were liable to be assessed under Item No. 23B of the First Schedule of the Act. In order to ascertain the popular meaning of the words 'Chinaware' and 'Porcelainware', the parties ought to be given opportunity to adduce evidence how the manufacturers and consumers understood the said words. In other words, whether in common parlance the porcelain parts of the insulators are 'porcelainware'. [See in this connection the observations in the case of Ramavatar Budhaiprasad v. Assistant Sales Tax Officer - : [1962]1SCR279 . Recently, in my judgment in the case of M/s. Nilsin Co. v. Collector, C.R. No. 2708 (W) of 1972 disposed of on 18th July, 1983, I have indicated the different stand points from which the popular meaning of a term not defined in the statute may be ascertained]. Therefore the above points ought to be raised at the first instance before the Central Excise Authorities. I accordingly, propose to quash the assessments made under Item No. 23B of the First Schedule of the Central Excises and Salt Act, 1944 upon the petitioners' finished product and to remit the matter for fresh assessment in accordance with law.

6. I, accordingly, make this Rule absolute, quash the assessments of excise duty upon electric insulators made partly of porcelain and partly of metal during April, 1970 upto the date of the issue of the instant Rule and commend the respondents to pass fresh orders for assessment or for refund as the case may be. The respondents after giving opportunities to the parties would be at liberty to again decide in accordance with law whether during the aforesaid period porcelain parts of the said insulators were liable to levy of excise duty under Item No. 23B of the First Schedule of the Central Excises and Salt Act, 1944.

7. There will be no order as to costs.

Let a copy of this order be prepared by the officer and handed over to the learned Advocate for the respondents.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //