2020 (12) TMI 1100 - HC - Central Excise

Classification - Scope of the term Textile - Demand based on CBIC circular and Trade Notice issued by the Commissioner - Maintainability of petition - alternative remedy of preferring an appeal - Section 35B of the Central Excise Act - non-compliance of the mandatory provisions of Section 37C of the Central Excise Act, 1944 - HELD THAT - When the statute provides for a particular procedure, the authority has to follow the same and cannot be permitted to act in contravention of the same. It has been hitherto uncontroverted legal position that where a statute is required to do something in a certain way, the thing must be done in that way or not at all. The other methods or mode of performance are impliedly and necessarily forbidden. The aforesaid settled legal position is based on a legal maxim expressio unius est exclusio atlerius , meaning thereby that if a statute provides for a thing to be done in a particular way, then it has to be done in that manner and in no other manner and following other course is not permissible. We should quash and set-aside the impugned Order in Original passed by the respondent no.2 dated 30.6.2020 and remit the entire matter to the respondent no.2 for fresh consideration after giving an adequate opportunity of hearing to the writ-applicants and also keeping in mind the prima facie observations made by this Court in this judgment The writ-applicants have prayed to quash and set-aside the CBEC Circular/Order No.8/92 dated 24.9.1992 and also the Ahmedabad Collectorate Trade Notice No.78/94 dated 9.5.1994, as relying on the same, the goods manufactured by the writ-applicants are being classified as the articles of plastics under the Heading 3926 of the Central Excise Tariffs. The challenge to the CBEC Circular/Order and also the Trade Notice referred to above is substantially on the ground that the excise duty is being demanded from the writ-applicant based on such order and trade notice, whereas identical goods are being accepted as textile products in case of several other manufacturers and no duty is being charged. It appears that the understanding of the word textiles in common parlance has not been considered by the Board as well as by the Ahmedabad Collector while issuing the impugned Order and the Trade Notice respectively. Instead of considering the method of weaving as a relevant factor, the nature of the raw material seems to have been taken into consideration while issuing such Order and Trade Notice. The Board s Circular and the Collector s Trade Notice prima facie appear to be contrary to the law laid down by the Apex Court about what is textiles , and cannot be relied upon for classifying woven fabric - Both the goods in question are being manufactured by the writ-applicants by weaving; it being warp knitting in case of the Agro Shade Net and weaving by warp and weft in case of the Geo Grid fabrics. Both these commodities are in the nature of fabrics, and the respondents have also accepted the fact that the Agro Shade Net are fabrics manufactured on the Raschel knitting machine, whereas the Geo Grid fabrics are woven fabrics manufactured on the weaving machines. The matter is remitted to the respondent no.2 for fresh consideration of all the issues discussed in this judgment - Appeal allowed by way of remand.

Summary

Issues Involved:
1. Maintainability of the writ application due to the availability of an alternative remedy.
2. Legality and validity of the impugned Order in Original dated 30.6.2020.
3. Appeal provisions under Sections 35 and 35B of the Central Excise Act.
4. Compliance with the mandatory provisions of Section 37C of the Central Excise Act, 1944.

Detailed Analysis:

1. Maintainability of the Writ Application:
The court addressed whether it should entertain the writ application despite the availability of an alternative remedy under Section 35B of the Central Excise Act. The court referred to previous judgments, emphasizing that the rule of exclusion of writ jurisdiction due to the availability of an alternative remedy is discretionary and not absolute. The court held that the writ application is maintainable due to the following reasons:
- The manner in which the Order in Original was passed, allegedly without giving the writ-applicants an opportunity for a hearing.
- The specific contention of discriminatory treatment was not adequately addressed by the authority.
- Sections 35 and 35B do not provide for any appeal against circulars or trade notices issued by the Board or Collectorate.

2. Legality and Validity of the Impugned Order:
The court examined the impugned Order in Original dated 30.6.2020, which classified the goods under Chapter Heading 39269099 and confirmed the demand for Central Excise duty. The court found procedural lapses and potential discrimination in the treatment of the writ-applicants compared to other manufacturers. The court noted that the impugned order did not adequately address the specific plea of discrimination raised by the writ-applicants, who argued that similar products were classified differently in other states, leading to an unfair competitive disadvantage.

3. Appeal Provisions under Sections 35 and 35B:
The court clarified that Sections 35 and 35B of the Central Excise Act do not provide for an appeal against circulars or trade notices. The court cited a Full Bench decision stating that a writ petition is the only remedy against trade notices, as the statute does not provide any appeal mechanism for such notices.

4. Compliance with Section 37C:
The court found that the service of the impugned order did not comply with the mandatory provisions of Section 37C of the Central Excise Act. The order was served by affixing it at the factory premises without attempting service by registered post with acknowledgment due, as required by the statute. The court relied on the Supreme Court's decision in Saral Wire Craft Pvt. Ltd., emphasizing that proper service is crucial for ensuring that the affected party has the opportunity to respond.

Conclusion:
The court quashed the impugned Order in Original dated 30.6.2020 and remitted the matter to the respondent for fresh consideration, ensuring compliance with the principles of natural justice and addressing the issue of discrimination. The court also directed the Union of India to re-examine the CBEC Circular/Order No.8/92 and the Ahmedabad Collectorate Trade Notice No.78/94. The entire exercise was to be completed within six months, and any recovery proceedings based on the impugned order were to be terminated.