1974 (12) TMI 38 - HC - Central Excise

Cotton fabrics impregnated or coated - Precedents - Appeal - Delay in disposal of appeal - Administration of Justice - Taxing statute

Summary

Issues Involved:
1. Jurisdiction of the Excise Authorities regarding classification of the product.
2. Alleged discrimination in duty classification between Gujarat and Kanpur.
3. Adopting the view of another High Court in interpreting an all-India statute.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Excise Authorities regarding classification of the product:

The petitioners argued that the Excise Authorities in Gujarat misclassified their product under Item No. 19 (III) of the Central Excises and Salt Act, 1944, which led to a higher duty rate of 25% ad valorem. They contended that their product should be classified under Item No. 19 (I) (2) (f), which carries a lower duty rate. The petitioners highlighted that the product did not qualify as "cotton fabrics impregnated or coated with preparations of cellulose derivatives or of other artificial plastic materials" as per the classification under Item No. 19 (III). The court, upon reviewing the plain reading of the entries and the chemist's report, found that the product did not fall clearly within the terms of Entry No. 19 (III). The court noted that the product had only 37.1% of polythene plastic material, which did not penetrate the fabric, thus not qualifying as impregnated or coated fabric.

2. Alleged discrimination in duty classification between Gujarat and Kanpur:

The petitioners claimed discrimination, stating that a similar product manufactured by another company in Kanpur was classified under Item No. 19 (I) (2) (f) by the Excise Authorities at Kanpur, following a decision by the Allahabad High Court. The court observed that the Allahabad High Court had ruled that a product with only partial plastic coating could not be classified under Item No. 19 (III) as it did not meet the criteria for being "coated" or "impregnated." The court agreed with this view, emphasizing uniformity in the application of the statute to avoid discrimination among manufacturers.

3. Adopting the view of another High Court in interpreting an all-India statute:

The petitioners argued that, based on the established practice and policy, one High Court should accept the view taken by another High Court in the interpretation of an all-India statute to maintain consistency and avoid discrimination. The court supported this principle, citing several precedents where the Bombay High Court had followed the interpretation of another High Court in matters of income tax and other all-India statutes. The court noted that the Allahabad High Court had refused to grant leave for an appeal to the Supreme Court, and the Excise Authorities had not sought special leave, reinforcing the need to follow the Allahabad High Court's interpretation.

Conclusion:

The court concluded that the petitioners' product should not be classified under Item No. 19 (III) but under Item No. 19 (I) (2) (f), aligning with the Allahabad High Court's ruling. The court issued appropriate writs quashing the order of the 2nd respondent and directed that the excess duty collected be refunded within two months. The court emphasized the importance of timely resolution of tax matters to avoid financial disruptions for businesses and the need for uniformity in tax administration across different states. The petition was allowed with costs.