1974 (12) TMI 39 - HC - Central Excise

Summary

Issues:
1. Interpretation of entry 33C of the Tariff Schedule regarding domestic grinding mills or flour mills.
2. Application of exemption notification issued by the Central Government under rule 8.
3. Legal significance of the trade notice in interpreting the relevant tariff entry.
4. Whether the petitioners' products qualify as domestic electrical appliances under item 33C.
5. Challenge against the levy under item 33C by the Central Government.

Analysis:
The judgment revolves around the interpretation of entry 33C of the Tariff Schedule concerning domestic grinding mills or flour mills. The petitioners contested the duty imposition under this entry, arguing that their products did not fall under the category of excisable goods as per the amended entry. Initially, the authorities had requested the petitioners to apply for a license for manufacturing these mills, including the value of the electric motor in the price list. However, subsequent decisions by the authorities and the Central Government exempted the petitioners from the duty under entry 33C, as their products lacked an inbuilt electric motor, which was a requirement for excisability under the entry.

The judgment delves into the application of an exemption notification issued by the Central Government under rule 8 in conjunction with entry 33C. The exemption notification specified certain domestic electrical appliances exempted from duty, excluding specific items like grinders and mixers. It highlighted that the duty under item 33C would not apply unless the manufacturer produced a complete domestic electrical appliance as per the specified items in the Schedule, emphasizing the necessity of an inbuilt electric motor for excisability.

The legal significance of a trade notice in interpreting the tariff entry was also discussed in the judgment. It was emphasized that the trade notice, while not altering the statutory meaning, provided insight into the government's interpretation of the entry and supported the prima facie construction of the relevant entry when considered in conjunction with the exemption scheme. The excise levy was clarified to be on production or manufacture, not on sales, underscoring the importance of the product being a complete domestic electrical appliance to attract duty under entry 33C.

The petitioners argued that their products did not qualify as domestic electrical appliances under item 33C since the electric motor was a separate component not manufactured by them but added later upon customer request. They contended that fitting the electric motor post-manufacture did not render the products excisable under the entry. The judgment sided with the petitioners, declaring the levy under item 33C as illegal and ultra vires, restraining the authorities from imposing duty on the petitioners' goods under the said entry.