1979 (3) TMI 64 - HC - Central Excise

Summary

Issues Involved:
1. Whether Walk-in-Coolers manufactured by the petitioner-company are ordinarily sold or offered for sale as ready assembled units attracting excise duty under Central Excise Tariff Item No. 29A(1).
2. Whether the petitioner-company is entitled to a refund of the excise duty paid under protest.
3. Whether the impugned order dated 6th January 1972 violated principles of natural justice and fair play.
4. Whether there was discrimination against the petitioner-company in violation of Article 14 of the Constitution.

Issue-wise Detailed Analysis:

1. Whether Walk-in-Coolers manufactured by the petitioner-company are ordinarily sold or offered for sale as ready assembled units attracting excise duty under Central Excise Tariff Item No. 29A(1):
The main question was whether Walk-in-Coolers manufactured by the petitioner-company are ordinarily sold or offered for sale as ready assembled units, thereby attracting the payment of excise duty of 20% ad valorem under Central Excise Tariff Item No. 29A(1). The petitioner argued that their Walk-in-Coolers are not sold as ready assembled units because they are assembled and installed at the customer's site, tailored to individual specifications. The court examined the process of assembling and installation, noting that the work done at the site is not merely mechanical but involves a detailed and time-consuming process. The court concluded that the petitioner's Walk-in-Coolers are not ready-assembled units and thus do not attract the duty under Tariff Item No. 29A(1).

2. Whether the petitioner-company is entitled to a refund of the excise duty paid under protest:
The petitioner sought a refund of the excise duty amounting to Rs. 4,10,726.06 paid under protest. The court found that except for one instance where a Walk-in-Cooler was assembled and tested at the factory (Model No. CRG 320), the petitioner-company did not ordinarily sell ready-assembled units. Hence, the petitioner was entitled to a refund of the excise duty paid, except for the duty on Model No. CRG 320, amounting to Rs. 3,864/-. Therefore, the court ordered a refund of Rs. 4,06,862.06 to the petitioner.

3. Whether the impugned order dated 6th January 1972 violated principles of natural justice and fair play:
The petitioner argued that the impugned order was passed without proper application of mind and was based on previous decisions without considering the specific facts of the case. The court noted that the petitioner had admitted that there was no change in the manufacturing technique or procedure. The court found that the impugned order was not a result of non-application of mind or misdirection in law, as the decision was consistent with earlier findings based on the same manufacturing data. However, the court found the department's view to be patently incorrect and grossly erroneous, justifying interference.

4. Whether there was discrimination against the petitioner-company in violation of Article 14 of the Constitution:
The petitioner alleged discrimination, claiming that Voltas Ltd., which sold similar Walk-in-Coolers, was not subjected to the same excise duty. The court compared the petitioner's sales contract with Hoechst Pharmaceuticals and Voltas Ltd.'s works contract with Poona Red Cross Blood Bank. The court found that the petitioner's contract was a sales contract while Voltas Ltd.'s contract was a works contract. Therefore, the plea of discrimination was rejected.

Judgment:
The court allowed the petition and made the Rule absolute in terms of prayers (a) and (b), with the modification that the amount of Rs. 4,10,726.06 shall read as Rs. 4,06,862.06. The respondents were ordered to refund the excise duty paid after 6th March 1972, provided it was paid under protest. Each party was ordered to bear its costs of the petition. The operation of the order was stayed for four weeks from the date of the signing of the judgment.