1981 (10) TMI 42 - HC - Central Excise

Varnished fibreglass tapes and glass mica tapes -Liability to duty - Trade Notice - Binding effect - Classification - Penalty and fine - Removal of goods

Issues Involved:
1. Whether the trade notice issued by the Collector was binding on the Department.
2. Whether the product manufactured by the petitioners falls within Tariff Item No. 59.
3. Whether the Department can be estopped from claiming contrary to the trade notice under the doctrine of promissory estoppel.
4. Whether the product is known in the commercial circles as electric insulation tape.
5. Applicability of Rule 9 and Rule 10 of the Central Excise Rules regarding the limitation and removal of goods.
6. Validity of the imposition of penalty and fine on the petitioners.

Detailed Analysis:

1. Binding Nature of Trade Notice:
The petitioners argued that the trade notice dated June 19, 1971, which defined "electric insulation tape," was binding on the Department. The court rejected this argument, citing the Supreme Court decision in *Orient Paper Mills Limited v. Union of India*, which held that quasi-judicial authorities should not be influenced by executive instructions. The court further noted that the Gujarat High Court's reliance on promissory estoppel in similar cases was not accurate, as there cannot be any estoppel against the statute.

2. Classification Under Tariff Item No. 59:
The petitioners contended that their products, varnished fibreglass tapes and glass mica tapes, did not fall under Tariff Item No. 59. The court found that the petitioners themselves admitted that their products were impregnated with insulating compounds. The court concluded that the products were used for covering electric wires and cables, even if not exclusively for covering joints or open ends, and thus fell under Tariff Item No. 59.

3. Doctrine of Promissory Estoppel:
The petitioners invoked the doctrine of promissory estoppel, arguing that the Department was bound by the trade notice. The court dismissed this argument, stating that the doctrine does not apply against statutory provisions. The court emphasized that the scope of the statute cannot be restricted by trade notices.

4. Commercial Recognition of the Product:
The petitioners claimed that their products were not known in commercial circles as electric insulation tapes. The court noted that this argument was raised for the first time before the revisional authority and found no evidence to support it. The court held that the burden of proof was on the petitioners to establish this claim, which they failed to do.

5. Applicability of Rule 9 and Rule 10:
The petitioners argued that they removed the goods under a bona fide impression that they were not liable to duty and that part of the claim was time-barred under Rule 10. The court rejected this argument, stating that the petitioners, as a Limited Company, could not rely on an enquiry made by the partnership concern. The court also held that the provisions of Rule 9 were applicable and that the claim was not time-barred under Rule 10A.

6. Imposition of Penalty and Fine:
The petitioners contended that the imposition of penalty and fine was unjust as they did not act mala fide. The court upheld the penalty and fine, noting that the petitioners had contravened the provisions of the Act and the Rules. The court also dismissed concerns about potential future actions under Rule 173-GG, stating that such actions were discretionary and could be challenged if exercised erroneously.

Conclusion:
The court dismissed the petition, upholding the orders of the Assistant Collector, the Appellate Collector, and the Government of India. The rule was discharged with costs.

← Previous Next →