1980 (8) TMI 100 - HC - Central Excise

Summary

Issues: Classification of Beta Naphthol under Central Excise Tariff - Whether excisable under Item 14D or Item 68.

Analysis:
1. The primary issue in this case revolves around the classification of Beta Naphthol under the Central Excise Tariff, specifically whether it should be excisable under Item 14D or Item 68. The dispute arose when the Assistant Collector of Central Excise initially classified Beta Naphthol under Item 14D, which pertains to synthetic organic dyestuffs and derivatives used in dyeing processes. This classification was upheld by the Appellate Collector, although an exception was made for Beta Naphthol used in a specific manufacturing process.

2. Subsequently, the Union Government intervened and determined that Beta Naphthol, even in liquid form and used for captive consumption, should fall under Item 14D of the Central Excise Tariff. This decision was based on the premise that once Beta Naphthol is manufactured, it attracts duty regardless of its form. Consequently, the revision application filed by the petitioners challenging this decision was rejected by the Union Government.

3. However, a significant development occurred when it was revealed that the Department itself had accepted that Beta Naphthol should be classified under Item 68 of the Central Excise Tariff, not under Item 14D. This acceptance was evidenced by trade notices issued by various Collectors of Central Excise, confirming that Beta Naphthol should be assessed under Item 68. The Excise Department at Kalyan also began assessing Beta Naphthol under Item 68 and recovering duty accordingly.

4. In light of the Department's subsequent acceptance that Beta Naphthol should be classified under Item 68, the Court found it necessary to quash the earlier decisions that classified Beta Naphthol under Item 14D. Consequently, the demand notice issued based on this incorrect classification was also quashed. The petitioners were deemed entitled to a refund of any duty paid under the incorrect classification and were awarded costs for the petition.

5. Ultimately, the Court's decision was guided by the Department's own revised classification of Beta Naphthol under Item 68, highlighting the importance of consistent and accurate classification under the Central Excise Tariff to ensure fair treatment and duty assessment for manufacturers and traders.