1982 (7) TMI 90 - HC - Central Excise

Fibre/tops exempted if produced out of duty paid waste - Manufacture out of - Meaning - Classification lists - Review - Interpretation

Issues Involved:
1. Validity of treating an earlier approval as provisional under Rule 9B.
2. Entitlement to exemption under Notification No. 37/78.
3. Authority to review earlier orders.
4. Interpretation of the term "manufactured out of waste."

Detailed Analysis:

1. Validity of Treating an Earlier Approval as Provisional under Rule 9B:
The petitioner, a limited company, filed a classification list of excisable goods on 6-3-1978, which was approved by the Assistant Collector of Central Excise, Madras, without any provisional status. However, on 16-11-1979 and 26-11-1979, the Assistant Collector communicated that the approval granted should be treated as provisional under Rule 9B of the Central Excise Rules, 1944, until certain enquiries were completed. The court held that the original approval was unconditional and final, and the respondents had no authority to retrospectively treat it as provisional. Rule 9B allows provisional assessment only under specific conditions, none of which were applicable when the original approval was granted.

2. Entitlement to Exemption under Notification No. 37/78:
Notification No. 37/78-C.E., dated 1-3-1978, exempts man-made fibres and tops from the whole of the duty of excise, provided they are manufactured out of duty-paid waste. The petitioner argued that their fibres/tops were manufactured from duty-paid waste, with MEG (Glycol) used only as an assisting agent, which is fully recovered. The court agreed, noting that the notification did not prohibit the use of assisting agents and did not require exclusive use of waste. The court rejected the respondents' argument that the process involved recycling that disqualified the petitioner from the exemption.

3. Authority to Review Earlier Orders:
The respondents attempted to review the earlier unconditional approval by treating it as provisional. The court reiterated that there is no inherent power of review unless expressly provided by statute. The Central Excises and Salt Act, 1944, and the rules made thereunder do not confer such power. The court cited previous judgments, including Madras Rubber Factory Ltd. v. Asst. Collector of Central Excise, to support this position. Consequently, the impugned orders dated 16-11-1979 and 26-11-1979, treating the earlier approval as provisional, were quashed.

4. Interpretation of the Term "Manufactured out of Waste":
The court examined the language of Notification No. 37/78, which exempts fibres/tops manufactured out of duty-paid waste. The notification does not use the term "exclusively" nor does it prohibit the use of assisting agents like MEG (Glycol). The court emphasized that the plain terms of the notification must be adhered to, without inferring any supposed intention of the exempting authority. The court referenced the Supreme Court's decision in Hansraj v. H.H. Dave, which stated that in a taxing statute, the clear meaning of the words governs the matter. The court found that the petitioner's process of manufacturing fibres/tops from duty-paid waste, even with the use of MEG (Glycol), qualified for the exemption.

Conclusion:
The court quashed the impugned orders dated 16-11-1979, 26-11-1979, and 6-12-1979, and allowed the writ petition. The petitioner's entitlement to the exemption under Notification No. 37/78 was upheld, and the bank guarantee provided by the petitioner was ordered to be cancelled and delivered back.

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