1978 (12) TMI 52 - HC - Central Excise

Summary

Issues Involved:
1. Regularisation of unauthorised converted cotton spindles under the Press Note.
2. Constitutionality of Clause 3 of the Woollen Textile (Production and Distribution) Control Order, 1962.
3. Constitutionality of the second proviso to Rule 174 of the Central Excise Rules, 1944.

Issue-wise Detailed Analysis:

1. Regularisation of Unauthorised Converted Cotton Spindles:
The petitioners, who installed unauthorised converted cotton spindles for manufacturing worsted yarn, applied for regularisation under a Press Note issued by the Textile Commissioner. The Textile Commissioner declined regularisation, arguing that the Press Note applied only to original worsted spindles, not converted cotton spindles. The Court examined whether the Press Note intended to cover converted cotton spindles. The Court found that the term "worsted spindle" in the Press Note referred to any spindle capable of manufacturing worsted yarn, including converted cotton spindles. The Press Note required spindles to have gill boxes, a component necessary for worsted yarn production, which supported the inclusion of converted cotton spindles. The Court concluded that the Textile Commissioner could not decline regularisation solely because the spindles were converted cotton spindles. Thus, the petitioners were entitled to regularisation under the Press Note.

2. Constitutionality of Clause 3 of the Woollen Textile (Production and Distribution) Control Order, 1962:
The petitioners challenged Clause 3 of the Order, arguing it violated Articles 14 and 19(1)(g) of the Constitution by conferring unguided and absolute power to the Textile Commissioner. The Court noted that Clause 3 did not provide guidelines for the exercise of discretion by the Textile Commissioner, making it susceptible to arbitrary and discriminatory use. The Court referenced previous cases where similar unguided powers were deemed unconstitutional. The Court held that the absence of guidelines and the potential for arbitrary decisions rendered Clause 3 violative of Articles 14 and 19(1)(g). Therefore, Clause 3 was struck down as unconstitutional.

3. Constitutionality of the Second Proviso to Rule 174 of the Central Excise Rules, 1944:
The petitioners argued that the second proviso to Rule 174, which required written permission from the Textile Commissioner for the installation and working of spindles, was linked to Clause 3 of the Order. With Clause 3 being unconstitutional, the proviso would be rendered inoperative. The respondents contended that the proviso was independently valid under the Central Excises and Salt Act. The Court found that the proviso relied on the power exercisable under Clause 3 and, without it, lacked context and guidelines. Consequently, the proviso was also held violative of Articles 14 and 19(1)(g) and was struck down.

Conclusion:
The Court set aside the Textile Commissioner's order declining regularisation of the petitioners' unauthorised spindles, struck down Clause 3 of the Woollen Textile (Production and Distribution) Control Order, 1962, and rendered the second proviso to Rule 174 of the Central Excise Rules, 1944, inoperative. All writ petitions were accepted, with no order as to costs.