1985 (4) TMI 68 - HC - Central Excise

Summary

Issues:
1. Classification of goods under the Central Excise Tariff.
2. Interpretation of exemption notifications.
3. Review of appellate orders by the Central Government.
4. Allegations of discrimination in granting excise duty exemptions.

Analysis:

The petitioners, manufacturers of colors, claimed their goods fell under item No. 14-I(5) of the Central Excise Tariff, classified as "pigment colors, paints, and enamels not otherwise specified." They supported their classification with approved documents by the Assistant Collector. The Assistant Collector initially assessed the goods as "Lake Colors" under a different tariff item. However, the Appellate Collector overturned this decision, noting that the petitioners' product did not meet the criteria for Lake Colors and correctly classified it under item No. 14-I(5), granting an exemption from duty.

The Central Government initiated a review of the appellate order, alleging that the petitioners had previously declared their product as Lake Colors. The Central Government argued that the addition of item 14-D to the tariff made Lake Colors fall under this category. However, the Central Government failed to address the reasoning behind the Appellate Collector's decision and disregarded the petitioners' consistent classification under item 14-I(5).

The Appellate Collector had determined that the subject item could only be classified under Tariff Item 14-D if it was used for dyeing purposes, which the petitioners' product was not. The Central Government did not provide evidence to the contrary. Additionally, the petitioners raised allegations of discrimination by presenting orders granting duty exemptions to similar manufacturers, which were not considered by the Central Government.

The High Court quashed the Central Government's order and directed a fresh review by the Customs, Excise, and Gold (Control) Appellate Tribunal, emphasizing a fair hearing for the petitioners. Pending the review, the bank guarantees provided by the petitioners would remain valid. The petitioners were entitled to future duty exemptions if eligible, and no costs were awarded in the circumstances.