1985 (7) TMI 93 - HC - Central Excise

Summary

Issues Involved:
1. Classification of rubberised tyre cord warp sheets for excise duty purposes.
2. Exercise of extraordinary writ jurisdiction by the High Court.
3. Determination of whether rubberised tyre cord warp sheets constitute a new saleable manufactured product.
4. Predominance of rubber content in rubberised tyre cord warp sheets.
5. Applicability of exemption from excise duty for rubberised tyre cord warp sheets.

Summary of Judgment:

1. Classification of Rubberised Tyre Cord Warp Sheets:
The primary issue was whether rubberised tyre cord warp sheets should be classified for excise duty under Item 191(b) or Item 22 of the Central Excise Tariff instead of Item 16A(2). The petitioners challenged the orders dated 15th October 1982 and 6th December 1982, which sought to levy excise duty on these sheets under Item 19 I(b) or Item 22, and also challenged Tariff Advice No. 52/80.

2. Exercise of Extraordinary Writ Jurisdiction:
The Court considered whether it should exercise its extraordinary writ jurisdiction given that the petitioners did not avail themselves of statutory remedies by way of appeal or revision provided by the Central Excises and Salt Act. The Court noted that ordinarily, it would not exercise such jurisdiction if adequate statutory remedies were available. However, it may intervene under Article 226 of the Constitution in exceptional cases. The Court found justification for exercising its writ jurisdiction due to the misinterpretation of Tariff Items and the involvement of Tariff Advice, which could not be appealed or revised.

3. Determination of New Saleable Manufactured Product:
The Court addressed whether rubberised tyre cord warp sheets constitute a new saleable manufactured product, commercially known and considered in the trade to be different from the original tyre cord warp sheets. The Court observed that these sheets undergo a substantial and basic change after rubberisation, transforming into a new product distinct from the original. Despite their limited shelf life and sticky nature, the Court held that they are a new product, thus liable to excise duty.

4. Predominance of Rubber Content:
The Court considered whether the rubber content in rubberised tyre cord warp sheets predominates over its cotton content. It was noted that the second respondent had disregarded the test of predominance of weight in the impugned order. The Court found that the rubber content indeed predominates, making the rubberised sheets fall under Item 16A(2) of the Tariff, which covers unhardened rubber products combined with textile materials.

5. Applicability of Exemption from Excise Duty:
The Court examined whether rubberised tyre cord warp sheets are exempted from excise duty under Notification No. 71/68-C.E., dated 1st April 1968, as amended by Notification No. 27/73-C.E., dated 1st March 1973. The Court concluded that these sheets, being unhardened rubber products combined with textile materials, are exempted from excise duty.

Conclusion:
The petition was successful, and the rule was made absolute in terms of prayers (a), (b), and (c). The Court held that rubberised tyre cord warp sheets are a distinct manufactured product, predominantly rubber, and exempt from excise duty under the relevant notifications. Costs were awarded to the respondents.