1986 (6) TMI 42 - HC - Central Excise

Refund admissible - Electric wires and cables - Cross examination - Classification of goods - Natural justice

Summary

Issues:
Classification of manufactured goods for excise duty exemption under Notification No. 50 of 1968.

Detailed Analysis:
1. The petitioners, engaged in manufacturing P.V.C. underground and overground telephone cables, sought exemption under Notification No. 50 of 1968, which specified a 5% ad valorem duty for certain telecommunication cables. The dispute arose when the Superintendent of Central Excise rejected their classification list, asserting that the cables did not fall under the specified category, attracting a higher duty of 12% ad valorem instead.
2. The petitioners pursued appeals and revision applications, ultimately leading to the Collector, Central Excise (Appeals) Bombay, dismissing their appeal, stating that the cables were not eligible for the concessional duty rate. Subsequently, the petitioners challenged this decision through a writ petition in the High Court.
3. The High Court scrutinized the basis of the Collector's decision and found serious flaws in relying solely on extracts from letters without providing the full context or allowing cross-examination of the authors. The Court emphasized the unfairness of basing a decision on incomplete information and opinions without proper verification.
4. The petitioners presented evidence, including a letter approving the manufacture of cables for underground use by a Public Sector authority, to support their claim that the manufactured goods qualified for the lower duty rate under the exemption notification. The Court accepted this evidence and concluded that the petitioners were entitled to the benefit of the exemption, as their goods fell within the specified category.
5. Consequently, the High Court ruled in favor of the petitioners, declaring that the manufactured goods were indeed overground and underground telecommunication wires and cables eligible for the 5% ad valorem duty under Notification No. 50 of 1968. The Court directed the authorities to calculate and award the refund due to the petitioners within three months, without imposing any costs on either party.