1986 (11) TMI 52 - HC - Central Excise

Issues Involved:
1. Nature and duration of the permission granted under Rule 56-B.
2. Applicability of Rule 56-B to the removal of Partially Oriented Yarn (P.O.Y.).
3. Marketability and classification of P.O.Y. under the Central Excise Tariff.
4. Competence of the Assistant Collector to withdraw the permission granted under Rule 56-B.
5. Doctrine of common parlance and its application to P.O.Y.
6. Applicability of amended Rules 9 and 49 of the Central Excise Rules.
7. Efficacy of alternative remedies and the jurisdiction of the High Court under Article 226.

Detailed Analysis:

1. Nature and Duration of the Permission Granted Under Rule 56-B:
The petitioner argued that the permission granted on 8th January 1985 was permanent. However, the court found that the original order explicitly stated the permission was temporary, valid only until 7th July 1985, and later extended to 7th January 1986. The court concluded that the permission was neither permanent nor unconditional. The argument that Rule 56-B does not contemplate permanent permission was not addressed as it was not pertinent to the case.

2. Applicability of Rule 56-B to the Removal of P.O.Y.:
The petitioner contended that once permission under Rule 56-B was granted, it could not be reviewed. The court referred to the Supreme Court's ruling in Assistant Collector of Central Excise Calcutta v. National Tobacco Co. of India Ltd., which held that there is an implied power to complete an assessment not specifically provided for by the Rules. The court concluded that the Assistant Collector had the implied power to withdraw the permission if it was based on a wrong foundation, thus rejecting the petitioner's argument.

3. Marketability and Classification of P.O.Y. Under the Central Excise Tariff:
The court examined whether P.O.Y. is considered "goods" and found that it is indeed marketable and known in trade circles. The petitioner admitted that P.O.Y. was sold and excise duty was paid on it. The court held that P.O.Y. is classified under Tariff Item No. 18(II)(i)(a) of the First Schedule and is thus excisable.

4. Competence of the Assistant Collector to Withdraw the Permission Granted Under Rule 56-B:
The court held that the Assistant Collector was competent to withdraw the permission granted under Rule 56-B upon realizing that P.O.Y. is not semi-finished goods. The court cited various precedents, including the case of Oudh Sugar Mills Ltd. v. Union of India, to support the view that intermediate or residual products are excisable.

5. Doctrine of Common Parlance and Its Application to P.O.Y.:
The petitioner argued that P.O.Y. is not known as "goods" in common parlance. The court referred to the doctrine of common parlance, which associates the identity of an article with its primary function. The court found that P.O.Y. is identified by its functional character and is known in the market, thus rejecting the petitioner's argument.

6. Applicability of Amended Rules 9 and 49 of the Central Excise Rules:
The petitioner argued that the circular of 1980 regarding P.O.Y. should apply. The court noted that the amended Rules 9 and 49, effective from 20th February 1982, require excise duty to be paid before texturisation. The court concluded that the amended rules nullify any previous circulars or guidelines and that P.O.Y. must discharge excise duty before texturisation.

7. Efficacy of Alternative Remedies and the Jurisdiction of the High Court Under Article 226:
The petitioner argued that the appeal pending was not an efficacious alternative remedy. The court, citing various precedents, decided to exercise its discretion to hear the case on merits, despite the availability of an alternative remedy.

Conclusion:
The court dismissed the writ petition, holding that all contentions raised by the petitioner lacked merit. The court found that the permission under Rule 56-B was temporary, P.O.Y. is excisable and marketable, and the Assistant Collector had the authority to withdraw the permission. The amended Rules 9 and 49 apply, requiring excise duty to be paid before texturisation. The doctrine of common parlance did not support the petitioner's arguments, and the court exercised its jurisdiction to hear the case on merits despite the availability of an alternative remedy.

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