1987 (8) TMI 97 - HC - Central Excise

Exemption notifications cannot provide norms or standard for classification of article - Plastics - PTFE sheets

Summary

Issues:
1. Interpretation of an exemption notification related to plastic sheets under the Central Excise and Salt Act, 1944.
2. Validity of a government notification defining "rigid" and "flexible" in relation to plastic articles.
3. Authority of the government to classify products for exemption purposes under Rule 8 of the Central Excise Rules.

Analysis:
1. The judgment dealt with the interpretation of an exemption notification applicable to plastic sheets classified under Tariff Item No. 15A(2) of the Central Excise and Salt Act, 1944. The petitioners, manufacturers of PTFE Sheets, sought exemption under a notification exempting certain plastic articles falling under the said Tariff Item. A previous judgment by Bharucha, J., had held that the petitioners were entitled to the exemption as their goods were not classified as "rigid."

2. The government issued a subsequent notification defining "rigid" and "flexible" in relation to plastic articles falling under the same Tariff Item. The petition challenged this notification, arguing that the government exceeded its authority by introducing a classification that should be determined by the legislature, not through an exemption notification. The petitioner contended that the government's attempt to define "rigid" and "flexible" through a notification was invalid.

3. The court analyzed previous judgments, including one by the Mysore High Court and another by the Patna High Court, to determine the extent of the government's authority in classifying products for exemption purposes. The court emphasized that any classification for exemption must be made by the legislature and not through notifications issued under Rule 8 of the Central Excise Rules. The court found that the government's attempt to define "rigid" and "flexible" through a notification was beyond the scope of its authority.

4. The court rejected the government's argument that the notification aimed to clarify the terms "rigid" and "flexible" for manufacturers' benefit, stating that such classification should be legislatively defined. The court emphasized that the terms were not defined in the Tariff Item itself, requiring interpretation based on popular or commercial understanding. Consequently, the court ruled in favor of the petitioners, holding the government's notification invalid and ordering the return of the deposited amount to the petitioners.

5. In conclusion, the judgment highlighted the importance of legislative classification in exemption matters and emphasized that the government's attempt to define terms through notifications was impermissible. The court's decision favored the petitioners, underscoring the necessity for clear legislative guidelines in classification for exemption purposes.