1989 (2) TMI 121 - HC - Central Excise

Summary

Issues Involved:

1. Whether the machinery parts installed by the petitioners are excisable under Entry 29-A of Schedule 1 of the Central Excises and Salt Act, 1944.
2. Whether the Customs, Excise and Gold (Control) Appellate Tribunal was bound by the decision of the Allahabad High Court in a similar case.
3. Interpretation of Entry 29-A of the Central Excises and Salt Act, 1944.
4. Application of the principle of ejusdem generis to Entry 29-A.
5. Consideration of precedent judgments from other High Courts and the Supreme Court.
6. Market value as a condition for excise duty under Section 3 of the Central Excises and Salt Act, 1944.

Detailed Analysis:

1. Excisability of Machinery Parts:

The petitioners, owners of a Cold Storage, were found to have installed R.A.C. machinery parts manufactured by themselves. The Central Excise Inspector deemed these parts excisable under Entry 29-A of Schedule 1 of the Central Excises and Salt Act, 1944, raising a demand of Rs. 43,219.21. Objections and subsequent appeals by the petitioners were rejected, leading to the current writ petition challenging the excise duty levy.

2. Tribunal's Adherence to High Court Decision:

The petitioners argued that the Tribunal should have followed the decision of the Allahabad High Court in "Mother India Refrigeration Industries P. Ltd. v. Superintendent of Central Excise and Others (1980 E.L.T. 600)" instead of the Gujarat High Court's decision in "Anil Ice Factory and another v. Union of India 1984 (Vol. 15) E.L.T. 333." The court clarified that sub-clause (2) of Article 226 of the Constitution pertains to the High Court's jurisdiction to issue writs within its territory and does not bind the Tribunal to follow decisions of the Allahabad High Court for cases determined outside Uttar Pradesh.

3. Interpretation of Entry 29-A:

The court emphasized that Entry 29-A covers refrigerating and air-conditioning appliances and parts thereof. The central idea is that dutiable articles must be assembled units ordinarily sold or offered for sale. The court noted that parts manufactured and utilized on-site, as in the petitioners' case, do not fall under this category. The court disagreed with the Gujarat High Court's view that sub-clause (3) of Entry 29-A is independent and should not be interpreted with reference to sub-clauses (1) and (2).

4. Principle of Ejusdem Generis:

The court applied the principle of ejusdem generis, which requires that general terms following specific ones should be interpreted in the context of the specific terms. The court concluded that Entry 29-A (3) must be read in conjunction with sub-clauses (1) and (2), meaning only parts ordinarily sold or offered for sale are excisable.

5. Precedent Judgments:

The court cited several judgments supporting its interpretation:
- "Blue Star Ltd. v. Union of India and another 1980 (Vol. 6) E.L.T. 280" (Bombay High Court): Walk-in-Coolers not liable to excise duty as they are not ready assembled units.
- "Calicut Refrigeration Co. v. Collector of Customs and Central Excise Cochin and others (1982 E.L.T. 106)" (Kerala High Court): Assembled units at the buyer's premises not covered under Item 29-A.
- "Vaidlal Ice and Cold Storage Co. Ahmedabad v. Union of India and others (S.C.A. No. 1504 of 1970)" (Gujarat High Court): Custom-made parts not liable to duty under Item 29-A (3).

6. Market Value and Section 3 of the Central Excises and Salt Act, 1944:

The court noted that Section 3 of the Act requires excisable goods to have a market value. Since the parts in question were custom-made and not sold in the market, they do not attract excise duty.

Conclusion:

The court held that the petitioners are not liable to pay excise duty on the disputed parts. The writ petition was allowed with costs, and the impugned orders levying excise duty were quashed.