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Issues Involved:
1. Whether the processes adopted by the respondent for manufacture of the said fabrics are only intermediary processes. 2. Whether the application of the said processes results in the manufacture of new substances or articles with distinctive names, characters, or uses. 3. Whether the respondent company manufactures cotton fabrics and artificial silk fabrics. 4. Whether the said fabrics are liable to duty under Item Nos. 19 and 22 of the First Schedule to the Central Excises and Salt Act, 1944. 5. The legality and validity of the notice u/s 80 of the Code of Civil Procedure. 6. Whether the levies, collections, and recoveries of the duties by the defendant are illegal, without jurisdiction, and ultra vires. 7. Whether the suit is barred by limitation. 8. Whether the suit is barred by the principles of waiver, estoppel, and acquiescence. 9. Whether the Court has jurisdiction to entertain the suit in view of the provisions of the Central Excises and Salt Act, 1944. Summary: Issue 1: Intermediary Process or Manufacture The Trial Court found that the processes adopted by the respondent for manufacturing the said fabrics are only intermediary processes. The application of these processes does not result in the manufacture of any new substance or article with a distinctive name, character, or use. The respondent does not manufacture cotton fabrics and artificial silk fabrics. Issue 2: Distinct Finished Marketable Products The Trial Court concluded that the processed fabrics are not distinct finished marketable products with distinct names, characters, and uses. These products are not brought into existence as new substances with distinctive names, characters, or uses in the commercial sense. They are manufactured only for utilization in the manufacture of shoes and are part of an integrated process. The processed fabrics are not marketable and cannot be bought and sold. Issue 3: Manufacture of Cotton and Artificial Silk Fabrics The respondent does not manufacture cotton fabrics and artificial silk fabrics. The processed fabrics are merely unfinished intermediary components used in the manufacturing of footwear. Issue 4: Liability to Duty The processed fabrics do not fall within the description of any of the goods mentioned in the Central Excises and Salt Act, 1944, and are not liable to duty under Items 22(B) or 19 of the Schedule. The Trial Court held that the levies and collections were illegal and without authority of law. Issue 5: Notice u/s 80 of CPC The notice under Section 80 of the Code of Civil Procedure was found to be legal, valid, and sufficient. Issue 6: Legality of Levies and Collections The levies, collections, and recoveries of the duties by the defendant were found to be illegal, without jurisdiction, and ultra vires. Issue 7: Barred by Limitation The suit was not barred by limitation. Issue 8: Waiver, Estoppel, and Acquiescence The suit was not barred by the principles of waiver, estoppel, and acquiescence. Issue 9: Jurisdiction of the Court The Court has jurisdiction to entertain the suit in view of the provisions of the Central Excises and Salt Act, 1944. Conclusion: The appeal failed, and the decision of the Trial Court was upheld. The processed fabrics were not considered excisable goods, and the levies and collections were deemed unlawful. The appeal was dismissed with no order as to costs.
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