1993 (10) TMI 93 - HC - Central Excise

Summary

Issues:
Classification of product as 'Bars' or 'Flats' for excise duty purposes, discrepancy in excise duty rates, requirement of undertaking for payment of additional duty, hardship faced by petitioners.

Analysis:
The petitioners, a partnership firm operating a rolling mill, faced a dispute regarding the classification of their product for excise duty purposes. Initially described as 'Bars' by the petitioners, the Department modified it to 'Flats' with higher excise duty rates. A decision by the Customs Excise Gold Appellate Tribunal classified the product as 'Other Bars and Rods', prompting the Department to ask for an undertaking to pay duty at a lower rate until the Supreme Court's decision. The difference in duty rates between 'Flats' and 'Bars' was highlighted, causing financial implications for the petitioners.

The petitioners contended that their product, known as 'Patti/Patra' in the industry, should be classified as 'Flats' with higher duty rates. They objected to being asked for an undertaking to pay additional duty if the Tribunal's decision was reversed, leading to financial strain and potential closure of their mills. The Department justified its stance based on the Tribunal's order and the need to comply until the Supreme Court's decision. The petitioners faced a dilemma of paying lower duty as 'Bars' or higher duty as 'Flats', with implications on their ability to recover costs from customers.

The Court acknowledged the petitioners' willingness to pay duty as per the 'Flats' classification, which was higher but acceptable to them. Not being party to the Tribunal case, the petitioners were unaware of the specifics but maintained their product was 'Flats'. The Court ruled in favor of the petitioners, directing them to pay duty as per the 'Flats' classification, rejecting the Department's instructions to pay as 'Bars' or provide an undertaking. This decision aimed to prevent undue financial burden on the petitioners and ensure compliance with the correct classification.

In conclusion, the Court allowed the writ petitions, setting aside the Department's instructions and directing the petitioners to pay excise duty based on the 'Flats' classification. The judgment aimed to alleviate the financial hardship faced by the petitioners and ensure compliance with the appropriate duty rates without unnecessary complications.