1995 (2) TMI 76 - HC - Central Excise

Summary

Issues Involved:

1. Classification of processed and unprocessed tyre cord fabric under Central Excise Tariff Act.
2. Jurisdiction and maintainability of writ petitions in the presence of an alternative remedy.
3. Application of limitation period under Section 11A of the Central Excise and Salt Act.

Detailed Analysis:

1. Classification of Processed and Unprocessed Tyre Cord Fabric:

The primary issue in these writ petitions is whether "tyre cord fabric of high tenacity yarn of polyamides or polyester" under Heading No. 59.02 in Chapter 59, Section XI of the Central Excise Tariff Act, 1985, refers to processed or unprocessed fabric. The petitioner, a manufacturer of tyre cord fabric, contends that only unprocessed tyre cord fabric is covered under Heading 59.02, and after paying excise duty at that stage, no duty is payable on the processed fabric. The authorities, however, classified the processed tyre cord warp sheet under Heading 59.05 and demanded duty.

The court noted that tyre cord fabric, used in tyre manufacturing, must undergo rubberizing, and the fabric is considered rubberized textile fabric under Heading 59.05 if its tenacity falls below the specified limit after processing. The court concluded that Heading 59.02 includes processed tyre cord fabric, as it is rubberized or processed tyre cord fabric, not unprocessed fabric. The court upheld the classification under Heading 59.05 for processed fabric with tenacity below the specified limit.

2. Jurisdiction and Maintainability of Writ Petitions:

The respondent raised a preliminary objection regarding the maintainability of the writ petitions, arguing that the petitioner has an adequate alternative remedy through the appellate process under the Central Excise and Salt Act. The petitioner countered that the High Court's power under Article 226 is not diminished by the existence of an alternative remedy, especially when the authorities have acted perversely in classifying the goods.

The court, referencing various judgments, held that the existence of an alternative remedy does not bar the High Court's jurisdiction under Article 226, particularly when the issue involves the interpretation of tariff headings, a mixed question of law and fact. The court decided to exercise its discretion to determine the scope of the entry authoritatively in these proceedings, rejecting the preliminary objection.

3. Application of Limitation Period under Section 11A:

The petitioner argued that the demands for the period from 1-7-1987 to 7-10-1990 were raised beyond the six-month limitation period under Section 11A(1) of the Central Excise and Salt Act. The respondents invoked the proviso to Section 11A, which allows an extended period in cases of fraud, suppression of facts, or willful misstatement.

The court found that the petitioner's assessments were provisional, and the petitioner did not disclose the removal of goods with lesser tensile strength to the respondents. The test results showing lesser tensile strength were not shared with the authorities at the time of removal. The court concluded that the removal of processed fabric with lesser tensile strength without disclosure constituted suppression of relevant facts with the intent to evade duty. Therefore, the extended limitation period under the proviso to Section 11A was applicable, and the impugned demands were not barred by limitation.

Conclusion:

The court dismissed the writ petitions, upholding the classification of processed tyre cord fabric under Heading 59.05 and the applicability of the extended limitation period under the proviso to Section 11A for the demands made by the authorities.