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Issues Involved:
1. Jurisdiction and authority of the Assistant Collector under Section 11A of the Central Excises and Salt Act, 1944. 2. Validity and timeliness of the show cause notice issued on 23-1-1990. 3. Whether twisting of cotton/nylon yarn amounts to manufacture. 4. Applicability of Tariff Advice 29/80, dated 24-5-1980. 5. Interpretation of relevant case laws regarding manufacturing processes and excisability. Issue-wise Detailed Analysis: 1. Jurisdiction and Authority under Section 11A: The petitioner argued that the impugned order was without authority, power, or jurisdiction as Section 11A of the Central Excises and Salt Act, 1944, empowers the Assistant Collector to demand duty only for the six months preceding the date of the show cause notice (23-1-1990). The court noted that Section 11A states that a Central Excise Officer may serve notice within six months from the relevant date for duties not levied or paid, with an extended period of five years in cases involving fraud, collusion, or wilful misstatement. The court found that the proceedings had been a continuous one and not a new show cause notice, thus rejecting the petitioner's contention on limitation. 2. Validity and Timeliness of the Show Cause Notice: The petitioner contended that the show cause notice issued on 23-1-1990 was invalid and time-barred as it was issued five years after the High Court's order in W.P. No. 2877/79. The court observed that the proceedings had been ongoing and that the petitioner had been effectively blocking the course of the proceedings by raising unnecessary queries and objections. The court held that the show cause notice was not a fresh notice but a continuation of the earlier proceedings, thus dismissing the petitioner's argument on this ground. 3. Twisting of Cotton/Nylon Yarn as Manufacture: The petitioner argued that twisting of cotton/nylon yarn does not amount to manufacture, citing previous High Court orders. The court referred to the Supreme Court's decision in Aditya Mills Ltd. v. Union of India, which held that "doubling and twisting of two different types of yarns amount to manufacture of a new type of yarn." However, the court also considered the subsequent Supreme Court decision in Porritts & Spencer (Asia) Ltd. v. Collector of Central Excise, which emphasized that the resultant product must have marketability. The court found that the twisted yarn in question did not have marketability until woven into duck fabrics, thus siding with the petitioner's argument that the twisted yarn did not constitute a new excisable product. 4. Applicability of Tariff Advice 29/80: The petitioner challenged the conclusion of the adjudicating authority that Tariff Advice 29/80, dated 24-5-1980, would not apply. The court did not delve deeply into this issue but noted that the adjudicating authority had not properly considered all relevant aspects, including the specific directions issued by the High Court in earlier proceedings. 5. Interpretation of Relevant Case Laws: The court analyzed the relevant case laws, particularly the Supreme Court decisions in Aditya Mills Ltd. and Porritts & Spencer (Asia) Ltd. The court noted that while Aditya Mills Ltd. held that twisting yarn amounts to manufacture, the subsequent decision in Porritts & Spencer emphasized the need for the resultant product to have marketability. The court concluded that the authorities had made a mistake in classifying the twisted yarn under T.I. 18-A(ii) without considering its marketability. Conclusion: The court quashed the order of the third respondent and remitted the matter for fresh consideration in light of the Supreme Court's decision in Porritts & Spencer (Asia) Ltd. The court emphasized that the twisted yarn did not have marketability until woven into duck fabrics, thus it could not be classified under T.I. 18-A(ii) as a new excisable product. The court also noted that the petitioner had not availed the statutory remedy of appeal but chose to address the merits of the case due to the prolonged nature of the proceedings.
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