1987 (8) TMI 222 - HC - Central Excise

Issues Involved:
1. Whether wet grinders are exigible to excise duty under Excise Tariff Item 33C.
2. Maintainability of the writ petitions challenging the trade notice.
3. Interpretation of the term "manufacture" under Section 2(f) of the Central Excises and Salt Act, 1944.
4. Binding nature of trade notices on assessing authorities.
5. Applicability of the Gujarat High Court's judgment to the present case.
6. Validity of the change in the Central Excise Department's stance on the classification of wet grinders.

Detailed Analysis:

1. Exigibility of Wet Grinders to Excise Duty under Item 33C:
The primary issue was whether wet grinders fall under Excise Tariff Item 33C, which pertains to domestic electrical appliances. The petitioners argued that wet grinders, which are driven by external motors, do not fall under this category. The respondents contended that the process of fitting an electric motor to the wet grinder constitutes "manufacture" and results in a new product that is subject to excise duty under Item 33C. The court found that the wet grinders in question, which use external motors and V-belt mechanisms, do not fall under Item 33C as they do not have in-built motors for instant operation. This conclusion aligns with the Gujarat High Court's judgment in a similar case.

2. Maintainability of the Writ Petitions:
The respondents raised a preliminary objection regarding the maintainability of the writ petitions, arguing that trade notices have no legal effect and cannot be impugned under Article 226 of the Constitution. The court rejected this argument, noting that the impugned trade notice had a significant impact on the petitioners and was binding on subordinate authorities. Therefore, the writ petitions were deemed maintainable.

3. Interpretation of "Manufacture" under Section 2(f):
The respondents argued that the process of fitting an electric motor to the wet grinder constitutes "manufacture" under Section 2(f) of the Central Excises and Salt Act, 1944, resulting in a new product that is exigible to excise duty. The court disagreed, stating that merely fitting an electric motor to a wet grinder does not constitute a manufacturing process that results in a new product. The wet grinder remains the same product, albeit with an added motor, and thus does not fall under Item 33C.

4. Binding Nature of Trade Notices:
The respondents contended that trade notices are merely advisory and not binding on assessing authorities, who are independent quasi-judicial bodies. The court acknowledged this but noted that in the specific case of W.P. 596 of 1981, the assessing authority had relied on the trade notice to levy excise duty. Consequently, the trade notice had a binding effect in practice, and the writ petitions were justified.

5. Applicability of the Gujarat High Court's Judgment:
The court found that the Gujarat High Court's judgment in Balakrishna Rechhodlal Sha v. Asst. Collector of Central Excise was directly applicable to the present case. The Gujarat High Court had ruled that domestic grinders without in-built motors do not fall under Item 33C. The court noted that the Supreme Court had dismissed an appeal against this judgment, further reinforcing its applicability. The court agreed with the Gujarat High Court's reasoning and applied it to the present case.

6. Validity of the Change in the Central Excise Department's Stance:
The court criticized the Central Excise Department for changing its stance without any cogent reasons, such as new facts, changes in the tariff entry, or judicial pronouncements necessitating a reconsideration. The court held that the department's sudden change in stance, as reflected in the impugned trade notice, was unjustified and could not be sustained. The court cited a Division Bench judgment of the Delhi High Court, which emphasized that any change in the department's stance must be based on cogent reasons.

Conclusion:
The court concluded that wet grinders driven by external motors do not fall under Item 33C of the Central Excise Tariff. The writ petitions challenging the trade notice were maintainable, and the process of fitting an electric motor to a wet grinder does not constitute "manufacture" under Section 2(f) of the Central Excises and Salt Act, 1944. The Gujarat High Court's judgment was applicable to the present case, and the Central Excise Department's change in stance was invalid. The impugned order in W.P. 596 of 1981 was set aside, and the other writ petitions were dismissed as the court's decision was binding on the assessing authorities.

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