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TMI Blog1987 (8) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... effect to such reclassification in any manner or under some other guise. The prayer in the W. Ps. Nos. 7494 and 8588 of 1982 is to quash the above said Trade Notice and for a consequential mandamus restraining the respondents from giving effect to the same. The prayer in W.P. 596 of 1981 is to quash the impugned order of the Collector, Central Excise, and for a consequential mandamus restraining the respondents from giving effect to the Trade Notice. 4. It is an admitted fact that both the traders and the manufacturers purchase from outsiders electric motors to fix the same in grinders. It is also an admitted fact that Excise Tariff Item 33C came into force with effect from 1-3-1969 by Finance Act No. 14 of 1969. The facts and circumstances leading to the filing of these writ petitions may now be noted. We have noticed earlier that Excise Tariff Item 33C was introduced by Finance Act 14 of 1969 with effect from 1-3-1969. When the departmental people called upon the manufacturers in wet grinders to take out a licence under the Central Excise Act, they protested and made representations through the Manufacturers association. Subsequently, the manufacturers were informed by the Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey will be liable to pay excise duty under Item 33C of the Central Excise Tariff in view of the process of manufacture involved in fitting motor to the steel frame of the wet grinder in the space allotted for the same and by connecting the wheel base of the grinder with the motor by using a V-belt. It is the case of the respondents that after fitting the electric motor to the steel frame, in the manner stated above, a new and different product emerges and the same is so commercially consumed in the market which is different from the raw materials, namely, motor and grinder portion. Therefore, the new produce is exigible to excise duty under Item 33C of the Central Excise Tariff. For this purpose, the respondent relies upon the definition of manufacture in Section 2(f) of the Central Excises and Salt Act, 1944. It is stated in the counter affidavit that invariably the petitioners are marketing the wet grinders after assembling the same, and that no consumer will venture to but a wet grinder in any unassembled condition as the assembly involves a number of manufacturing operations. The fact that electric motor fitted into the wet grinder has already been subjected to excise duty i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excises and Salt Act. The wet grinders are commonly known and used only as an electric appliance and not otherwise. On the basis of these averments in the counter affidavits, the respondents have prayed for the dismissal of the writ petitions. 8. Mr. A.K. Kailasam, learned counsel for the petitioners, placing reliance heavily on two Division Bench judgments of the Gujarat High Court namely, Balakrishna Rechhodlal Sha v. Asst. Collector of Central Excise, Ahmedabad and others, reported in 1979 E.L.T. 377 and Shri Punit Ghar Ganti v. Union of India and others, reported in 1981 E.L.T. 121, submitted that the goods dealt with by the Gujarat High Court are identical to the goods in dispute in these cases and the Excise Law being a Central enactment, must be enforced uniformly throughout the country and, therefore, the contrary view taken by the Central Excise authorities in Tamil Nadu State cannot be sustained. In support of this proposition, he relied on the following decisions: The Union of India and others v. The Elphinstone Spinning and Weaving Mills Co. Ltd., reported in 1969 E.L.T. 680, Lachmandas Tobacco dealers v. Union of India and others, reported in 1978 E.L.T. 502, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the issue. Otherwise, they cannot depart from their earlier stand as and when they like. For this proposition, he relied on a Division Bench decision of the Delhi High Court in J.K. Synthetics Ltd. and another v. Union of India and others 1981 E.L.T. 328, and two other judgments of this Court in Indian Organic Chemicals Ltd. v. Union of India and others, 1983 E.L.T. 34 and Madras Rubber Factory Ltd. v. Asst. Collector of Central Excise Madras and another, 1981 E.L.T. 565. 10. Learned counsel for the petitioners further contended that in the fitment of motor into the wet grinder in the places meant for it, no manufacturing process takes place within the meaning of Section 2(f) of the Act and the assumption on the part of the respondents that in the process of fitment of motor, there was a process of manufacture, and at the end, a new product emerges out of such manufacturing process exigible to excise duty is without any basis. To substantiate his contention that there is no manufacturing process involved, he cited a decision in Union of India and others v. Delhi Cloth and General Mills Co. Ltd. and others 1977 E.L.T. 199. 11. The learned counsel submitted that the trade no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and circumstances of the case, inasmuch as the jurisdiction of the Assessing Officer is not in doubt. In support of this he relied on a Division Bench judgment of this court in Collector of Central Excise, Madurai v. Madurai Coats Ltd. 1986 E.L.T. 157. The learned counsel also submitted that Rule 233 of the Central Excise Rules enables the Revenue to issue trade notices and, therefore, the petitioners cannot challenge the impugned trade notice. The further contention is that Entry 33C of the Central Excise Tariff has to be construed in the light of the words employed therein and decisions interpreting the items or entries in other enactments cannot be relied on for understanding the scope of Entry 33C. For this proposition, he cited a decision in Brooke Bond India Ltd. v. Union of India, 1984 E.L.T. 32. The learned counsel submitted that even though the manufacturer of wet grinder and the trader have purchased electric motors from third parties and thereafter fitted the latter into the steel frame of the wet grinder, and connected the motor with the wet grinder by V-belt, both the trader and the manufacturer are liable to pay the excise duty in view of the fact that in fitting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nced by the impugned trade notice. Therefore, if the petitioner in W.P. 596 of 1981 is aggrieved, he must file an appeal against that order. 18. Mr. A.S. Kailasam, learned counsel appearing for the petitioners in reply to the arguments of the learned counsel for the Revenue submitted that it is not open to the respondents to give a new reason for not accepting the ruling of the Gujarat High Court. The reason already given in the impugned order in W.P. 596 of 1981, alone will have to be taken into account and not the reasons given in the counter affidavit. For this contention, he relied on the following judgments - Pir Sidik Md. Shah v. Mst. Saran 58 MLJ 7, Parry Co. Ltd. v. P.C. Pal and others, 1970-2-L.I.C. 1071 and In re Hind Hosiery Mills and others, 1982 E.L.T. 424. 19. Let me now consider the rival submissions of the learned counsel on both sides. We have noticed earlier that Item 33C was introduced into the Central Excise Tariff by Finance Act 14 of 1969 with effect from 1-3-1969. Immediately thereafter, the Superintendent of Central Excise, seems to have issued communications to the manufacturers and dealers in wet grinders calling upon them to comply with the all form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en produced by the learned counsel for the petitioner, which is to the following effect :- CENTRAL EXCISE INTEGRATED DIVISIONAL OFFICE TRICHIRAPALLI C.No. V/33C/14/1/69/IDO Dt. 19-8-1969 To The Superintendent of Central Excise, MOR A , Trichi. Sub. : Central Excise - 1969 Budget-Domestic Electrical appliance Grinding - AL 4 of M/s. Chandra Agencies. Ref.: Range Officers O.C. 1205/3-5-1969 ** * ** In view of the fact that wet rice grinder is not excisable the AL-4 application with Central Excise revenue stamp for the value of Rs. 100/- (Rupees one hundred) and the ground plan of M/s. Chandra Agencies received in this office for issue of L-4 licence are returned herewith. The papers may be handed over to the party and necessary acknowledgement obtained and filed in the MOR Office. Sd./- V. Thirumalachari for Asstt. Collector Encl. : AL-4 and ground plan Copy to M/s. Chandra Agencies, 84, Palakarai, Trichi. A communication from the Government of India, Central Board of Excise and Customs received by M/s. Wet Grinders Manufacturers Association is set out below :- GOVERNMENT OF INDIA Central Board of Excise and Customs F.No. 46/2/69/CX-4 Ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is of some importance, and therefore, it is set out in full - Copy of Letter F. No. 15t/1/75CX-4, dated 12-6-1975 from Government of India, Ministry of Finance (Central Board of Excise and Customs), New Delhi. Sub: Central Excise - Domestic electrical appliance-inclusion of a point wet grinder from South zone. ****** I am directed to state that the question whether wet grinders etc. produced for domestic use and run by V-Belt mechanism connected to external electrical motor with the grinding system is classifiable as Domestic electrical appliances for levy of duty under Item 33C CET and that whether the scope of Board s clarificatory Letter F. No. 46/69-CX-4, dated 15-1-1970 requires any review or clarification was considered by the Collectors in conference. The conference considered the various aspects including the recommendations of the Dts. General of Technical Development etc. and decide that such grinders which do hot have in-built motors for instant operation in the system itself and which are operated by the V-Belt mechanism through external motors should fall outside the scope of Item 33C-CET 2. Board agrees with the decision of the Collectors in confere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained in the entry under Tariff Item 33C makes it clear that for product to attract levy of under the item, it must essentially be capable of domestic use and it must also be of the nature of an electrical appliance. The conference felt that the Tariff Advice issued in the case of Washotax (Tariff Advice No. 37/77, dated 10-10-1977 F. No. 154/4/77-CX-4) should apply to the wet grinder in question, as well subject, however, to the model being otherwise on merits considered as falling under T.I. 33C of Central Excise Tariff. 5. The Board agree with the above views of the conference and accordingly, holds that the wet grinders would be classifiable under Item No. 33C of the Central Excise Tariff. 6.Tariff Advice 23/75, dated 12-6-1975 may, therefore, be treated as cancelled. 7. Necessary instructions may please be issued to the filed formations. The Trade interests may also be suitably informed as per annexure. (C.B.E C. F.No. 154/5/78-CX-4, dated 18-6-1979) (Tariff Adv. No. 27/79) This was followed by another communication which is to the following effect - Central Excise-Item No. 33C - Domestic appliances - Classification of wet grinders. ****** Attention is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the interests of all concerned, the enforcement of the levy must be uniform throughout the country and in addition to that I am in respectful agreement with the ratio laid down by the Division Bench, I am following the same ratio. If once I come to the conclusion that the ratio of the Division Bench judgment of the Gujarat High Court (referred to above) applies to the facts of this case, there is no need for me to deal with all the aspects argued before me. It is enough if I give reasons how the ratio of the Division Bench judgment applies in all fours to the facts of the facts of the present case. 21. Mr. T. Somasundaram, learned counsel for the Revenue, as pointed out earlier, submitted that the ratio of the Division Bench judgment will not apply to the facts of the present cases as the goods dealt with by the Gujarat High Court are different from the one under consideration in these cases. On a careful scrutiny of the Division Bench judgment, I find that the learned counsel for the Revenue is not right in his above submission. Further, more than the nature of the goods, the ratio is important. Let me now analyse the facts and goods that were the subject matter of the Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d members of E.A.O., were requested to bring this to the notice of their members, manufacturers. Thereafter the Central Government has now sought to levy duty on the very same article by taking a different view as per the order which is challenged by the second Petitioner, dated September 17, 1973. In that order they have pointed out that according to the size, capacity output and the small horse power of the motor required for this appliance, it was clearly a domestic appliance and it was advertised as such domestic appliance. It was further pointed out that the design in the unit was such that the motor specially fitted to the unit, and therefore, such grinders were liable to be assessed as domestic electrical appliances under Item 33C of the Tariff schedule. Accordingly, even the first petitioner in whose case the collectorate has taken a final decision that these domestic flour mills were non-excisable under Entry 33C were also required to pay duty under this item. The same is the case of the third petitioners who are fresh manufacturers. Therefore, all these three petitioners have challenged the aforesaid levy under Item 33C. 2.................... 3. Therefore, this Entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchasing a separate electric motor manufactured by another manufacturer. That is why even the further exemption notification, which was issued on the same day i.e., March 1, 1969 for giving partial exemption to the extent duty was paid on electric motor in case of such domestic electrical appliances which attracted duty, has specifically mentioned that electrical appliances must be one fitted with duty paid electric motor, rotor or starter. It is this electric element or motor or rotor or starter which give the specific character to the goods of this description as electrical appliances. Unless electrical part is fitted into it by which the said appliance works and the rest of the assemblage would be only a domestic appliance which could not fall within the specific Tariff item of electric appliances, but would be any other kind of power driven domestic grinder. It is only when the electric motor is fitted into it that it becomes a domestic electric grinder so as to attract duty under Item 33C. Therefore, the Central Government s first order was clearly in accordance with the scheme of this Tariff Item. That interpretation was even accounted to the trade by the aforesaid trade n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion placed by the appropriate Government department on the words of the statute. Here we are not reading a trade notice for the purpose of controlling the plain meaning of the Tariff Entry. We are only reading at it is even the Government construction fits in and support our prima facie construction the relevant entry, when it is read with the entire exemption scheme. As earlier pointed out by us, the excise levy is on the production or manufacture and is not a sales tax levy. Therefore, what is taxed is production or manufacture and if the article at the stage of production or manufacture was an unassembled article or was not completely integrated whole domestic electrical appliance, it is obvious that the excise duty under the relevant Entry 33C would not be attracted. Keeping in mind this relevant scheme of the exemption notification, in the relevant schedule, which covered only these appliances which were complete domestic electrical appliances by specifying 20 of these items and the partial exemption which was given of duty paid at the earlier stage on the electric motor in the second para of that notification it is clear that it is only when the electric motor, rotor or star ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th in the judgment of the Gujarat High Court and the goods in question are identical, the reason given in the impugned order in W.P. 596 of 1981 is that the Government have not accepted that decision. The Central Excise Collector never said in the order that the goods considered by the Division Bench of the Gujarat High Court were different. Further, I find from the discussion in the judgment that almost all the questions raised by the learned counsel for the Revenue in these cases were raised before the learned Judges of the Gujarat High Court, but did not find acceptance with them. The learned Judges have considered similar trade notice issued by the Government of India holding that domestic grinders were non-excisable under Entry 33C as they had no inbuilt electric power motor and that Entry was applicable to sophisticated types of units in which motor was used in the unit itself and the working parts were so specially designed and were integrated into the whole unit as to form sub-domestic electric appliance. The learned Judges also considered the effect of notification issued under Rule 8 and came to the conclusion that the Notification helps only the case advanced by the trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Central Board of Excise and Customs, dated 18-6-1979, cannot be sustained in the absence of any change in the Tariff Item or the subsequent judgments of the other High Courts or Supreme Court. As rightly contended by the learned counsel for the petitioner placing reliance on a Division Bench judgment of the Delhi High Court in J.K. Synthetics Ltd. v. Union of India and other, 1981 E.L.T. 328, before the department departs from its earlier stand, they must give cogent reasons such as fresh Acts or change in relevant Tariff Entry or any further decisions of a High Court or Supreme Court necessitating the reconside-ration of the earlier view. In this case, the only reason given is that Washotax has been brought under Item 33C and consequently the wet grinders must also be classified under Item 33C of the Central Excise Tariff. This reason does not satisfy the conditions for change of view as laid down in the Division Bench judgment of the Delhi High Court with which I respectfully agree. The Division Bench judgment of the Delhi High Court in the case cited above, has held as follows :- The question which we are now called upon to consider is as to the precise scope of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessees. 24. Though Mr. T. Somasundaram, learned counsel for the Revenue, strongly emphasised the fact that Trade notice is not binding on the assessing authority and they are expected to pass orders independent of information contained in the trade notice, the fact remains that in the assessment order in W.P. 596 of 1981, the Collector has squarely placed reliance on trade notice and has levied excise duty on wet grinders under Item 33C of Central Excise Tariff. Therefore, the contention that the writ petitions are premature and not maintainable against trade notice cannot be accepted. 25. In the light of the foregoing discussion, I hold that the wet grinder falls outside the scope of Item 33C of the Central Excise Tariff. I answer the question posed at the outset accordingly. In view of the above conclusion, there is no need or necessity to formally quash the impugned trade notice as this decision is binding on the assessing authorities. However, the impugned order of the assessing authorities in W.P. 596 of 1981 is set aside and the writ petition is allowed. All the other writ petitions are dismissed on the ground that no formal absolute rule nisi need go quashing the trad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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