9911796707
TMI Blog1970 (8) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... told has been raised to 54 per cent). The end product i.e. Nylon 6 yarn is again assessed to Central Excise duty at the rate of 4.50 per kg. under Item No. 18 of the Central Excise Tariff. The imported Caprolactum which is a monomer has to be first polymerised before Nylon 6 yarn is obtained therefrom. The polymerised Caprolactum chips are obtained at an intermediary stage in the manufacture of Nylon 6 yarn the said polymer chips are not sold as such in the market by the petitioner and are entirely used in the process of manufacture of Nylon 6 yarn. It is further alleged in the petition that these chips cannot be sold in the market as Plastics . 3. It is stated that during one of the visits by the respondent to the petitioner-factory in August, 1962, it was represented to him that polymer chips obtained from the polymerised Caprolactum cannot be regarded as Plastics not otherwise specified under Item 15A(iii) of the Schedule I of Act of 1944. It is stated that polymer chips cannot be used for the conventional plastics and vice versa because of the different properties. It is alleged that Nylon 6 yarn which is produced by the petitioner-factory from the polymer chips is separate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no realisation of duty from the petitioner and for this reason the petitioner has no cause of action. The petition is said to be of anticipatory relief and deserves to be rejected. 5. On merits it is denied that the polymer chips do not fall within Plastics not otherwise specified . It is stated that polymer chips are covered by Item 15A(iii) of Schedule I of the Act of 1944. It is maintained that polymer chips are obtained by the polymerisation of the caprolactum and are known as Polymide resins and that they can further be used as raw material for manufacture of different plastic articles by using special type of extrusions and injection moulding techniques. The product being a thermoplastic material by itself is correctly assessable under Item 15A(iii) of the First Schedule of Act of 1944. It is stated in the return that polymer chips are marketed products and were being imported by the petitioner in the first instance under the trade name Ultramid B.S. . On, this countervailing duty at the rate of 20 per cent ad valorem was being paid. Subsequently, however, the petitioner has set up a plant for the manufacture of this material from the imported chemicals known as Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in maintained that the remedy by way of appeal to the Central Board of Revenue was adequate. It was stated that the letters dated 12-2-1963 and 16-2-1963 did not amount to threat to recover the excise duty but simply informed the petitioner that according to the department particular items mentioned therein were considered dutiable and the duty was to be levied in accordance with the Central Excise Law. It was again reiterated that polymer chips produced by the petitioner are assessable under Item 15A(iii) of First Schedule to the Act of 1944. 8. The main contention in the writ petition, therefore, is that the polymer chips which are obtained at an intermediate stage in the manufacture of Nylon 6 yarn which is the end products manufactured by the petitioner and are not assessable to duty under Item No. 15A(iii) of Schedule I of the Act of 1944, Entry 15A for the relevant period reads as under : 15A. Plastics, All Sorts : (i) Moulding powders, granules and flakes (thermosetting and 20% ad valorem thermoplastic). (ii) Polyethylene films, Layflat tubings and P.V.C. sheets (that is to say, polyvinyl chloride sheets). (iii) Not otherwise specified. It may be mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remedy when the same can be obtained from the authorities under the Act. According to him it would pot be conducive to the proper administration of these quasi-judicial matters if the persons were permitted to come to the High Court without first having exhausted the remedies provided under the Act. Mr. Singhvi further contended that the question whether polymer chips are covered by the Entry 15A(iii) under the heading plastics of all sorts is essentially a question of fact and the same must be allowed to be decided by the authorities constituted under the Act who are in the best position to do so. He submits that this Court does not decide the disputed question of fact and as there is a dispute between the petitioner and the respondent as to whether polymer chips are covered by the Entry 15A(iii) the only appropriate course is to relegate the petitioner to the remedy provided under the Act. He, however, conceded that the plea that this Court under Article 226 of the Constitution should not entertain the petition when alternative remedies are available is not a question of jurisdiction but is only of discretion. Mr. Singhvi also did not seriously contend that in no case can the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bjection taken was that an appeal has been filed before the Central Board of Revenue and that, therefore, this remedy was not available to the petitioner. It was not pleaded that the demand by the Excise authorities would not be realised till the disposal of the appeal. In that view of the matter it is quite apparent that so far as the realisation of the amount on account of excise duty was concerned, it was never contemplated to be stayed and would obviously have been realised, had the petitioner not moved this Court by means of this writ petition. It is only after the petitioner had moved this Court and a stay of recovery had been ordered that the proceedings for the realisation of the amount or to proceed against the petitioner in accordance with law with which he had been threatened by the letter of the Deputy Superintendent of Police, Kota dated 16-2-1963, were not pursued. 1 may mention at this stage that the factum of the appeal having been filed and pending before the Central Board of Revenue had been mentioned in the petition in the first instance. The contention of Mr. Singhvi is that if this appeal also remains pending and this petition is also heard on merits it will me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c denial of the allegations made in the petition that the respondent had acted under the general directions of the Central Board of Revenue. Another significant fact which shows that the remedy by way of appeal or revision will be illusory is furnished in the judgment of the Bombay High Court in Nilon Synthetic Fibres Chemicals Limited v. Shri R.K. Audi, Assistant Collector and others (Miscellaneous No. 491 of 1964) decided on 30th April, 1970. In this case the point raised was identically the same whether the polymer chips were covered by Item 15A in Schedule I to the Central Excises and Salt Act, 1944. In the judgment there is a reference to the fact that though the petitioner company had been insisting to the Assistant Collector that it was not liable to excise duty under Item 15A, the later had written a letter to the petitioner dated 28th November, 1964 in which it was stated that the Government of India had decided to levy duty on Polymer chips under Item 15A of the Schedule I of the Act. Mr. Palkhiwala pointed out, and in my opinion rightly that in view of the fact that the main submission of the counsel for the petitioner that Polymer chips were not covered by Item 15A ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rieved by an order of the Appellate Assistant Commissioner imposing a penalty cannot be permitted to abandon resort to that machinery and to invoke the jurisdiction of the High Court under Article 226 when he had adequate remedy open to him by way of appeal to the Tribunal. In that case of course the matter required investigation of facts and, therefore, obviously the relief by way of writ petition was not available. Their Lordships of the Supreme Court have in a number of cases under the Income-tax Act upheld the issuance of writs under Article 226 of the Constitution by the High Courts. 15. In Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District I, Calcutta and another (AIR 1961 S.C. 372) their Lordships upheld the power of the High Court to issue a writ under Article 226 of the Constitution of India quashing the notice issued by the Income-tax officer under Section 34 of the Act if he had acted in excess of his jurisdiction. 16. The next case referred to was the British India Steam Navigation Co. Ltd. v. Jasjit Singh, Addl. Collector of Customs, Calcutta and others (AIR 1964 S.C. 1451) in which an appeal had been directly filed in the Supreme Court against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that certain direction had been issued by the Central Board of Revenue and the Collector had not applied his independent mind but had gone by the directions. This, their Lordships of the Supreme Court, found to be illegal as in their view the Collector being the quasi-judicial authority had to apply independent mind and, therefore, directed that the matter be sent back to the Collector for decision whether the M.G. Paper should be assessed as Printing Paper or as packing and wrapping paper . Mr. Singhvi specially relied on the observations as follows : Both the appellant as well as the Revenue invited us to decide the case on the basis of the material on record. Ordinarily this Court does not go into questions of fact. That is the duty of the authorities under the Act. We see no exceptional circumstances in this case requiring us to deviate from the ordinary rule. 19. The learned Counsel contended that even when both the sides wanted their Lordships of the Supreme Court to decide the matter, the matter was sent back to the authorities under the Act for decision. He contended that similarly in the present case there is no reason why the matter whether polymer chips a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it petition raises a disputed question of facts and on this ground also the petition should be thrown out. In my view there is a fallacy in the argument of the learned Counsel. There is no disputed question of facts so far as the main pleadings of the parties are concerned. Just because according to the petitioner the Polymer chips are not covered by Entry 15A while according to the respondent Polymer chips are covered by Entry 15A does not make it a disputed question of fact. All the facts relating to the process of obtaining Polymer chips and the various constituents are admitted. The question only is whether on these admitted facts a liability to excise duty can be created on the Polymer chips obtained by the petitioner under Entry 15A. The question here is not of deciding the disputed question of facts but it is simply of interpreting the Entry 15A on the basis of facts on which there is no dispute. The contention of the petitioner is that on the admitted facts the Polymer chips are not covered by Entry 15A and the order of the Collector holding the petitioner liable to pay excise duty amounts to assuming the jurisdiction where it has none and also it is patently erroneous. Suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich in fact does not vest in him it would be a clear case of acting without jurisdiction and would also be a case of patent illegality. In my view, therefore, as the petitioner is raising the contention that on admitted facts. Entry 15A does not cover Polymer chips, and if this contention is right, the result would be that it is being asked to pay money without any authority of law. I cannot conceive of any greater infringement of petitioner s right and, therefore, it is not possible for me to accept the submission of Mr. Singhvi that the petitioner is not entitled to invoke Article 226 of the Constitution even in these circumstances. 25. Mr. Singhvi also sought to contend that the order of the Collector did not mention all these facts and details which had been mentioned by the petitioner and, therefore, it would not be proper for this Court to decide the matter on this material. This in my opinion is not the correct approach. It is admitted by the respondent that a detailed representation was made to the respondent by the petitioner taking the stand that polymer chips were not covered by Entry 15A. It is also admitted in the return that a German Scientist was taken by the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and at an intermediate stage they produced a substance which the Excise authorities claimed was not a refined oil because deodorisation had not been done and the substance without deodorisation could not be called a refined oil as known to the consumers in the commercial community. The writ petition had been allowed by the Punjab High Court, Circuit Bench at Delhi and an appeal of the Union of India against the said judgment was dismissed by their Lordships of the Supreme Court. In this case no objection was raised that the petitioners must be relegated to the alternative remedy of appeal or revision or that the decision whether a particular item fell within one entry or other of the First Schedule to the Act could not be determined because there was a dispute on the question of facts. 28. Another case reported as South Bihar Sugar Mills Ltd. and another etc. v. Union of India and another etc. [1978 E.L.T. (J 336) = AIR 1968 Supreme Court 1922] may be referred. In that case again the question was whether gas produced by the manufacturers was kiln gas and hence not chargeable under the Excise Act whereas the Revenue contended that the process employed by the petitioner company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner was to be relegated to seek its remedy before the appellate of the revisional authority only one of the two courses could be followed i.e. (i) that the authority under the Act should follow the Bombay High Court decision and give relief to the petitioner or (ii) that the respondent should ignore the judgment of the Bombay High Court and take a contrary view. In the event of the first course being followed the Excise authorities will be prevented from challenging the view taken by the Bombay High Court so far as the present petitioner is concerned because it will not be possible for the respondent to have this matter pursued further in any proceedings. In the other alternative, the result will be ignoring and acting contrary to the judgment of the Bombay High Court by the Tribunal under the Act which would not. be consistent with the proper administration of justice but rather will be destructive of it. 31. In that view of the matter and in view of the facts and circumstances of the case and the long time that has elapsed since the matter has been pending in this Court, I think it will not be proper to reject this petition on this preliminary ground. The contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nylon 6 fibres used in textile industry. This end product Nylon 6 yarn is covered by Item No. 18 of the Central Excise Tariff on which duty is paid by the petitioner. It is further stated that the polymer chips obtained in the petitioner company are exclusively suitable for spinning of yarn for textile industries only. It is also stated that the raw material caprolactum can be polymerised by different technical methods under different conditions to obtain different grades of polymer. There are, however, two broad grades of polymers namely (i) Polymer chips used exclusively for textile industry and suitable only for spinning textile fibres ; and (ii) Polymer chips used exclusively as a material for the Engineering suitable for plastic moulding injection and extrusion purposes and which are unfit for use in textile industry. It is asserted that it is the Polymer chips obtainable under category (ii) only which fall within the entry Plastics of all sorts . Different procedures are said to be used for these two categories. The type of chips obtained depends on the conditions and procedure adopted for polymerisation of caprolactum. It is also stated that at the time of the polymerisati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being manufactured by the petitioner. It is stated that the Polymer chips have Thermoplastic properties and that Ultramid BS can be used for manufacture of textile fibres as well as the plastic material for manufacture of articles made of plastics. 35. Later on some further affidavits were filed by the petitioner of 6 persons dealing and familiar with the plastic industries which are to the effect that polymer chips used by the petitioner company for the manufacture of Nylon yarn are not plastic articles and are not commercially used for producing plastic products and that it cannot be regarded as raw material for manufacture of plastic nor are they known as plastics commercially. 36. A further affidavit by Mr. V.J. Bakre, Chief Chemist, Central Revenues Control Laboratory, Government of India, dated 26-7-1970, was filed and I permitted it to be placed on record. In this affidavit it denied that the polymer chips which are used by the petitioner company for spinning yarn are not fit for being moulded into plastic articles or other industrial components. Reference is made to the various definitions of Plastic given in some of the standard books of which I shall have occasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isation. This fact has been admitted by Mr. Chatterjee on behalf of the respondent in his affidavit dated 3-7-1964. Some polyamide are fibre forming to produce synthetic fibres of the Nylon type. The contention of Mr. Palkhiwala, therefore, is that before polymer chips obtained by the petitioner company can be called plastic, so as to be covered by the Entry 15A, it must be at least shown that these polymer chips are at all capable of being used either as a raw material for plastic industry or as a plastic. According to the counsel anybody wanting to obtain Polymer chips for fibre has to take a decision much earlier than the stage of Polymer chips. The classification whether the Polymer chips will be of textile fibre or whether they will be plastic has to be determined at the stage of polymerisation. According to Mr. Palkhiwala if Polymer chips are to be obtained which could be called plastics and be used for the purpose of plastic industry the additive of plasticizers and other additives are essential and as admitted by in the case of polymer chips obtained by the petitioner no plasticizers are added it would be wrong to say that they are nevertheless plastic. He says that all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition, published by Dr. Van Nostrand Company, Inc. Princeton, New Jersey ; plastic is defined as under : A Plastic has been defined in a limited sense as any of a large group of organic substance, whether natural or synthetic, which can be moulded (Plastikos fit for moulding). The noun Plastic is usually applied to all polymers which are not considered to be elastomers or fibres; i.e. which exhibit neither the long range elasticity of elastomers nor the very high crystallinity of most fibres. In the engineering sense, however, a plastic is a mixture containing one or more resins compounded with fillers, plasticizers, lubricants, dyes, etc. which has been subsequently fabricated. Commercial nylon fibres are linear and have molecular weight averages of the order of 12,000 to 20,000. If the average molecular weight is below 6,000 little or no fibre formation is possible; fibres formed from polymers with an average molecular weight of about 6,000 to 10,000 are weak and brittle; as the average molecular weight increases above this range, the fibres becomes stronger. However, if the molecular weight runs much over 20,000, the polymer becomes too difficult to melt or dissolve. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nition of thermoplastic in British Plastics Year Book, 1967, published by Lliffe Books Limited, Stamdord Street, London, where it is mentioned as under : Thermoplastic A material that can be softened to a pliable mass by heating, then shaped to a desired form which is retained on cooling to the solid state. This process of softening can be repeated a number of times without damage to the material always providing that the heat applied is not such as to cause chemical decomposition. The other passages mentioned in the books may also be looked into : Extrusion The process of forcing materials in the plastic condition through a die to produce strips, rods, tubes, or profiles. Nylon A high molecular weight polyamide produced typically by the condensation of a dibasic acid such as adipic acid and a diamine such as hexamethylene diamine. Used as fibres and filaments, for injection moulding and extrusion and in surface coatings. Nylons are distinguished by number, such as Nylon 6.6 and Nylon 6. These numbers refer to the carbon atoms present in the reactants used to prepare the particular polyamide. The principal nylons are nylon 6.6 from hexamethylene diamin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... astic which can be manipulated by the usual processes employed in the industry ......... The technique of production of fibres, bristles, filaments, etc. is very much a plastic process. 44. This definition was urged to support the contention of Mr. Singhvi that simply because the end products produced by the petitioner is Nylon 6 fibres, it does not mean that polymer chips produced by them are not covered by the definition of the word Plastic . Counsel for the petitioner, however, brought to my notice the definition of plastic given in this very book at pages 5 and 7 wherein it is written as under : Page 5. - Often it is the plasticizers rather than the resin components which become the determining factor in the availability of the final plastic. Another controlling factor is the equipment required to manufacture the various items. Page 7. - When these are mixed with modifying agents such as plasticizers, fillers, or the like, the resulting product is usually called a plastic material after it is formed to shape. The term Plastic material is usually reserved for the end product of the process even though these may only be a plastic intermediate stage. The counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he technique of manufacturing filaments or fibres by forcing the molten plastics material through a spinnaret and spinnaret is defined as a device embodying a number of small holds through which a plastic material can be forced to produce filaments or fibres. At page 173 Titanium Dioxide is mentioned as a non-toxic white coloured inorganic pigment. 47. The counsel for the petitioner, however, submitted that no much reliance can be placed on this Dictionary as the author has mentioned that he has found differences of opinion existing between companies in the same country as a term used in one country may mean something rather differently. In this connection it was pointed out that the mention of Titanium Dioxide as an inorganic pigment is not mentioned in Encyclopaedia of Polymer Science and Technology Volume 10, Edited by Herman F. Mark others; published by Interscience Publishers, New York, wherein a table is given of different inorganic pigments, including of the class Oxides but no mention is made of Titanium Dioxide. The suggestion is that if this entry does not include Titanium Dioxide as one of the inorganic pigment the mention of it in the Dictionary of Plastics, by J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effective plasticizer. The suggestion was that it was not necessary for the production of plastic to add any plasticizer. 52. Reference is then invited to page 15 of Plastics in the Service of Man , A Pelican book by E.G. Couzens and V.E. Yarsely, published by Penguin Books where it is mentioned as follows : In the book Plastics in the Service of Man by Couzens and Yarsley, which is a book intended for the general reader who is anxious to be well informed in the matters of daily interest. 53. Reference was then made to pages 176-178 of the said book where the process of spinning fibres like dry spinning, wet spinning and melt spinning are mentioned. Melt spinning is applied to insoluble polymers such as the Polyamides e.g. nylon and Terylene. 54. Reference was also made to Concise Guide to Plastics, Second Edition, by Herbert R. Simonds and Hames M. Church, published by Reinhold Publishing Corporation, New York, where a table of the progress in plastic development mentions polyamide (Nylon) fibres in the table giving details. 55. From the above said extracts, it is quite clear that even in Scientific and Technical sense the word plastic is not universally being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tific and technical text which was clearly in opposite and irrelevant when an entry in a fiscal statute was to be interpreted. 58. According to Mr. Palkhiwala the test that has to be applied was the test of how the word plastic was understood in the market and the commercial field and how the people belonging to trade understood it. According to him the fact whether a particular item could be known technically and scientifically as plastic was not determinative of the meaning as the Act was for the purpose of raising revenue and, therefore, it should be given the meaning as understood in the trade. According to Mr. Palkhiwala this was the test which has been recognised in a number of decided cases and it was that test alone which must be applied in the present case to determine whether the word Plastic in the entry cover the polymer chips which are obtained by the petitioner. In order to support his contention as to how the Entry 15A in the First Schedule of the Act should be interpreted, the counsel for the petitioner referred to a number of authorities where the test of principle of interpreting by giving a popular meaning as understood by the persons dealing in the trade wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have appeared in the schedule. That being so, it must follow that salted peanuts and cashew nuts, which as 1 have said above are considered generally in Canada to be within the category of nuts, do not fall within the exemptions provided for fruit and vegetables in Schedule III. 59. Mr. Palkhiwala stressed that the test adopted was whether the products were known in Canada, the country where the sales tax was being imposed, as fruit or vegetable . According to him the test to be applied in the present case should also be whether polymer chips are known as Plastics in India. 60. In Craies on Statute law , 6th Edition at page 163 it has been observed as under by Pollock B. in Grenfell v. Inland Revenue Commissioners : If a statute contains language which is capable of being construed in a popular sense, such a statute is not to be construed according to the strict or technical meaning of the language contained in it, but is to be construed in its popular sense, meaning, of course, by the words popular sense , that sense which people conversant with the subject matter with which the statute is dealing would attribute to it. 61. Further on the Rule is elaborated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , L.C. in Glassgow Corpn. v. Farie when he says of mines and minerals that, in construing the expression, it has to be determined what these words mean in the vernacular the mining world, the commercial world, and landowners at the time when the grant is made. This method of interpretation has been repeated and accepted more than once, and their Lordships agree that, where it can be ascertained that a particular vernacular meaning is attributed to words in circumstances similar to those in which the expression to be construed is found the vernacular meaning must prevail over the scientific. But the distinction is not a rigid one to be applied without regard to the circumstances in which the word is used. It was said by Lord Waston in the same case. Mines and minerals are not definite terms ; they are susceptible of limitation or expansion, according to the intention with which they are used. In their Lordships view, the same observations are true of the meaning of petroleum. It may vary according to the circumstances in which it is used. According to the Privy Council, therefore, the proper approach in interpreting the word is to ascertain the meaning which an ordinar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d submitted that it included charcoal and, therefore, their case was covered by Entry I of Part III of Sch. II. The Additional Sales Tax Officer and Assistant Commissioner had held that charcoal was not covered by Entry I of Part III of Sch. II. On further appeal the Board of Revenue held that charcoal would be included in the terms coal and this decision had been upheld by the High Court. Dealing with the matter about the interpretation of the taxing statute Shelat J. who spoke for the Court, observed as follows : Now, there can be no dispute that while coal is technically understood as a mineral product, charcoal is manufactured by human agency from products like wood and other things. But it is now well settled that while interpreting items in statutes like the Sales Tax Acts, resort should be had not to the scientific or the technical meaning of such terms but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense. 65. Their Lordships noticed various decisions including that of 1951 Canada Law Reports and the earlier decision of the Supreme Court i.e. Ramavatar Budhaiprasad etc. v. Assistant Sales T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Union of India and another v. Delhi Cloth and General Mills Co. Ltd. and others [1977 E.L.T. (J 177) = AIR 1963 S.C. 791] to the effect that in order of becoming goods there must be something which can ordinarily come to the market to be bought and sold and is known to the market. It was held that the kiln gas was not Carbon Dioxide nor compressed Carbon Dioxide known as such in the commercial community and was not liable to duty under the First Schedule of the Act. Their Lordships held as follows : The Act charges duty on manufacture of goods. The word Manufacture implies a change but every change in the raw material is not manufacture. There must be such a transformation that a new and different article must emerge having a distinctive name, character or use. The duty is levied on goods. As the Act does not define goods, the legislature must be taken to have used that word in its ordinary dictionary meaning. The dictionary meaning is that to become goods it must be something which can ordinarily come to the market to be bought and sold and is known to the market. The counsel for the petitioner contended that the test, therefore, that must be applied to give a findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be used for spinning of textile yarn. (d) No additives are added in the process of Polymerisation by the petitioner-company. (e) For making any change in the process of conditions of polymerisation in the petitioner factory change of specification would have to be made in the V.K. Reactor used by the petitioner s plant. (f) Polymer chips obtained in the plant of the petitioner are exactly similar to the polymer chips obtained by Badishe Anilin Soda Fabrik A.G. (B.A.S.F.) Ludwigshafenamrhein; A German firm which are described by them under their trade name `UL TRAMID BS . 70. These above facts clearly bring about vital differences between the Polymer chips obtained by the petitioner company and those necessary for the purpose of plastic. It seems prima facie too much to say that though the nature of the Polymer chips obtained by the petitioner are such that it can never be used by any manufacturer of plastic or by any industry for Plastic purpose (rather the polymer chips obtained are such that they do not have the minimum essential ingredients for being utilised for plastic purpose) yet they must be included in the word Plastic on the basis of wider and scientific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mid BS rather than to restrict it, and that he would not exclude it from Plastics, if Ultramid BS was not known in the market or in the trade as plastic, and was not known under synthetics fibre category. This fact the counsel maintains, supports his submission that Polymer chips of the petitioner-company, are not known in the trade and in the circle which deals with it as plastics. He says that the fact that the Plastic Industry is not using Ultramid BS can only be on the basis that the same is not included in the entry of Plastic. He has also pointed out that in the catalogue under the heading Plastics and Auxiliaries for plastics only Ultramid is mentioned as is clear from the extract of the catalogue at page 136 of the record. This according to the counsel also supports the assertion that there is a vital difference between the Ultramid and Ultramid BS and the two categories of goods are never equated under the same heading of Plastics. According to these categorisations Ultramid BS is excluded positively by the conscious act of the manufacturers from the heading Plastics . It may be mentioned that no counter-affidavit has been filed by the respondent to show that these catego ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffidavits were put in alongwith an application filed by the petitioner on 1-12-1969 which is C.M.P. 1463 W/69 and is at page 167 of the record. In that application it was clearly stated that the petitioner wanted to file affidavits of four persons who were in the trade and that they be allowed to be placed on record. The said application was allowed in the presence of counsel by Rangarajan J. on 2-12-1969 with the following orders : C.M. 1463-W/69-allowed. Counter-affidavit to be filed in three weeks. From the above order it is quite clear that these affidavits were allowed to be placed on record with the permission of the Court and the respondent was given time to file the reply. The respondent has actually availed of this opportunity and filed affidavit dated 26-7-1970 of Mr. V.J. Bakre, Chief Chemist, Central Revenues Control Laboratory, Government of India. This affidavit though filed during the course of hearing was permitted by me to be placed on record and was actually referred to by the counsel for both the sides. In this affidavit reference is made to the four affidavits filed alongwith C.M. 1463-W/69. It cannot, therefore, be said that these four affidavits were p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... running the Plastic Industry known as Nylon Plastic Industries. His affidavit states that Ultramid BS material is not known as plastic material ,or raw material for Plastic Industry in the Trade and Industry in India. He specifically refers to the user of Ultramid of BASF for the purpose of Plastic industry. 75. The next affidavit is by one Mr. R.S. Risbood, Assistant Manager in the Technical Sales Service of Indian Commercial Company Private Ltd., Bombay. According to this affidavit Nylon moulding powders used for moulding and extrusion purposes have a higher molecular weight whereas Nylon 6 products from Caprolactum used for spinning textile yarn has a much lower range of molecular weight. He further states that Nylon 6 which is used for textile yarn cannot be used as a moulding powder which is commonly known as injection moulding, extrusion and blow moulding etc. in plastic Trade and Industry. 76. Another affidavit is by Mr. Lakhiram Gupta Manager of M/s. Plastic Products Limited. The said company is stated to be in the trade of plastic since 1938 and manufactures plastics good. His affidavit states that in 1962 the company had erroneously imported a small quantity of Poly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use in the Plastic Industry. 78. Mr. Singhvi, however, contended that even if these affidavits were to be taken into account, they did not show that the polymer chips are not covered by the entry Plastic in the trade or in the business circle relevant for this purpose. He submitted that these affidavits are by persons who are engaged in the plastic industry and all that these affidavits show is that the Polymer chips produced by the petitioner-company are not used as raw material for plastic industry or plastic goods by the deponents. According to him these affidavits did not show that the Polymer chips are not to be included in the entry of Plastic. In my view there is no force in this contention of Mr. Singhvi. The facts found on the record show that the Polymer chips produced by the petitioner-company are not known in the trade and business circle as plastic nor are they used nor in fact can they be used in the Plastic Industry at all. The process by which the Polymer chips are obtained also materially differs from that by which the polymerisation would have to be done if it was necessary to use it for plastics. There is an affidavit of the manufacturer, BASF along with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r chips obtained by the petitioner-company were in such a condition that it was not possible to market them and that, in fact, they were not being marketed. It was contended by the counsel for the petitioner company that the petitioner has no arrangement for the removal of the Polymer chips from the factory for sale to any other factory. It was also contended that the removal of the Polymer chips from the factory involves a highly technical arrangement as care has to be taken that no trace of moisture gets into them. Reference was made to the affidavit filed by Mr. Jain to the effect that the petitioner-company had imported air tight metal containers from West Germany and that these containers were not available in India under the present conditions and it was commercially not possible to take the same from the market. The argument was that as the petitioner-company was not in a position to market and sell the Polymer chips obtained by the petitioner-company, it would not attract the excise duty because the duty imposed is in the very nature of things to be imposed on goods. It was contended that in order that a commodity should be goods it should be something known to the market a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e so, then the moment the manufacture takes place excise duty is immediately attracted. Once, therefore, if it be held that Polymer chips are manufactured and further Polymer chips are covered under the entry of Plastic there would be no escape from the conclusion that excise duty would be immediately attracted irrespective of the fact whether these polymer chips were actually brought to the market or whether the petitioner-company had the necessary resources to bring them to the market. In the case of Delhi Cloth and General Mills Ltd. [1977 E.L.T. (J 177)=AIR 1963 S.C. 791] what was held was that raw oil without deodorisation was not known as refined oil as known to the consumers and the commercial community and it was for this reason that it was held that it did not attract the excise duty. Similarly in the case of South Bihar Sugar Mills Ltd. [1978 E.L.T. (J 336)= AIR 1968 S.C. 922] it was found that the kiln gas produced by the petitioner-company was not known as Carbon Dioxide in the market, and, therefore, the imposition of duty under the head compressed, liquified or solidified Gases was not covered. Reference was also made to a decision of Tarkunde J. of Bombay, High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). - These shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in India, and a duty on salt manufactured in, or imported by land into, any part of India, as and at the rates, set forth in the First Schedule. Rule 7: Recovery of duty. - Every person who produces, cures or manufactures any excisable goods, or who stores such goods in a warehouse shall pay the duty or duties leviable on such goods, at such time and place and to such person as maybe designated, in or under the authority of these Rules, whether the payment of such duty or duties is secured by bond or otherwise. Rule 9 : Time and manner of payment of duty. - (I) No excisable goods shall be removed from any place where they are produced, cured or manufactured or any premises appurtenant thereto, which may be specified by the Collector in this behalf, whether for consumption, export or manufacture of any other commodity in or outside such place, until the excise duty leviable thereon has been paid at such place and in such manner as is prescribed in these Rules or as the Collector may require, and except on pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial Polymer chips which were imported under the trade name of, Ultramid BS . Subsequently, however, the petitioner is stated to have set up another plant for the manufacture of Polymer chips from caprolactum. It was maintained that this product i.e. Polymer chips is manufactured in one plant while Nylon yarn i.e. the end product is manufactured in the other plant. The two plants are said to be distinctly separate and can work independently of each other. This plea by the respondent was challenged in an affidavit dated 29-4-1965 by Mr. Aggarwal on behalf of the petitioner-company. It was maintained that the plants set up by the petitioner-company is one composite plant for the manufacture of Nylon 6 yarn from the raw material caprolactum. It was also maintained that the Industrial Licence obtained by the petitioner company specifies that the petitioner company is entitled to manufacture of Nylon 6 yarn. Stated that this is the only Industrial licence under which the entire factory of the petitioner functions and that the whole plant was imported at one time under a single import licence. It was, however, admitted that though the plant was installed at one time the V.K. Reactor pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufactured whether for consumption, export or manufacture of any other commodity in or outside such place until the excise duty leviable paid. This rule clearly contemplates that even if the goods are removed from one part on the premises to another part of the premises for the purpose of further manufacture excise duty has to be paid. This Rule does not support the interpretation that the goods must be removed from the premises of the factory as such. In this connection the definition of factory in Section 2(e) of the Act which means any premises, including the precinct thereof wherein or in any part of which excisable goods other than salt are manufactured or wherein or in any part of which any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on, shows that even a part of the premises where excisable goods are manufactured is covered by the word factory within the meaning of the Act. Now Rule 49 only says that payment of duty shall not be required in respect of excisable goods made in the factory until they are about to be issued out of the place or premises specified under Rule 9. As excise is on the manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be pumped into the Feeding Hopper from the Dryer directly. The suggestion was that if that continuous process was there, there would obviously be no removal of the Polymer chips which would be pumped directly and without having to put them into the air tight containers. I am not sure that there necessarily would be the result because it may be possible to urge that even if the Polymer chips are pumped from the Dryer to the Feeding Hopper yet they are being removed from the place of their manufacture and, therefore, they are liable to excise. It may be further possible to say that the automatic or manual picking up of an excisable goods should make no difference in determining the question of the levy of excise. But it is not necessary to give any decision on this point as admittedly that process is not being followed by the petitioner-company. [The petitioner-company is admittedly manufacturing Polymer chips which are put in air-tight containers at one place and the same are then removed from that part of the premises and then taken to another part of the premises for manufacture of another commodity i.e. Nylon 6 yarn. I fail to see how this process does not involve the remova ..... X X X X Extracts X X X X X X X X Extracts X X X X
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