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TMI Blog2020 (12) TMI 1100X X X X Extracts X X X X X X X X Extracts X X X X ..... h and set-aside the impugned Order in Original passed by the respondent no.2 dated 30.6.2020 and remit the entire matter to the respondent no.2 for fresh consideration after giving an adequate opportunity of hearing to the writ-applicants and also keeping in mind the prima facie observations made by this Court in this judgment The writ-applicants have prayed to quash and set-aside the CBEC Circular/Order No.8/92 dated 24.9.1992 and also the Ahmedabad Collectorate Trade Notice No.78/94 dated 9.5.1994, as relying on the same, the goods manufactured by the writ-applicants are being classified as the articles of plastics under the Heading 3926 of the Central Excise Tariffs. The challenge to the CBEC Circular/Order and also the Trade Notice referred to above is substantially on the ground that the excise duty is being demanded from the writ-applicant based on such order and trade notice, whereas identical goods are being accepted as textile products in case of several other manufacturers and no duty is being charged. It appears that the understanding of the word textiles in common parlance has not been considered by the Board as well as by the Ahmedabad Collector while issuing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Your Lordships may be pleased to issue a Writ of Certiorari or a Writ of Mandamus or any other appropriate writ, order or direction quashing and setting aside Order No.8/92 dated 24.09.1992 and Order No.28/4/94-CX dated 01.03.1994 issued by the CBEC and Trade Notice No.78/94 dated 09.05.1994, and also Notices F.No.V.39/15-128/Dem/OA/15-16 dated 18.12.2015 (Annexure- E ), F.No.V.39/15-10/Dem/OA/2017-18 dated 21.06.2017 and F.No.V.39/15-44/Dem/OA/17-18 dated 7.5.2018 (Annexure- F ); (BB) That Your Lordships may be pleased to issue a Writ of Certiorari or any other appropriate writ, order or direction quashing and setting aside O/O No. AHM-EXCUS-003-COM-009 to 011-20-21 dated 30.6.2020 (Annexure- J-4 ) passed by the 2nd Respondent herein with all consequential reliefs and benefits; (BBB)Pending hearing and final disposal of the present petition, Your Lordships may be pleased to stay implementation and execution of O/O No. AHM-EXCUS-003-COM-009 to 011-20-21 dated 30.6.2020 (Annexure- J-4 ), thereby restraining the 2nd Respondent herein, his servants and agents from taking any action against the Petitioners pursuant to O/O No. AHM-EXCUS-003-COM-009 to 011-20-21 dated 30.6.202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classified by the writ-applicants under the Heading No.5911 of the Tariffs as the Textile Products and Articles, for technical uses 4. It is the case of the writ-applicants that both the products manufactured fall within the Heading Nos.6005 and 5911 respectively and are fully exempt from the payment of the excise duties. In such circumstances, it is the case of the writ-applicants that they have not discharged any excise duty for such goods right from the inception of manufacture, i.e. from around September 2007. 5. It appears from the materials on record that the Revenue Officers collected samples of both the products from the factory premises of the writ-applicants for the purpose of analysis and opinion of the Departmental Chemical Examiner. The Chemical Examiner, in his report, opined that the Agro Shade Net bearing Sample No.RCL/31 was a green coloured knitted fabric . The department also took into consideration the manufacturing process of the Agro Shade Net and confirmed that the HDPE (High Density Polyethylene) granules were converted into the HDPE films from which the HDPE strips were produced and the HDPE strips were directly fed into the knitting machine. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned show-cause notices referred to above and also preferred various representations addressed to the Principal Chief Commissioner of Customs including the Ministry of Finance, The Principal Chief Commissioner of Ahmedabad Zone and the jurisdictional Commissioner. In all the above referred representations, the writ-applicant furnished the list of several manufacturers of Gujarat with their respective addresses and also the details of manufacturers of the Agro Net and Geo Grid fabrics in the other States. 11. The representations along with necessary details and information were preferred to redress the grievance that the proceedings were initiated only against the writ-applicant and no one else similarly situated like the writ-applicant. 12. It is the case of the writ-applicant that the specimen invoice of the other manufacturers was also submitted to show that similar goods were sold under the exemption. 13. The materials on record further indicate that while adjudication of the show-cause notices was going on, the present writ-application came to be filed questioning the legality and validity of the CBEC orders as well as the Ahmedabad Collectorate Trade Notice an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d rate as per provisions of Section 11AA of the Central Excise Act, 1944, as amended from time to time, read with Section 142 and 174 of the Central Goods and Services Tax Act, 2017 on the service tax demanded at (ii) above; (iv) I impose penalty of ₹ 3,65,69,096/- (Three Crores Sixty Five Lakhs Sixty Nine Thousand and Ninety Six only) (hundred percent of confirmed service tax) on the Service Provider for the period April, 16 to June, 17 in terms of the provisions of Section 11AC of the Central Excise Act, 1944 read with Section 142 and 174 of the Central Goods and Services Tax Act, 2017. Provided that if the service tax confirmed and interest is paid within 30 days of receipt of this order, penalty payable shall be 25% of the service tax so determined. However, the benefit of reduced penalty shall be available only if the amount of reduced penalty is also paid within such period. (v) I order them to pay interest of ₹ 11,707/- in terms of the provisions of Rule 8(3) of the Central Excise Rules, 2002 read with Section 11AA of the Central Excise Act, 1944 on the delayed payment as discussed above; (vi) I impose penalty of ₹ 4,533/- in terms of the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for two weeks, because hearing of the petition before this Hon ble Court was likely to take some time. The Petitioners have kept the 2nd Respondent informed about all the developments like closure of the High Court for 3 days that were taking place with regard to listing of the Writ Petition by personally speaking to him; and the fact that the petition was allowed to be circulated for hearing on 21.7.2020 was also conveyed to the 2nd Respondent herein on behalf of the Petitioners. This Hon ble Court heard the petition (i.e. the present petition) on 21.7.2020 and made an order restraining the 2nd Respondent from taking any final decision in the case. On advance copy of the petition, the Standing Counsels for the Respondents was also present and heard on 21.7.2020. The Petitioners informed the office of the 2nd Respondent telephonically immediately after this Hon ble Court made the order on 21.7.2020, and informed the concerned Officers that the authority concerned was restrained from taking any final decision without the permission of the Hon ble High Court. But on the next day i.e. 22.7.2020, the 2nd Respondent herein sent a group of Revenue Officers to the factory of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tered post acknowledgement due or by speed post with the proof of delivery or by courier approved by the Board to the person concerned from whom it was intended or his authorized agent. If it is not possible to serve the order in the prescribed procedure as referred to above, then by affixing a copy thereof at some conspicuous part of the factory or warehouse or any other place of business or usual place of residence of the person. 23. Mr.Dave would argue that in the case on hand straightway the method of service referred to above in clause (b) of Section 37C (1) of the Act has been resorted to. Mr.Dave vehemently argued that the scheme of Section 37C has been interpreted by various High Courts, and in this context, he has referred to and relied upon on the following judgments: (i) State of Punjab v/s. Amar Singh Harika, AIR 1966 SC 1313; (ii) Saral Wire Craft Pvt. Ltd. v/s. Commissioner of Customs, Central Excise Service Tax, 2015 (322) ELT 192 (SC); (iii) Soham Realtors Pole Star v/s. Commissioner of Central Excise, Customs Service Tax, Nagpur-II, 2018 (12) GSTL 288 (BOM.); (iv) Prem Nath Khanna v/s. Collector of Central Excise, 1987 (29) ELT 9 (ALL); and (v) N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yed, the woven fabric would be textile . It is further held that the use to which it may be put is also immaterial and does not bear on its character as a textile. 28. Having regard to the above, Mr.Dave would argue that the raw-material used for making a fabric is immaterial and what is relevant is the method of bringing a final fabric into existence. He would submit that regardless of the raw-material, when any material is woven into a fabric, such fabric would be textile . It is vehemently argued that the order issued by the Board and the Trade Notice of the Ahmedabad Collectorate is based only on the nature of the initial raw-material used for the fabrics and, therefore, are contrary to the general understanding of textiles and fabrics in common parlance and also contrary to the law laid down by the Apex Court referred to above. In such circumstances, according to Mr.Dave, the impugned order and the Trade Notice being illegal, are liable to be quashed. 29. Mr.Dave further argued that the manufacturing process of both the products as recorded by the Commissioner of Central Excise, Ahmedabad, in the impugned show-cause notices would clearly indicate that the Agro S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided against such order before the appellate tribunal under Section 35B of the Central Excise Act. 34. According to Mr.Bhatt, as there is an alternative remedy of appeal available to the writ-applicant, this Court may not exercise its writ jurisdiction under Article 226 of the Constitution of India. 35. Mr.Bhatt would submit that without prejudice to his preliminary contention as regards the maintainability of this writ-application on the ground of availability of alternative remedy, even otherwise on merits the writ-applicants have no case. He would argue that the Agro Shade Net and Geo Grid fabrics could be termed as articles of plastics because both the products were made of the HDPE strips of less than 5 mm width. Both the products are woven fabrics and are not made out of textile material, but they were woven from the HDPE strips and the HDPE strips could be said to be plastic material. 36. According to Mr.Bhatt, having regard to the various Notes of Chapters 59, 60 and 39 respectively of the Central Excise Tariffs, the goods in question which were produced by weaving/knitting of the HDPE strips cannot be regarded as textile. Mr.Bhatt seeks to rely upon the Circula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al with identical submissions as raised in the present case. In Darshan Boardlams Ltd. (supra) also a preliminary objection was raised as regards the maintainability of the writ-application on the ground of alternative efficacious remedy available to the writ-applicant in the form of an appeal under Section 35B of the Act before the appellate tribunal. While negativing such preliminary objection with regard to the maintainability of the writ-application, this Court held as under : 64. Before entering into the merits of the main issue, we propose to deal with the preliminary contention of Mr.Oza, learned senior counsel appearing for the Revenue as regards the maintainability of this petition on the ground of alternative efficacious remedy available to the petitioner in the form of an appeal under Section 35G of the Act before the Appellate Tribunal. 65. It is true that power of the High Court to issue prerogative writs under Article 226 of the Constitution of India is plenary in nature and cannot be curtailed by other provision of the Constitution of India or a Statute but the High Courts have imposed upon themselves certain restrictions on the exercise of such power. One ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndamental rights; (ii) where there is failure of principles of natural justice or, (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. 67. We are of the view that on the facts of the present case, the preliminary contention or objection as raised by the Revenue deserves to be rejected as it cannot be said that exercise of writ jurisdiction in the present case is unwarranted. As rightly pointed out by the learned counsel appearing for the petitioner that the controversy in the instant case centers around the issue, that if the goods in question are chargeable to nil duty in other States of the country and if such a decision has been accepted by the department, then whether the petitioner who is a businessman carrying on business within the State of Gujarat could be asked to pay duty @ 8% ad valorem on the same goods. 68. We find substance and merit in the contention of Mr.Dave that in this country of stiff competition it would be virtually very difficult for the petitioner to survive in the business. Companies manufacturing pre-laminated plain particle board made of Bagasse in other States of the country have not to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In Ambica Meta Yarn Manufacturing Company (supra), a Division Bench of this High Court made the following observations: ...The High Court will not therefore ordinarily interfere in exercise of the power under Article 227. 'Not ordinarily' of course does not mean 'never'. In some cases the High Court might consider it expedient in the interest of justice to do so. For instance, in two types of cases the High Court might interfere (unless the Revenue is prepared to stay the recovery during the pendency of proceedings before the appellate or revisional authority), viz : (1) Where the excise authorities of other States are accepting the interpretation canvassed by the assessee. In such cases the assessee will not be able to withstand the competition in the market and the industry in the State will suffer serious handicap and may even get mauled: (2) In a case where a product is forbeing assessed under one entry several years in the past and the department has accepted the position for all these years but abruptly changes its stance without there being any legislative change. Only in such rare cases the Court might possibly entertain a petition m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was enforcing a fundamental right. This judgment of the Supreme Court would not help the Revenue in making good the contention that in view of the alternative remedy petition deserves to be rejected. 77. In Sadhana Lodh (supra), a three-Judge Bench, in paragraphs 7 and 8 of the judgment, made the following observations as under : 7. The supervisory jurisdiction conferred on the High Courts under Article 227 of the Constitution is confined only to see whether an inferior Court or Tribunal has proceeded within its parameters and not to correct an error apparent on the face of the record, much less of an error of law. In exercising the supervisory power under Article 227 of the Constitution, the High Court does not act as an Appellate Court or the Tribunal. It is also not permissible to a High Court on a petition filed under Article 227 of the Constitution to review or re-weigh the evidence upon which the inferior Court or Tribunal purports to have passed the order or to correct errors of law in the decision. 8. For the aforesaid reasons, we are of the view that since the insurer has a remedy by filing an appeal before the High Court, the High Court ought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 itself that the Bench took the view on the facts of the case so far as entertaining a writ petition was concerned. In the aforesaid decision, the controversy centered around valuation of plant and machinery as also inclusion or non-inclusion of certain machines, in use or not or in working condition or not, which are primarily questions of fact as observed by the Supreme Court. 82. In Alembic Glass Industries Limited (supra), the Supreme Court, while dismissing SLP preferred by the assessee against the judgment of this High Court in a writ petition, made the following observations : This special leave petition is filed against the judgment of the Delhi High Court dismissing the writ petition. The writ petition was filed against the show cause notice issued by the Central Excise department to the petitioner. The High Court has dismissed the writ petition mainly on the ground that it does not wish to entertain the writ petition against the show cause notice. We cannot say that the High Court was not right in doing so. The High Court took note of the fact that the adjudication order has already been passed in the matter, against which the petitioner had a right of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces and considering the nature of issue involved, the Bench took the view that the issue ought to have exhausted the alternative remedy. 88. Bearing in mind the aforesaid principles of law as explained by the Supreme Court and other High Courts on the question of entertaining a writ petition under Article 226 of the Constitution of India in a case where an alternative remedy by way of an appeal is available, we hold that the present case is one where there are good grounds to overrule the preliminary objection of the Revenue in this regard and proceed to decide the main issue in question by entertaining the petition. 41. Following the very same principles as explained by this Court in the case of Darshan Boardlams Ltd (supra) quoted above, we are of the view that we should not decline to entertain this writ-application on the ground that the writ-applicants have a remedy of preferring an appeal before the appellate tribunal under Section 35B of the Act. We are saying so keeping in mind the following : (1) The manner in which the Order in Original came to be passed by the respondent no.2. (2) Prima facie, it appears that no opportunity of hearing was given to the wri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 43. Sub-section (a) of Section 37C (supra) states that any decision, order, summons or notice may either be sent by registered post with acknowledgement due to the person for whom it is intended or his authorized agent. If this mode of service is unsuccessful then service can be effected by affixation. It is not the case of the department that it simultaneously also dispatched the order to the writ-applicants by registered post with acknowledgment due. 44. In the aforesaid context, we may refer to and rely upon a decision of the Supreme Court in the case of Saral Wire Craft Pvt. Ltd. (supra), more particularly, the observations made in paragraphs 9 and 10 therein, which read thus : 9. It is an anathema in law to decide a matter without due notice to the concerned party. Every effort must be taken to meaningfully and realistically serve the affected party so as not merely to ensure that he has knowledge thereof but also to enable him to initiate any permissible action. The appellant justifiably submits that it was statutorily impermissible for the respondents to serve the adjudication order on a kitchen boy , who is not even a middle level officer and certainly no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved by this Court in Babu Verghese , it is the basic principle of law long settled that if the manner of doing a particular act is prescribed under any statute, the act must be done in that manner or not at all. The Inspector who ostensibly served the copy of the order should have known the requirements of the statute and therefore, should have insisted on an acknowledgement either by the appellant or by its authorized agent. The Inspector had a statutory function to fulfill, not a mere perfunctory one. The appeals are accordingly allowed and the impugned orders are set aside. In the facts obtaining before them, the computation of the period would commence at least from the date on which the appellant asserts knowledge of its existence, i.e., on 26-7-2012. So computed, the appeal filed before the Commissioner (Appeals) on 22-8-2012 would be within the prescribed period of 60 days and should, therefore, have been entertained on merits. It is ordered accordingly. The appellant shall appear before the Commissioner (Appeals) on the forenoon of 3-8-2015. The appeal shall then be taken up and heard on its merits. There shall be no order as to costs. 45. Having regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regards the legality and validity of the CBEC Circular/Order dated 24.9.1992 and the Ahmedabad Collectorate Trade Notice No.78/94 dated 9.5.1994 because we have something else in our mind. We intend to remit the entire matter to the respondent no.2 for fresh consideration in accordance with law, more particularly, the prima facie findings which we may record in the present order. 49. Prima facie, it appears from the materials on record that both the products involved in this case are fabric and both are produced by a weaving method. 50. The Agro Shade Net is knitted on the Raschel Knitting machine. Knitting is a method of constructing fabric (Fair Child Dictionary page 146) and it is an alternative method for making fabric (the Standard Hand Book of Textiles page 154). Fabric is a cloth i.e. woven, knitted, braided, knitted, felted or pleated with any textile fiber, or is a pointed web. 51. The Chemical Examiner of the Department has tested and analyzed a sample of the Agro Shade Net, and for sample No.RCL/31 it is opined by him that the same is a green colored knitted fabric. The Geo Grid fabrics are woven fabrics, and the polyester yarn is used for weaving of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving of yarn and weaving would mean binding or putting together by some process so as to form a fabric. Moreover a textile need not be of any particular size or strength or weight. It may be in small pieces or in big rolls; it may be weak or strong, light or heavy, bleached or dyed, according to the requirement of the purchaser. The use to which it may be put is also immaterial and does not bear on its character as a textile. It may be used for making wearing apparel, or it may be used as a covering or bedsheet or it may be used as tapestry or upholstery or as duster for cleaning or as towel for drying the body. A textile may have diverse uses and it is not the use which determines its character as textile. It is, therefore, no argument against the assessee that dryer felts are used only as absorbents of moisture in the process of manufacture in a paper manufacturing unit. That cannot militate against dryer felts falling within the category of textiles , if otherwise they satisfy the description of textiles . 55. What is held by the Supreme Court is an answer to what the respondents have argued in this case about what is textile , and whether woven fabric of any ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e writ-applicant has submitted as under :- It may be noted sir that more than 100 manufacturers in the country are treating this product as a Textile material and following HSN code under chapter 60. We understand that we are the only company who have the Show cause Notice pending. 60. A list of several manufacturers was also submitted before such authorities. 61. In the order passed by the jurisdictional Commissioner during the pendency of this writ-application also, this submission has been recorded that there are more than 100 manufacturers in the country and all of those have been treating this product as technical textile material, and a reference has also been made to the evidence like the invoices of other manufacturers. However, no finding has been recorded worth the name in the impugned order about this specific plea of discrimination raised by the writ-applicant. The specific pleading in this writapplication that verification had been caused by the respondents in respect of many manufacturers whose details have been furnished by the writ-applicant has not been disputed, and no material has been brought on record by the respondents to indicate that such sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Tamil Nadu (manufacturer-Greaves Limited, Chennai) whereas in Gujarat it is classified under Heading No.84.07 in the petitioners' case by the Assistant Commissioner of Central Excise at Valsad under the Commissionerate of Central Excise, Valsad. 106. We may also quote and rely upon the final judgment between the same parties rendered by a Division Bench of this Court, reported in 2006 (72) RLT 721 (Guj.) In the aforesaid set of facts and circumstances which remain uncontroverted, the petitioner succeeds on the limited ground of discrimination and it is not necessary for the Court to enter into any discussion on merits of the issue of classification. 107. We have also noticed that in Special Civil Application No.3540 of 2008, this Court protected the petitioners by passing an interim order dated 28th February 2008 on the ground that the same products in other States were subjected to nil rate of duty which the petitioner had been pointing out to the department since 2006. 63. In the result, this writ-application is partly allowed. The impugned Order in Original passed by the respondent no.2 dated 30.6.2020 is hereby quashed and set-aside. The matter is remit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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