9911796707
TMI Blog1974 (12) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... r product manufactured by M/s. India Coating and Laminating Corporation having its factory at Kanpur as cotton fabrics not otherwise classified under Item No. 19 (II) (f) of the said Schedule which subjects the item to excise duty to be paid according to the quality of cloth and the same varies from 3.6 paise to 15.5 paise per metre. The grievance of the petitioners is that the action of the Excise Authorities in Gujarat in subjecting their products to duty under sub-item (III) of Item No. 19 would result in the petitioners paying duty at the rate of 25 per cent ad valorem. The petitioners, therefore, made representation to the second respondent who is the Superintendent of Central Excise, Surat, by their letter of March 9, 1927 that the product of the petitioner-firm should be charged under Item No. 19 (I) (2) (f) and not under Item No. 19(III). The petitioners also pointed out by their another letter of March 13, 1971 the financial impact on account of the action of the Excise Authorities in classifying the petitioner's product as covered by Item No. 19 (III) instead of Item No. 19 (I)(2)(f) of the said Schedule. The 2nd respondent, however, by his letter dated June 9, 1971 intim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d directions, quashing and setting aside the order passed by the 2nd respondent holding that the petitioner-firm should be charged under Item No. 19 (III) and restraining the respondents from recovering duty under the said item. 2. This petition has been resisted by the Union of India - respondent No. 1 herein, contending, inter alia, in the affidavit-in-reply filed on its behalf by one Mr. P.J. Pohowalla, who happens to be Assistant Collector of Central Excise, Surat, that according to the opinion of the Chief Chemist, the product of the petitioner-firm is in the form of a white cotton fabrics on one side of which is an uneven coating of polythene plastic material, the percentage of which is 37.1 (approximately) and the rest being cotton fabric and the sample thereof did not pass the laboratory test for water proofness, and it was, therefore, validly classified as a product subject to the duty under item No. 19 (III) of the aforesaid Schedule. It was admitted in the said affidavit-in-reply that the petitioners had preferred an appeal before the 3rd respondent, but since it stood transferred to the Appellate Collector, Bombay, it was necessary for the petitioners to have approac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter. 5. Mr. Vakharia, the learned advocate of the Union of lndia sought to appeal these contentions by urging that the petition is premature inasmuch as the Collector of Central Excise, Bombay, is seized of the appeal which has been transferred by respondent No. 3 and the petitioners sought not to have rushed to this court and should have exhausted the remedy before the Appellate authority. Mr. Vakharia also contended that as this is a matter of classification of products and the question is about the appropriate Item of the Schedule under which the product in question is liable to duty, it is one, within the jurisdiction of the Excise Authorities and this court on the accepted principles should not interfere with the finding made by the 2nd respondent. In the submission of Mr. Vakharia, the decision of Allahabad High Court cannot be taken as a binding precedent to this court, and the accepted policy of this Court on the principle of comity of judicial decisions, in matters of income-tax cannot be extended to the matters falling under Excise and Customs Acts. 6. We are afraid we cannot accept the contention of Mr. Vakharia, that the question urged in this petition is one wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts were similar. The Deputy Chemist in Kanpur case gave his opinion in favour of the Manufacturers. The Board of Central Excise being not satisfied with the opinion referred the matter to the Chief Chemist who also relied on the same observations from the aforesaid Encyclopaedia of Chemical Technology, Vol. 5 and opined in favour of the Revenue. It is on the basis of this opinion that the Excise Authorities raised a demand for differential duty as in their opinion the product of Kanpur Manufacturers which was classified hitherto by the Excise Authorities as cotton fabrics material in any other manner under Item No. 19(I) (2) (f) was not correct. The Kanpur Manufacturers being aggrieved with the order-in-appeal preferred by them against the additional demand, moved Allahabad High Court under Article 226 of the Constitution of India for appropriate writs, orders and directions. The Excise Authorities in Allahabad High Court also resisted the petition on similar grounds which have been raised in this petition. A Division Bench of Allahabad High Court which heard the petition observed as under : "According to this report only 27 per cent of the cotton fabrics is covered by plast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collars of shirts and bush shirts." On the above clear admission of the Chemist in his report it also cannot be urged successfully that it is an impregnated fabric. It has been also pointed out by the petitioners in paragraph 10 of the petition that in the process of manufacturing of their product there is no lamination, no coating, no impregnation. The petitioners have asserted that for purposes of coating or impregnating any cotton fabric what is required is the adoption of one of the following three methods : 1. Extrusion and roller pressing, 2. The use of Doctor Knife. 3. Calendering process. As a result of either of those three processes, the cellulose derivatives or plastic material completely inter-mixes with the base material by which this impregnated or coated material is never separable from the base material. The petitioners have also produced a sample of their product and pointed out that the small coating which has been applied on the fabrics can be easily separated from the base material. Petitioners have further averred that there is only sprinkling of the powder on cotton fabric by screen and no motive power is used while doing the same, while in case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er High Court must ordinarily accept that view of the interpretation of a section or a provision of taxing statute which is an all India statute (see Maneklal Chunilal Sons v. Commissioner of Income-tax - (1953) 24 ITR 375 : Commissioner of Income-tax v. Chimanlal J. Dalal Co. - ( 1965) 57 ITR 285 and Commissioner of Income-tax v. Tata Sons Private Limited - (1974) 97 ITR 128. 10. In C.I.T. v. Chimanlal J. Dalal Co. (supra) the Division Bench of the Bombay High Court was concerned with the question of a carry forward loss in speculation suffered by it in earlier year and set if off against speculative profits of the subsequent year. There was already a decision of the Gujarat High Court on the point with which the Bombay High Court was not in agreement. The Gujarat High Court has held that registered firm was entitled to carry forward the speculative loss suffered by it in earlier year and set it off against speculative profits of the subsequent year. The Division Bench of the Bombay High Court, though it did not agree with any of the reasons of the Gujarat High Court, in support of its decision, however, in conformity with the general practice of the Bombay High Court that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty and consistency in matters of application of taxing statute, so as to avoid the challenge of discrimination in application and administration of tax matters. Mr. Shelat's third contention, therefore, must clearly prevail. 11. The contention of Mr. Vakharia that the petition is premature is not at all well founded for the simple reason that though the petitioners have tried to exhaust this alternative remedy by filing appeal on 14th June, 1971 before respondent No. 3 and which as a matter of fact was heard on 28th October, 1971 before respondent No. 3, he did not think it fit to decide that appeal and pronounce his order till as late as 28th April, 1972 when the petitioners moved this court on being informed, when petitioner No. 1 inquired as to the result of the appeal, that the same was transferred to the Appellate Collector, Bombay. It is really surprising how respondent No. 3 thought fit after lapse of considerable period of as much as six months to transfer this appeal to the Appellate Collector, Central Excise, Bombay. We think it our duty to draw the attention of the taxing authorities that delay in Administration of justice always results in denial of justice. It is act ..... 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