9911796707
TMI Blog1987 (12) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... duty. Steel forgings manufactured by the petitioners are as per customer's forging drawing and proof machined when so desired. They are forged as per customer's demands so that the same can be used by the customers as raw, material for the manufacture of machined components such as crank shafts, axle. tubes, axile shafts, welding bulbs etc., prior to March 1, 1986, the items which the petitioners are describing as pieces roughly shaped by forging were covered by Item No. 26AA of the First Schedule to the Central Excises and Salt Act, 1944 (hereafter referred to as "the Act"). By Notification No. 206/63, dated 30-11-1963 iron and steel products falling under sub-item No. 1(a) of Item No. 26AA were exempted from payment of duty. Because of this Notification, the petitioners were not liable to payment of duty on the said products manufactured by them. In August, 1983, the Tariff relating to iron and steel and articles of iron and steel was rationalised and new Tariff Item 25 was introduced and substituted for the then existing Tariff Items No. 25 and 26AA. Forgings manufactured by the petitioners used to be classified under sub-item (8) of Item 25. The exemption granted by the aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x issued by the Central Board of Excise and Customs dated 4/5-6-1987 Annexure K to the petition and thus, the decisions taken by the Superintendent and the Assistant Collector are based on extraneous considerations, and not because of any change in the nature of the forgings manufactured by the petitioners or change in law. It is also their case that the Assistant Collector could not have changed the classification without following the procedure prescribed in that behalf; and, therefore, the said orders are without jurisdiction. The Petitioners also contend that the orders passed by the Assistant Collector deserve to be quashed as they have been passed without affording any opportunity of hearing to the petitioners; and thus they are violative of principles of natural justice. On merits, it is the contention of -the petitioners that the forgings manufactured by them which are roughly shaped pieces of forgings are really classifiable under Tariff Item No. 7208.00 and not under Tariff Item No. 7308.90. The Petitioners, therefore, want this Court to quash the directions contained in the telex of the Board at (Annexure-K to the petition) and also the directions contained in the letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstructions and adopt them as the basis of their action. 6. Even though Dr. Kantawala, the learned Counsel appearing for the petitioners strenuously contended that the forgings manufactured by the petitioners fall under Tariff Item No. 7208.OO and that the classification once accepted cannot be changed or modified unilaterally, without getting it set aside by approaching the appellate authority, agreed to the suggestion made by the Court that the question regarding proper classification should be decided by the appropriate authorities under the Act if directions are given by this Court to the concerned authorities to decide that question without in any manner being influenced or feeling bound by the Board's Telex at Annexure-K. Mr. Kantawala also submitted that in that case, this Court should also observe that H.S.N. method is not adopted by the Legislature for the purpose of classifying iron and steel and other allied products and articles and that the method of classification as adopted by the Legislature and the speech delivered by the Finance Minister while introducing the change should be taken into consideration while determining the question regarding proper classification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he instructions contained in the Board's circular are really administrative directions; and though they are binding on the subordinate officers, cannot render the action taken by the proper officer as without any authority of law. These instructions are meant for internal administration. Moreover, approval granted by the Superintendent was not objected to by any higher officer; and to the knowledge of all concerned, the Petitioners' products were allowed to be cleared throughout the year as products falling under Tariff Item No. 7208.00. This position continued in spite of some controversy raised regarding proper classification of those items in November, 1986 as disclosed by the letter dated 12-11-1986 of the Assistant Collector, Annexure-II to the affidavit-in-reply filed by K.S. Mahant, Assistant Collector of Central Excise, Rajkot. However, in view of the course which the parties have agreed to adopt, it is not necessary to consider the effect thereof any further. 9. As regards Board's telex Annexure-K it is obvious that it cannot bind the quasi-judicial authorities. Section 37-B of the Act which reads as under leaves no doubt about the same; "37-B. Instructions to Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n soon after the Board's telex and the correspondence between the parties that the directions which the Superintendent gave by his two letters at Annexures D' and G and the order which came to be passed by the Assistant Collector Annexure-j are the result of the instructions contained in the said telex Annexure-K. For this reason and also because the petitioners were not heard before making any change in the classification, the orders dated 30-6-1987 passed by the Assistant Collector deserve to be quashed and set aside. 12. It was contended by Dr. Kantawala that before changing the classification, the Assistant Collector ought to have heard the petitioners. He submitted that the previous correspondence between the parties cannot be regarded as an opportunity of hearing. He submitted that in fairness, the Assistant Collector ought to have fixed the matter for hearing after the representation dated 22-6-1987 (Annexure-H) was received by him. Having gone through the letters written by the authorities in this behalf, we are of the opinion that the petitioners cannot be said to have been given an opportunity of hearing for showing cause as to why classification should not be changed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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