9911796707
TMI Blog1988 (4) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) (3) 22D Articles of ready-to-wear apparel (known commercially as ready-made-garments), including under garments and body supporting garments but excluding articles of hosiery, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power. Ten per cent ad valorem. 4. It is to be noted that "articles of hosiery" in or in relation to the manufacture of which any process was ordinarily carried on with the aid of power were expressly excluded from taxability under tariff item No. 22D. 5. The contention of the petitioner is that Section 3 which is the charging section of the Central Excises and Salt Act, 1944, provides for levy and collection of Central excise duty at the rates set forth in the First Schedule to the Act. The products manufactured by the petitioners, namely, "the articles of hosiery" have not been expressly and specifically excluded from the ambit of taxation under tariff item No. 22D continue to be immuned from operation of the Central Excises and Salt Act, and the rules framed thereunder. The petitioners neither paid nor was asked to pay any duty of excise on the goods manufactured by the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y" would come under the newly introduced tariff Item No. 68 of the First Schedule to the Act, and the petitioner was accordingly asked to obtain Central Excise Licence in accordance with the provisions of the Central Excises and Salt Act, 1944, and the rules framed thereunder. 10. The petitioners thereafter obtained Central Excise Licence in Form No. 14 as prescribed under Rule 174 of the Central Excise Rules and observed all formalities under the Central Excise Rules. The petitioners commenced payments of excise duty at 1% ad valorem as levied under the Finance Act, 1975, which was thereafter increased to 2% by the Finance Act, 1977, and then increased to 5% by the Finance Act, 1978 and finally increased to 8% by the Finance Act, 1979. It has been stated by the petitioners that they have paid excise duty from March, 1975 to 31st March, 1980 at the appropriate rates. From July, 1977 the petitioners commenced payments of Central Excise Duty under protest because the petitioners realised that the payment was not justified under the provisions of the said Act and the rules. 11. On or about 18th June, 1980 by the Finance Act (No. 2) of 1980 a new Explanation was added to Item No. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned realisation were, prima facie, illegal, invalid, without jurisdiction and authority of the law inasmuch as the products manufactured at their factory were not at all liable to excise duty under tariff item No. 68 of the Tariff Schedule. On 4th August, 1980 the petitioner applied in the prescribed form for refund of the entire amount of excise duty paid by them between March, 1975 and 31st March, 1980, totaling a sum of Rs. 7,28,178.35P. According to the petitioners, Rs. 1,11,580.86P. was paid under a mistake of law during the period March, 1975 to June, 1977 and a sum of Rs. 6,16,597.49P. was paid by the petitioners "under protest" during July, 1977 to March, 1980. In their application for refund dated 13th June, 1980 and 4th August, 1980 the petitioners relied on a decision of the Gujarat High Court dated 30th April, 1980 in the case of Darshan Hosiery Works v. Union of India, 1980 E.L.T. 390. 16. The Assistant Collector of Central Excise, Calcutta-XIII by his letter dated 25th April, 1981 informed the petitioners that their claim for refund could not be allowed and the petitioners were bound to pay duty till 18.6.1980. The Assistant Collector of Central Excise ask ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of ready-to-wear apparel" would include under garments and body supporting garments; but would exclude articles of hosiery, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power". The legislators proceeded on the assumption that under the generic heading "articles of ready-to-wear apparel", "articles of hosiery" would come in; but hosiery goods which were manufactured with the aid of power was kept out of the ambit of taxation. Other articles of hosiery which were not manufactured with the aid of power would remain within the description "articles of ready-to-wear apparel". But for the specific exclusion made in item No. 22D "articles of hosiery" manufactured with the aid of power would have come under the general heading "articles of the ready-to-wear apparel." 21. Tariff Item No. 68 was introduced by the Finance Act, 1975. It is a residuary item under which all other goods "not elsewhere specified, manufactured in a factory" has been brought under the excise levy. There are certain goods mentioned in that article which have been specifically exempted. 22. The dispute in this case is about the scope of the expression "all o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of a licence granted under the Act, engage in the production and manufacture of any specified goods included in the Schedule to the Central Excise Tariff Act, 1985. In this case, there is no dispute that initially the hosiery goods manufactured by the petitioner were not dutiable. Tariff Item No. 22D which was introduced by the Finance Act, 1971, brought to tax articles of readymade garments but specifically excluded hosiery goods from that item if such were manufactured with the aid of power. Therefore, the intention of the Legislature was to grant exemption to such goods even though these goods might otherwise come under the head "articles of ready-to-wear apparel." 27. The Finance Act, 1975, which introduced tariff item No. 68 in the First Schedule has generally imposed a duty on "all other goods, not elsewhere specified". It cannot be readily inferred that the intention of the Legislature was to impose duties not only on goods which not specified at all in item Nos. 1 to 67 but also those goods which were specifically mentioned for the purpose of granting exemption. The general rule of construction is that "where there are general words in a later Act capable of reasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x-payer must be preferred. 30. Therefore, in my judgment, the expression "all other goods, not elsewhere specified" appearing in tariff item No. 68 would only mean goods which have not been specified under tariff item Nos. 1 to 67 either for the imposition of duty or for the purpose of granting exemption from duty. 31. My attention was also drawn to the Explanation which was introduced to tariff item no. 68 by which it was laid down that goods which had been specifically mentioned in tariff item Nos. 1 to 67 for the purpose of excluding such goods from duty "shall be deemed to be goods not specified in that item". In the context of section, 6th Explanation which was introduced on 18th June, 1980 by the Finance Act (No. 2) of 1980 was not merely clarificatory. The Explanation had the effect of enlarging the ambit of tariff item No. 68. It is significant that the Explanation states "goods which are referred to in preceding item in this Schedule". This can only mean goods which have been specifically mentioned in any preceding item of the Schedule. Therefore, the Explanation really seeks to bring within the ambit of tariff Item No. 68 goods which had been specifically mentioned in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 6 if the goods are treated as specified in the First Schedule a licence would be necessary even if they are not excisable. This is a misreading of the provisions of section 6 which are for convenience set out below: - "6. The Central Government may by notification in the Official Gazette, provide that from such date as may be specified in the notification no person shall except under the authority and in accordance with the terms and conditions of a licence granted under this Act, engage in - (a) the production or manufacture or any process of the production or manufacture of any specified goods included in the First Schedule or of saltpetre or of any specified component parts or ingredients of such goods or of specified containers of such goods. (b) the wholesale purchase or sale whether on his own account or at a broker or commission agent or the storage of any specified goods included in the First Schedule." 35. The word "specified" in this section refers to specification in the notification as is clear from the opening words "provide that from such date as may be specified in the notification" and the reference is to "specified goods included in the First ..... 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