Processing of woven cloth is not new manufacture under excise tariff; writ relief and limited refund remained available.
Bleaching, dyeing and printing of already woven grey cloth were treated as processing of an existing textile, not as manufacture of a new cotton or man-made fabric under Items 19 or 22 of the Central Excise tariff. The processed cloth was therefore outside those items and fell only within the residuary entry to the extent of value added by processing. A writ challenge to the illegal levy remained maintainable despite the statutory refund machinery, because a levy without authority of law can be examined in writ jurisdiction. Refund, however, was confined to duty collected within the recognised three-year period preceding each petition.
Issues: (i) Whether bleaching, dyeing and printing of already woven grey cloth amounts to manufacture of cotton fabrics or man-made fabrics falling under Item 19 or Item 22 of the First Schedule to the Central Excises and Salt Act, 1944, or whether the processed cloth is assessable only under Item 68. (ii) Whether the writ petitions were maintainable notwithstanding the refund machinery under the excise law, and if refund was admissible, to what period it could extend.
Issue (i): Whether bleaching, dyeing and printing of already woven grey cloth amounts to manufacture of cotton fabrics or man-made fabrics falling under Item 19 or Item 22 of the First Schedule to the Central Excises and Salt Act, 1944, or whether the processed cloth is assessable only under Item 68.
Analysis: Fabric was treated as woven stuff or woven substance, and excise duty was held to attach to manufacture of an excisable article. Processing of existing woven cloth by bleaching, dyeing or printing did not bring into existence a new woven fabric or a distinct excisable commodity within Item 19 or Item 22. The inclusive references to embroidery and impregnated or coated fabrics showed that where the Schedule intended to treat a further process as a distinct excisable category, it said so expressly. Processed cloth therefore did not become cotton fabric or man-made fabric anew, though the processing activity could fall within the residuary entry.
Conclusion: The processing did not amount to manufacture of cotton fabrics or man-made fabrics under Item 19 or Item 22. The levy under those items was invalid, and the goods were liable only under Item 68 to the extent of value added by processing.
Issue (ii): Whether the writ petitions were maintainable notwithstanding the refund machinery under the excise law, and if refund was admissible, to what period it could extend.
Analysis: A challenge to an illegal excise levy could be examined in writ jurisdiction, and the existence of statutory refund machinery did not bar relief where the levy itself was without authority of law. At the same time, refund claims based on illegal collection were subject to the court's discretion, and the period of refund was confined by the three-year limitation recognised in analogous refund jurisprudence.
Conclusion: The petitions were maintainable, and refund was confined to excise duty collected during the three years immediately preceding the filing of each petition.
Final Conclusion: The impugned levy on the full market value of processed cloth could not stand under Items 19 and 22, but the petitioners were entitled only to limited relief by way of refund of excess duty paid within the recognised three-year period, with assessment to be made on the basis of Item 68 and value addition from processing.
Ratio Decidendi: In excise law, processing of an already woven textile does not amount to manufacture of a new cotton or man-made fabric unless the tariff expressly treats the processed form as a distinct excisable category; where the levy is unlawful, writ relief and refund may be granted subject to the court's discretion and the applicable limitation period.