1979 (11) TMI 101 - HC - Central Excise

Court overturns revisional order, grants relief to petitioner. Refund ordered for excess duty paid.

The court upheld the appellate authority's decision, overturning the revisional order and granting relief to the petitioner. The petitioner's fabric was ... Cold wax emulsion and cold aluminium acetate - Black dyed drill - Revision - Reports and opinions of Technical experts Issues Involved:1. Classification of the fabric under the relevant excise duty notifications.2. Validity of the demand notices issued for additional excise duty.3. Whether the process of applying cold wax emulsion and cold aluminum acetate is part of the general dyeing process.4. Whether the first demand notice dated 9th December 1968 was time-barred.5. Entitlement of the petitioner to a refund of the excess duty paid.Issue-wise Detailed Analysis:1. Classification of the Fabric:The primary issue was whether the fabric manufactured by the petitioner should be classified under category (b) 'bleached or/and dyed but not printed' or under categories (d) or (f) 'processed in any other manner' as per the relevant excise duty notifications. The petitioner argued that the processes of working cold wax emulsion and cold aluminum acetate into the fabric were part of the general dyeing process and thus should fall under category (b). The respondents contended that these processes were special treatments, classifying the fabric under categories (d) or (f).2. Validity of the Demand Notices:The petitioner received demand notices dated 9th December 1968 and 20th April 1969 for additional excise duty, which were confirmed by the Assistant Collector. The appellate authority allowed the appeal on merits, holding that the fabric was not commercially or technically known as water-repellent and should be classified as dyed fabric. However, the revisional authority reversed this decision, reinstating the Assistant Collector's order.3. Process of Applying Cold Wax Emulsion and Cold Aluminum Acetate:The petitioner provided extensive evidence, including reports and opinions from experts like Dr. Patwardhan, Chika Ltd., and others, demonstrating that the processes of applying cold wax emulsion and cold aluminum acetate were integral to the general dyeing process. These processes were necessary to give the fabric body, suppleness, and improve dye fastness. The revisional authority, however, ignored these reports and based its decision on the incidental water-repellent quality of the fabric, which was not a relevant factor for classification under the notifications.4. Time-barred Demand Notice:The petitioner argued that the first demand notice dated 9th December 1968 was time-barred. The notice was issued under Rule 10A, which pertains to residuary powers for recovery of sums due to the government and does not prescribe a time limit. However, the court held that Rule 10, which pertains to recovery of duties short-levied or erroneously refunded and prescribes a three-month period, was applicable. Thus, the demand notice should have been issued under Rule 10, making the claim time-barred except for the last sum of Rs. 1,505/-.5. Refund of Excess Duty Paid:Following the appellate authority's order, the petitioner applied for a refund of Rs. 5,46,850/- paid under protest. Despite the appellate order, the respondents issued another demand notice and referred the matter for review. The court concluded that the petitioner was entitled to a refund, subject to verification of the payment being made under protest and the correctness of the amount.Conclusion:The court sustained the appellate authority's order, set aside the impugned revisional order, and allowed the petition in terms of prayers (a) and (b). The respondents were directed to verify whether the amount of Rs. 5,46,850/- was paid under protest and, if so, to refund the amount within three months. The respondents were also ordered to pay the costs of the petition.