1983 (12) TMI 72 - HC - Central Excise

Court rules reach trucks not covered under Central Excises and Salt Act, excise duty unlawful.

The court ruled that reach trucks are not classified under Item 34B of the Central Excises and Salt Act, as it only includes forklift trucks and platform ... Trucks - Interpretations - Taxing statute Issues Involved:1. Classification of reach trucks under Item 34B of the First Schedule to the Central Excises and Salt Act, 1944.2. Legality and correctness of the orders passed by the Assistant Collector and the Appellate Collector.3. Authority and jurisdiction of the respondents to impose duty on reach trucks.4. Interpretation of the term 'the following, namely' in the context of Item 34B.5. Validity of the demand notice issued by the Assistant Collector of Central Excise.Issue-wise Detailed Analysis:1. Classification of Reach Trucks Under Item 34B:The primary issue was whether reach trucks manufactured by the petitioner should be classified under Item 34B, which pertains to 'Works trucks, mechanically propelled, used for short distance transport or handling of goods, the following namely: (1) Forklift trucks (2) Platform trucks.' The Assistant Collector initially classified reach trucks as forklift trucks, making them subject to excise duty. However, the Appellate Collector later reversed this decision, stating that reach trucks are different from forklift trucks and platform trucks and should not be classified under Item 34B.2. Legality and Correctness of the Orders:The Appellate Collector's order dated 29th January 1974, found that the Assistant Collector's classification was incorrect. The Appellate Collector noted, 'The Assistant Collector himself has stated that the subject goods are other than forklift trucks and platform trucks. This is exactly so as given in the tariff.' Consequently, the appeal was allowed, and a refund was ordered. However, the Joint Secretary, Government of India, later set aside the Appellate Collector's order, restoring the original order of the Assistant Collector, asserting that reach trucks are functionally similar to forklift trucks and thus should be classified under Item 34B.3. Authority and Jurisdiction:The petitioner contended that the respondents had no authority or jurisdiction to extend the definition of forklift trucks to include reach trucks. The petitioner argued that Item 34B only covers forklift trucks and platform trucks, and not other types of works trucks. The court noted that the respondents' interpretation extended beyond the legislative intent, which did not include other types of works trucks under Item 34B.4. Interpretation of 'the following, namely':The court emphasized the restrictive nature of the phrase 'the following, namely,' used in Item 34B. The court held that this phrase limits the scope to the specific types of works trucks listed, i.e., forklift trucks and platform trucks. The court referenced prior judgments, including the Bombay High Court's decision in Chemicals and Fibres India Ltd. 1982 E.L.T. 917, which held that the expression 'the following, namely' restricts the general descriptive words to the specific items listed thereafter.5. Validity of the Demand Notice:The court found the demand notice issued by the Assistant Collector on 21st July 1975 to be invalid. The notice demanded payment of excise duty on reach trucks for the period between 31st July 1971 and 30th December 1973. Given the court's interpretation that reach trucks do not fall under Item 34B, the demand for excise duty was deemed unlawful.Conclusion:The court concluded that reach trucks are not covered under Item 34B, which specifically lists only forklift trucks and platform trucks. The court held that the respondents had exceeded their jurisdiction by extending the definition to include reach trucks. The application by the petitioner was successful, and the rule nisi was made absolute, quashing the impugned orders and demand notice. The court also noted that a taxing statute should be construed strictly, and any ambiguity should be resolved in favor of the assessee. The operation of the order was stayed for one week after the winter vacation, with provisions for the petitioner to apply for the return of the original bank guarantee.