1987 (2) TMI 71 - HC - Central Excise

Petitioners Allowed Cash Security Over Bank Guarantee, Duty Rate Upheld

The court allowed the petitioners to furnish cash security instead of a bank guarantee after failing to meet the final deadline. The rule, initially ... Cotton fabrics Issues:1. Extension of time for furnishing bank guarantee.2. Prematurity of the writ petition.3. Maintenance of status quo regarding the demand by Excise Department.4. Classification dispute of the product manufactured by the petitioners.5. Decision on the classification of the product.6. Discharge of the rule due to absence of petitioners and correctness of the Appellate Collector's order.Extension of time for furnishing bank guarantee:The petitioners were granted multiple extensions to furnish a bank guarantee for a sum of Rs. 25,000, initially restraining the respondents from enforcing a demand. Despite repeated extensions, the final deadline was not met, leading to the court allowing the petitioners to furnish cash security instead.Prematurity of the writ petition:Initially discharged on grounds of prematurity, the rule was later recalled, and status quo was maintained regarding the demand raised by the Excise Department, with ongoing attachment of some petitioners' assets. The case was adjourned multiple times before being finally disposed of due to the absence of petitioners.Classification dispute of the product manufactured:The dispute revolved around the classification of the product manufactured by the petitioners, involving plastic-coated cotton fabrics. The Assistant Collector contended that the product should be classified under T.C. 19(III) with a higher duty rate, based on physical verification and chemical tests.Decision on the classification of the product:After analyzing the manufacturing process and conducting physical examinations, the Appellate Collector upheld the classification under T.C. 19(III) for the petitioners' product. The process was deemed to be coating impregnation rather than lamination, leading to the demand for the payment of the differential duty.Discharge of the rule and correctness of the Appellate Collector's order:The rule was ultimately discharged due to the absence of petitioners during the final hearing. The judgment emphasized that the dispute was primarily a question of fact, and since no arguments were presented on behalf of the petitioners, the order of the Appellate Collector was deemed not erroneous. The court discharged the rule without costs and allowed the respondents to withdraw and appropriate the deposited amount towards their claim.