TaxTMI 
TaxTMI 
1982 (6) TMI 53
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....cified in the notification, any excisable goods from the whole or part of the duty leviable on such goods. In exercise of this power under the said rule 8, the Central Government issued on June 18, 1977 Notification No. 131 of 1977 granting partial exemption to cotton yarn and cellulosic spun yarn falling under Tariff item Nos. 18A and 18-III from payment of excise duty. Composite mills such as the company herein were, however, excluded from the operation of the said Notification No. 131 of 1977 by reason of proviso (vii) to the said notification, under which proviso: "...nothing contained in this notification shall apply to any yarn which is used for weaving in a composite mill." The company here, which is a composite mill, was thus excluded from the operation of Notification No. 131 of 1977. Simultaneously, the Central Government also issued another notification on the same day June 18, 1977 being Notification No. 132 of 1977 by which cellulosic spun yarn falling under Tariff Item No. 18-III (i) and cotton yarn falling under Tariff Item No. 18-A (i) were exempted from the whole of the duty of excise leviable thereon when used for weaving cotton fabrics falling under Tariff Ite....
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....Excise Collectors to account and collect duty under the second proviso to the Notification No. 226 of 1977 as "fabric duty" under Item No. 19 of the Central Excise Tariff. Prior to the said instructions, the duty under the said proviso was being accounted for and charged as "yarn duty" and was also being collected by debiting in the personal ledger account for yarn maintained by the company herein with the excise authorities as well as similar accounts of other composite mills. In pursuance of the aforesaid instructions of the Central Government, the Assistant Collector of Central Excise intimated to the company herein that the exemption available under Notification No. 228 of 1977 would not be applicable to cotton fabrics produced by the company prior to July 15, 1977. Correspondence thereafter ensued between the company and the excise officers. Subsequently the company received as many as four show cause-cum-demand notices dated December 8, 1977, January 13, 1978, January 13, 1978 and January 30, 1978 respectively, these four show cause-cum-demand notices being Exhibit-E collectively to this petition. It is against these show cause-cum-demand notices that the company has filed th....
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....be beyond the rule-making powers of the Central Government. In Cannanore Spinning and Weaving Mills Ltd. v. The Collector of Customs and Central Excise, Cochin, and others, A.I.R. 1970 Supreme Court 1950 = 1978 ELT (J 375), the Supreme Court had an occasion to consider the scope and ambit of the rule-making powers of the Central Government conferred by rule 8 of the Central Excise Rules. The Supreme Court in its aforesaid ruling observed thus: "The rule-making authority had not been vested with the power under the Central Excises and Salt Act to make rules with retrospective effect." (Vide paragraph 6.) The position thus being settled on high authority, the contention of the learned Counsel Mr. Bhabha supported as it is not only by the Supreme Court ruling in Cannanore Spinning and Weaving Mills' case supra but also by a Division Bench ruling of the Gujarat High Court in Arodaya's case supra deserves to be accepted. 7. Going through the Division Bench ruling of the Gujarat High Court in Arodaya's case, I find myself in agreement with the reasoning and the ultimate conclusion reached therein consistent also with the ratio of the Supreme Court ruling in Cannanore's case. As obser....
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....would bear excise duty payable on the date on which the goods were removed from the premises of the manufacturer. But the impugned second proviso to Notification No. 226 of 1977 requires the manufacturer to pay excise duty on such fabrics, not only at the appropriate rate of duty as specified in the Notification but it requires the manufacturer to pay the duty payable on such cellulosic spun yarn or cotton yarn or both, as the case may be, under Notification No. 131 of 1977. It must be borne in mind that Notification No. 131 of 1977 deals not with duty on cotton fabrics. It deals with duty on cellulosic spun yarn and cotton yarn. When cellulosic spun yarn and cotton yarn which were used in the manufacture of such cotton fabrics by a composite mill prior to July 15, 1977 from the whole duty free yarn were concerned, an element of excise duty is sought to be brought in, so to say, by the back door, by including the duty on cellulosic spun yarn and cotton yarn as a component of the duty on cotton fabrics. It is true that the words of the proviso purport to show that what is being collected is the duty payable on cotton fabrics but when one bears in mind the scheme which we have set ou....