Bombay High Court
Candy Filters (India) Ltd. vs Union Of India on 1 January, 1800
Equivalent citations: 1990ECR345(BOMBAY), 1990(48)ELT206(BOM)
JUDGMENT
1. This petition under Article 226 of the Constitution, takes exception to the order of the respondents refusing to exempt the petitioners from the levy prescribed by Tariff Item No. 33(2) of Central Excise Tariff, vide the Central Excises and Salt Act, 1944.
2. Petitioner No. 2 is the Managing - Director of petitioner No. 1 and they have a manufacturing division doing business in the name and style of, "The Orion Engineering Works". This Company manufacturers component part of water treatment plants, which are thereafter installed by petitioner No.1. One of the components manufactured by the Company is that figuring in the present case. The petitioners insist in describing that components as an "agitator", a "compressor" or an "air-blower". The said product is supplied without a motor, which is installed at the site of the filtration plant. The product is not an electric fan as contemplated by Tariff Item No. 32(2). Neither the shape not the function of the product would justify its identification as a fan answering the description set out in the aforementioned Item. On 29 August 1974, the Officers of the Excise Department, upon a visit to the Company, seized three agitators which were under testing and for which purpose they had been fitted with electric motors. The articles were released later on after the Company had executed a bond. On 12 December 1974, the Company was noticed to show cause why the equipment should not be confiscated, as also why, the duty and penalty chargeable under Tariff Item No.33(2) should not be recovered from it. Petitioner No. 1 replied contending that the product was not an electric or an industrial fan. This contention was rejected by respondent No. 2 under his order reproduced at Exh. C. Respondent No. 2's order was sustained by respondent No. 3, the only variation being that there was a reduction in the fine and penalty. A revision to the Government yielded no result. The orders passed by the appellate the revisional authorities are at Exhs. E and G. respectively. Exception is taken to the orders holding the product in question, to be subject to levy under Tariff Item No. 33(2). The orders be quashed and a mandamus to issue calling upon the respondents to withdraw and cancel the same. The amount payable, which has been deposited in Court be directed to be refunded to the petitioners.
3. There is no affidavit-in-reply field by the respondents. Mr. Lokur representing them, submits that respondents 2 to 4 have taken a correct view of the excisability of the product. Alternatively, and assuming that they have come to a wrong conclusion, this Court under Article 226 of the Constitution has no jurisdiction to set aside the said order as, it is a not a Court of appeal or revision.
4. Having regard to the submissions aforementioned, the points for determination would be : -
(1) Whether the respondents erred in holding that the product figuring in the case, falls under Tariff Item No. 33(2)?
(2) Whether under Article 226 of the Constitution, this Court has jurisdiction to quash the order made by respondents 2 to 4?
I record affirmative answers to both the points and allow the petition for the reasons given below:-
5. Item No. 33(2) of the Central Excise Tariff is worded as under:-
"Electric fans, designed for use in an industrial system as parts indispensable for its operation and have been given for that purpose some special shape or quality which would not be essential for their use for any other purpose, and regulators therefor".
It is well settled that meanings given to articles in a fiscal statute, must be such, as people in trade and commerce, conversant with the subject, treat and understand them, (see Dunlop India Ltd. v. Union of India and other, . As Mr. Parik puts it, would the common man or persons in the trade or business, accept the product figuring in this case, as an electric fan designed for use in an in industrial system? In the Encyclopatedia of Science and Technology, published by Magrew Hill, there is at page 480, a description of compressors. There are two types of Rotary compressors viz., Sliding - vane type and Twin - Lobe type. Analysing the agitator figuring in this case, it seems that it fits into the description of a Rotary compressor, Sliding - vane type. The function that, that Sliding - vane type compressor performs, is the same as that expected from the product figuring here. In respect of Twin - Lobe type Rotary compressor, the Gujarat High Court has in SIM Maneklal Industries Ltd. v. Jain, 1979 (4) E. L. T.(J. 150) held:-
"We do not attribute to the Legislature mechanical knowledge of the functioning of various types of machines which produce or blow air. We have got to construe the expression "electric fans, all sorts" by giving it a popular meaning and as understood in commercial world and also in consumer world. One is not expected, when he has got to see whether "electric fans of all sorts", come within the meaning of the expression, to have technical knowledge in electronics".
These observations were made to repel the contention that like an electric fan, the compressor sucked and blow air, this bringing it within the meaning or Tariff Item No. 33(2).
6. According to Mr. Lokur, 2nd respondent has analysed has analysed the equipment figuring and held that it is an electric fan designed for an industrial use. I am referred to following passage from respondent No. 2's order :-
"air blowers manufactured by the notices are of special shape and size to from part of the filtration plant which in turn in useful in an industry".
That however, does not distinguish it so as to render the Gujarat High Court's aforementioned decision inapplicable. Reading the order of respondent No. 2, the clear inference is that an attempt is made to somehow fit the contraption into the description of an electric fan as set out in Tariff Item No. 33(2). That would not be a proper analysis of the shape, design and function of the agitator. It would be evidence of an attempt to fit the contraption into the strait - jacket of the statute. The same can be said of the orders passed in appeal and revision i.e. attempt made to somehow fit an agitator into the entry at Tariff Item No. 33(2). Respondent 2 to 4 should have accepted the Gujarat High Court's decision.
7. Mr. Lokur's alternative submission that this Court should not interfere, for it cannot under Art. 226, is equally untenable. A similar before Mr. Justice Jahangir of this Court in Sudarshan Chemicals Ltd. v. Union of India and others, 1979 (4) E. L. T. (J. 275), was repelled thus :-
"If on a proper interpretation of the item in the Schedule of the Central Excise Act, it is found the item is not liable to Central Excise, then the order passed must be held to be held to be an illegal order or an order without jurisdiction.
In such cases the High Court can set aside the order in exercise of its powers under Art. 226 of the Constitution."
With respect, I agree and hold that the observation are directly attracted to the facts and circumstances of the case before me.
8. To sum up, the order passed by the 2nd respondent and confirmed in appeal and revision by respondents 3 and 4 respectively, will have to be quashed. Petitioners will be entitled to a refund of the amount deposited and hence the order :-
ORDER The order of the 2nd respondent together with those passed by respondents 3 and 4 in appeal and revision respectively, are hereby quashed. Respondents are restrained from enforcing notice dated 12 December 1974. Petitioners are permitted to withdraw the sum of Rs. 36,510/- deposited in Court at the stage of the admission of this petition. Rule made absolute in the above terms. Parties shall bear their own costs. The above order shall not take effect for a period of four weeks, so as to enable the respondents to prefer an appeal.
Prothonotary and Senior Master to act on the certified copy of the minutes of the order.