Punjab-Haryana High Court
Tirupati Woollen Mills Ltd. And Anr. vs Union Of India (Uoi) And Ors. on 30 May, 1997
Equivalent citations: 1998(99)ELT492(P&H), (1998)118PLR642
Author: S.C. Malte
Bench: S.C. Malte
JUDGMENT S.C. Malte, J.
1. Petitioner 1 is engaged in the manufacture of coarse/carpet woollen yarn. Petitioner 2 is one of the share-holders of petitioner 1. The petitioners have challenged the legality and validity of the action by the Central Excise Department by which it has charged excise duties in respect of the wool fibers by putting it in the category of Item No. 43 of the tariff of the Central Excise and Salt Act, 1944. The petitioners also challenged the legality and validity of expression of opinion by the Central Board of Excise and Customs to the effect that woollen fibre manufactured in Draft-o-matic machine are classifiable under Tarrif Item No. 43 of the Central Excise Tariff. The petitioners also felt aggrieved by the direction dated 5.7.1985 issued by the Inspector, Central Excise, Range I, Kundli, Sonepat, by which he has directed the petitioners to obtain a licence after paying duty as per Tariff Item No. 43 of the Central Excise Tariff. The contention of the petitioners is that they were manufacturing the Woollen yarn which was covered under Item 18-B(i). It is claimed that product was exempted from duty vide notification No. 224/79-CE, dated 13.7.1979. Despite that the Excise Department has taken the view that the product manufactured by the petitioners would fall under Item No. 43 mentioned above. On taking that view various show-cause notices, totalling 25 notices, as mentioned in Annexure P-2, have been issued by the Superintendent, Central Excise Duty, and the petitioners were called upon to show cause why the excite duty coupled with some penalty should not be imposed on them. It was further Staled that the petitioners were at liberty to lead evidence in support of their claim. It was farther stated that they would be heard in person. Failure to show cause within 30 days was stated to be an indication that the petitioners did not want to say anything before the adjudicating authorities and the case shall be posted for hearing and decided ex parte on the basis of evidence available. In response to these various show-cause notices, the petitioners have replied, out of which copies of two replies Annexure P-4 dated 11.7.1985 and another dated 5.8.1985 are attached with the petition. While the matter was thus pending for decision, the Inspector of Central Excise visited the manufacturing unit of the petitioners and in the visit book made the following endorsement: -
"Visited the Unit. Please note that woollen slivers manufactured in draft-o-matic machine are classifiable under Tariff Item No. 43 of Central Excise Tariff. Please take out the licence and clear the goods only on payment of duty and after completing the licensing formalities."
Aggrieved by such a stand taken by the respondents, the petitioners filed this writ petition and challenged the various actions thus taken by the respondents.
In the written statement filed by the Assistant Collector of Central Excise, Rohtak, it was contended that the petitioners are manufacturing "carded gilled woollen slivers. It was further contended that the product manufactured by the petitioners is a combination of various fibres into one by strengthening it to make out woollen slivers into uniform thickness. It was further contended that sample of the product manufactured by the petitioners had been subjected to the test by the Chemical Analyser, Central Excise New Delhi, by taking sample on 18.10.1979 and his opinion was that the woollen slivers manufactured by the petitioners are in the form of "carded slivers composed wholly of wool fibres containing a few foreign particles." It was further submitted that the Central Board of Excise has also expressed opinion that the woollen slivers manufactured in draft-o-matic machine were correctly classified under Tariff No. 43 of the Central Excise Tariff. It was submitted that the cases initiated by issuing show-cause notices to the petitioners are awaiting decision by the appropriate authorities of the department; and under these circumstances, it was premature for the petitioners to seek a remedy by filing the writ petition.
3. The counsel for the petitioners brought my attention to the various stages of manufacturing of the articles manufactured by the petitioners' factory. It was submitted that the manufacturing process thus does not produce the goods that would-be covered by Item No. 43. It was submitted that the Excise Officers have taken unreasonable view and have claimed to get support from the report of the Chemical Examiner, which states about kind of the product and on the letter issued by the Central Board of Excise and Customs. It was submitted that in response to the various show cause notices issued by the Excise Officers, the petitioners have given elaborate reply and during the pendency of the decision of it, the Excise Inspector should not have made an endorsement dated 5.7.1985, referred above, it was submitted that the petitioners are justified in resorting to the writ jurisdiction because the Excise officers entrusted with the job of adjudication of the duty would not take any different view from one expressed by the Central Board of Excise and, therefore,, it would be a futile exercise to direct the petitioners to the departmental remedies.
4. As against that, the counsel for the respondents submitted that the decision by the Excise officers is based on material on record. Further, during the pendency of the decision on the show-cause notices issued by the Excise Department, the petitioners were not entitled to file a writ, and their remedy was to thrash the matter departmentally.
5. The counsel for the petitioners brought my attention to the communication from the Under Secretary, Central Board of Excise and Customs, (Annexure P-5). It is as follows:-
"Point No. 6: Regarding Classification of Woollen Slivers manufactured in Draft-o-matic machine.
I am directed to refer brief on point No. 6 sponsored by you for discussions in the conference of Collectors of Central Excise (North Zone) held at Jaipur on the above subject and to inform you that the board has decided that Woollen Slivers manufactured in Draft-o-matic m/c. are correctly classifiable under tariff Item No. 43 of the central Excise Tariff."
6. it was submitted that the Excise Officers are following these directions without themselves applying their mind to ascertain the kind of product produced by the petitioners. In my opinion, this letter is nothing but an expression of opinion that the woollen slivers manufactured in Draft-o-matic machine were correctly classifiable under tariff Item No. 43. It cannot be said to be a direction. All the same, the effect of such expression of opinion would have no bearing while deciding the matter in a quasi-judicial manner by the various officers under the Central Excise Act. In this respect the Supreme Court has expressed its own opinion in a case of Orient Paper Mills Ltd v. Union of India, A.I.R. 1969 SC 48. their Lordships have observed as follows:-
"If the power excised by the Collector was a quasi judicial power - as we hold it to be - that power cannot be controlled by the directions issued by the Board. No authority however high placed can control the decision of a judicial or a quasi-judicial authority. That is the essence of our judicial system. There is no provision in the Act empowering the Board to issue directions to the assessing authorities or the appellate authorities in the matter of deciding disputes between the persons who are called upon to pay duty and the department. It is true that the assessing authorities as well as the appellate authorities are judges in their own cause; yet when they are called upon to decide disputes arising under the Act they must act independently and impartially. They cannot be said to act independently if their judgment is controlled by the directions given by other. Then it is a misnomer to call their orders as their judgments; they would essentially be the judgments of the authority that gave the directions and which authority had, given those, judgments without hearing the aggrieved party. The only provision under which the Board can issue directions is Rule 233 of the Rules framed under the Act. That rule says that the Board and the Collector may issue written instructions, providing for any supplemental maters arising out of these Rules.
Under this rule the only instruction that the Board can issue is that relating to administrative matters; otherwise that rule will have to be considered as ultra vires Section 35 of the Act."
The case of Orient Papers Mills (supra) further came to be considered by the Gujarat High Court in case of Genest Engineers Pvt. Ltd. v. U.O.I., 1989(43) E.L.T. 24 (Guj.). In that case their Lordships took into consideration the provisions of Section 37-B of the Central Excises and Salt Act, 1944, and observed that section empowers the Central Board of Excise to give administrative directions and instructions which are to be observed by the Officers while discharging administrative functions. All the same, that provision has taken particular care to see that authorities who would be acting in a quasi-judicial capacity while dealing with grievance raised by the assessee, are protected from such directions and they are at liberty to take their judicial view. Obviously, therefore, there is no question of any apprehension in the mind of the petitioners that the expression of opinion at Annexure P-5 Would in any way come in the adjudication of their case by the authorities who would be discharging the quasi-judicial function. In the context of this, it may further be noted that even long before the opinion of the chemical analyser was received on 17.12.1982 and the expression of opinion of the Central Board of Excise at Annexure P-5 dated 2.1.1985, show-cause notices dated 22.11.1982 and 26.11.1982 have been issued, among 25 notices as mentioned in Annexure P-2. Therefore, it cannot be said that the Excise Officials entrusted with the job of assessment of excise duty were following some instructions given at Annexure P-5.
7. The counsel for the petitioners made elaborate submissions to substantiate his case that the articles produced by the petitioners would, not fell under Item No. 43 of the Tariff. On the other hand, the counsel for the respondents has relied on report of the Chemical Examiner and the expression of opinion of the Central Excise Board Annexure P-1 to indicate that the show-cause notice was not merely a matter of whim but is based on conscious application of mind and it was open to the petitioners to appear before the concerned authorities in response to the show-cause notice and put up their case so that adjudication would be possible, in view of these rival claims it is obvious that it becomes a question of fact as to whether the product manufactured by the petitioners corresponds to the article covered by Item No. 43, referred above. Obviously, this Court would not be in a position to go into such details. The petitioners are at this stage facing only show-cause notices. Yet there is a scope for them to put-forth their case, which they claimed to have already put-forth by replying to the show-cause notices. Admittedly, the matter was pending for adjudication when this petition came to be filed and the matter came to be standstill. In the set of these circumstances the question is whether this Court would be justified in exercising writ jurisdiction. The counsel for the petitioners claims that in view of the stand taken by the respondents to justify the decision to put the article under Item No. 43, it obviously looks futile to approach to alternative remedy in the same department which has already taken the view. It was submitted that, therefore, this Court should examine the position and decide the matter, However, as stated above, it is nonetheless going to be an ascertainment of fact as to whether the product in question responds to the description given in Item No. 43. This aspect can be very well looked into when the matter is before the Excise Authorities performing the quasi-judicial functions. The counsel for the respondents brought my attention to a case of Titaghur Paper Mills Co. Ltd. v. State of Orissa, AIR. 1983 S.C. 603. In that case their Lordships observed that when alternative remedy was available, the petitioner should have resorted to it before coining to the High Court in writ jurisdiction. In another case of Assistant Collector of Central Excise v. Dunlop India Ltd., A.I.R. 1985 S.C. 330 their lordship expressed a view that when alternative remedy is available, writ jurisdiction cannot be invoked. It was observed that the Court must have good and sufficient reasons to by-pass the alternative remedy provided by the statute. The Supreme Court has also deprecated the practice of getting interim orders in cases of recovery of revenue, and thereafter prolonging those matters. This was found to be a device to avoid the payment of revenue by way of tax or duties. In my opinion, the petitioners should have resorted to the remedies available under the Central Excises and Salt Act, 1944. The petitioners have already submitted their replies in response to the show-cause, notices in question. The authorities under the Central Excises and Salt Act shall expedite the disposal of those matters, preferably within six months. With these observations, the petition is dismissed with costs.