Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs New Shorrock Mills on 3 July, 1986
Equivalent citations: 1986(9)ECC57, 1987(30)ELT629(TRI-DEL)
ORDER
1. The Government of India, in exercise of powers under Section 36(2) of the Central Excises and Salt Act, issued a Show Cause Notice dated 21-11-1981 to the respondent M/s New Shorrock Mills, Nadiad among others seeking to review the order-in-appeal Nos. 746/BI-32/81 to 751/BI-37/81, dated 7-7-1981 passed by the Collector of Central Excise (Appeals) Bombay which matter has since been transferred to this Tribunal for being dealt with as an appeal by the department before this Tribunal. The facts of the case are that the appellants applied for a refund of Rs. 15,789.40 of duty paid on drill cloth on the ground that they had paid full rate of duty on the goods whereas they were entitled to a refund at the rate of 50% reduced rate of duty as per Clause (v) of Notification 226/77, dated 15-7-1977, according to which a concessional rate of duty for drill as defined from time to time by the Textile Commissioner under the Cotton Textile (Control) Order, 1948, for which maximum ex-factory price had not been specified by the Textile Commissioner under the said order, had been granted. The period for which the refund claim was made was for the month of October-November, 1979. This refund claim was rejected by the Assistant Collector for the reason that the duty had already been paid according to the approved classification lists as per Notification 226/77 prior to 30-11-1979. On an appeal against this order, the Collector (Appeals) allowed the appeal. The Government of India, while seeking to review this order, observed that the Appellate Collector's order was incorrect as no other drill but drill of specifications of controlled cloth for which no maximum price is fixed, alone would appear to be assessable under proviso (V) of Notification 226/77 and that drill of 3/1 or 1/3 will not as such be eligible for exemption as Notification No. CER/1/66, dated 5-1-1967 of the Textile Commissioner was amended by Notification No. CER/1/69, dated 4-10-1969.
2. Arguing the case for the department, the learned Departmental Representative Shri K.C. Sachar referred to the definition of drill as given by the Textile Commissioner in 1964 as amended in 1967 of the Textile Commissioner Notification according to which, drill by definition should have a maximum weight of 5 ozs. per Sq. yard of warp and weft yarn in grey looms state and should be woven in weaves namely 2/1 or l/2 or 3/1 or 1/3. (3/1 and 1/3 drill manufactured by appellants is also known as 4 harness warp or weft faced fabric). There was yet another definition of 1968 wherein the weight factor was given as between 4 Ozs. and 8.5 Ozs. and the weaves were given as 2/1 or 1/2. Another aspect in the 1968 definition was that it should be woven with yarn of average count not exceeding 34.49s. Thus, the Department Representative pointed out the ingredients in the definitions of 1964 and 1967 were different from that of 1968. He pointed out that the appellants had stated in their reply of Show Cause Notice that the drill manufactured by them had weight per sq. yard not less than 5 Ozs. and the Departmental Representative observed that non-controlled drill by definition should not be less than 5 Ozs. 3y this, according to him, their product would fall under controlled item and not non-controlled drill. He also questioned the distinction sought to be made by the respondent regarding the controlled and non-controlled drill on the basis of whether Textile Commissioner has fixed the maximum price or not and stated that this contention stands disapproved by the provision of Notification 301/79 itself. The specification of the maximum price by the Textile Commissioner is not a necessary criterion- Further, drill having a weight of 4 to 5 Ozs. and weave 2/1 would fall under both controlled and non-controlled categories. The fact that the 1968 definition superseded the earlier one as indicated by the specification of the count of yarn which was absent in the earlier definition of 1964. He also repelled the claim of the respondent that their case is covered by the decision of the CEGAT in the case of Collector of Central Excise, Indore v. Jiyajeerao Cotton Mills on the ground that there was a factual error in the CEGAT order when they observed that the 1964 definition of the Textile Commissioner remained in force till its supersession by another order dated 17-12-1979. The Departmental Representative pointed out that actually the amendment came much earlier to the issue of Notification 301/79, dated 30-11-1979.
3. Arguing for the respondent, Shri N.I. Mehta, the learned counsel submitted that the Government of India has exercised its special and extra ordinary powers of review by issuing the Show Cause Notice and therefore, the matter has to be confined to the issue as focused in para 4 of the Show Cause Notice. He submitted that there were two orders of the Textile Commissioner, one issued on 13-10-1964 as amended and another on 2-5-1968. The first order defined drill and the second defined controlled drill. He stated that it was important to note that the Notification 226/77 contained only the term drill in Clause (iv) thereof and the expression controlled drill was introduced only by Notification 301/79. Clause V of the Notification was also amended by introducing this expression. The refund claims in this appeal are of October and November, 1979, prior to the issue of the amending Notification 301/79. Therefore, the respondent's claims are covered by the Central Excise Notification 226/77. It was his argument that the definition of the term controlled drill brought about by the amending notification dated 2-5-1968 of the Textile Commissioner cannot be said to superseded the earlier definition of 1964 and 1967 because the Notification of 2-5-1968 was an independent self-contained notification. The counsel also argued that the Central Excise exemption notification has adopted the terminology as contained in the Textile Commissioner's Notification and, as such, was a case of legislation by incorporation and the relevant terms in the T.C. Notification are deemed to be written into the Central Excise Notification. Therefore, their case was squarely covered by the Notification 226/77 and the decision of the CEGAT in the Jiyajee Rao Cotton Mills case would also fully support the respondent's submissions.
4. We have given careful consideration to the submissions made by the learned Departmental Representative and the counsel for the respondent. The claim for refund in this case was on the ground that the drill produced and cleared by them during the period October-November, 1979, was entitled to 50% reduced rate as per Clause (v) of Notification 226/77. This clause in that Notification read as follows :
"In the case of drill as defined from time to time by the Textile Commissioner under the Cotton Textile (Control) Order 1948 for which maximum ex-factory prices have not been specified by the Textile Commissioner under the said order ...".
In the review show cause notice issued by the Government of India, in para 4, it has been stated that no other drill but drill of specifications of controlled cloth for which no maximum price is fixed alone would be eligible for exemption under the abovecited provision of Notification 226/77, dated 15-7-1977, and that drill of 3/1 or 1/3 will not be eligible for exemption as Notification CER/1/66, dated 5-1-1967 of Textile Commissioner was amended by Notification CER/1/69, dated 4-10-1969.
5. The respondent's case is that, at the material time, there was no controlled drill at all and that the term "controlled drill" was introduced as per Textile Control Order CER/1/68, dated 2-5-1968 which was incorporated in Central Excise Notification 301/79, dated 30-11-1979.
6. We observe that this Tribunal had on an earlier occasion considered a similar issue involving the interpretation of Central Excise Notification No. 226/77 and its amendment by Notification No. 301/79, dated 30-11-1979. The order in question was passed in the case of Collector of Central Excise, lndore v. Jiyajeerao Cotton Mills Ltd. Gwalior - 1984 (15) ELT 258. That case also related to 4-harness drill as in the present case. The period in dispute in that case was 15-7-1977 to 14-4-1978. The period relevant to the present case is October-November, 1979. Both periods are prior to the amendment of Central Excise Notification No. 226/77 by 301/79, dated 30-11-1979. In the decision in the Jiyajeerao Cotton Mills case (supra), the Tribunal held that since 4-harness drill satisfied both the conditions of proviso (v) of Notification 226/77 it conformed to the Textile Control Order definition' of 1964 and no maximum ex-factory price for it was specified by the Textile Commissioner under the said order - it was entitled to the concession given by the proviso.
7. In the other decision of the Tribunal which was also referred to and discussed during the course of hearing, namely, Collector of Central Excise, lndore v. Jiyajeerao Cotton Mills Ltd. - 1985 (21) ELT 317, the period of the dispute was 1-7-1981 to 19-8-1981, that is, after Central Excise Notification No. 226 of 77 was amended by Notification No. 301/79. That decision does not, in our opinion, have application to the facts of the present case. This is because, Notification 226/77 as amended in 1979 restricted the scope of the expression "Drill" to "Controlled Drill". In other words, the Notification 226/77 covered "Drill" as well as "Controlled drill" till the amendment on 30-11-1979 when the coverage was restricted to "controlled drill".
8. In the circumstances, and following the decision reported in 1984 (15) ELT 259, we uphold the impugned order, discharge the show cause notice issued by the Central Government and dismiss the appeal,,