Customs, Excise and Gold Tribunal - Tamil Nadu
Collector Of C. Ex. vs Swastik Coaters Pvt. Ltd. on 7 August, 1998
Equivalent citations: 1999(107)ELT533(TRI-CHENNAI)
ORDER S.L. Peeran, Member (J)
1. This appeal has been filed by the Revenue against the order-in-original dated 22-12-1988 passed by the Collector of Central Excise, Hyderabad. The assessees are manufacturers of book binding cloth. They filed classification list under Chapter 52.06 claiming the same to be processed cloth described as MD dyed. Supdt. of Central Excise, Anti Evasion along with officers visited the premises on 7-8-1987 and examined the process of manufacture and obtained write-up of the same from their Company Director, Shri Gopal Malani and drew samples at various stages of manufacture as under:
(i) Grey powerloom cloth before it is subjected to the process of dyeing,
(ii) Cloth after it is subjected to the process of dyeing
(iii) final product after it is subjected to the process of coating for purposes of chemical examination.
The officers also visited the registered office of the assessee at Secunderabad and obtained from them photocopies of invoices wherein the description of swastik book binding cloth is given. Visits were also made to the other premises of the customers in the city of Hyderabad and further enquiries were conducted with other customers. The customers confirmed purchasing book binding cloth from the assessee and that they are using the cloth in their units or selling the cloth to others for use in the making of note books, registers and files etc. After due investigation and recording of statements the department issued show cause notice seeking reclassification of the item under Chapter Heading 59.01 and alleged that the assessees wrongly classified the goods under Headings 5206.61 and 5206.32 describing the book binding cloth manufactured by them as processed cloth. Details of the figures were collected for March, 1986 to July, 1987 and the differential duty of Rs. 10,87,331.57 was demanded from the respondents. It was therefore, the case of the department that the item is not processed cloth but book binding cloth. The assessees filed detailed reply answering to the various charges made out in the show cause notice.
2. Collector after detailed consideration accepted the same and dropped the issue by holding that the item is classifiable only under Chapter Heading 52.06 and not under Heading 59.01 or under Chapter Heading 59.03. He has noted the process of manufacture as follows :
The duty paid grey cloth is brought from outside, then it is dyed with direct colours and starched. The dyed cloth is finished with starch, china clay along with other finishing material and then calendared, folded and packed. The approximate starch content is 20%, china clay is 20% and other finishing material is 10%. The Heading 52.06 covers cotton fabrics woven on looms subjected to the process of bleaching, mercerising, dyeing, printing, water proofing, shunk-proofing, organdie processing or any other process or any two or more of these processes with the aid of power or steam.
The cloth manufactured by them is having the following construction:
'Weft: 24, Warp 24, Reed 32 and reed 32. Accordingly the count of the cloth is 24's. It is merely dyed, starched and coated with china clay. The stiffness of the cloth is lost when it is dipped in water. It has been pointed out that this cloth cannot be used as out covers of books to fall under the Heading 59.01. It is merely binding cloth used as tapes for binding two edges of the books.'
3. The Collector has held as follows :
"Chapter Heading 59.01 page 814 of HSN covers textile fabrics coated with gum or amylaceous substances of a kind used for the outer covers of books, spectacles or cutlery cases, knife sheaths etc. Heading 59.03 covers textile impregnated or laminated with plastics other than those of 59.02. In the explanatory notes at page 816 it is clarified that the fabrics of this heading are used for a variety of purposes including furnishing materials, manufacture of hand bags, travel goods, garments, slippers, toys etc. in book binding as adhesive tapes. In order to fall under 59.03 the cotton fabrics should be impregnated or covered or laminated with plastics. In this case NB dyed cloth is grey cloth which is subjected to process of dyeing and coating with starch and china clay. As this cloth is not used for outer covers of books and although used as adhesive tape in book binding, as it is not impregnated or laminated covered or coated with plastic material the impugned goods will not be classifiable either under Heading 59.01 or under 59.03. Accordingly, I hold that such cotton fabrics subjected to the process of dyeing or any or more than two processes would be classifiable under 52.06 and not under 59.01".
4. The Central Board has reviewed this order of the Collector dated 22-12-1988 under their communication dated 20-12-1989. There is no signature of the Member of the Board. But the order merely indicates "Sd/-". It has been attested by Senior Technical Officer. The Tribunal had directed the Revenue to produce the case records to verify the facts as to whether the Order No. 59R dated 20-12-1989 had been signed by the Member of the Central Board of Excise and Customs, as preliminary objection had been raised that the same has not been signed and in terms of the judgment rendered in the case of CCE v. MM. Rubber Co. reported in 1991 (55) E.L.T. 289 (S.C.), it has been laid down that "one year from the date of decision or order" to run from the date of signing of the decision or order by the concerned authority. It has also been held that if the authority is authorised to exercise the power or to do an act of affecting the rights of parties, he shall exercise that power within the period of limitation prescribed therefor. The order or decision of such authority comes into force or becomes effective on and from the date on which it is signed. The date of such order or decision is the date on which the order or decision was passed or made that is to say when he ceases to have any authority to tear it off and draft a different order and when he ceases to have any locuspaetentiae. The Hon'ble Supreme Court further observed that normally that happens when the order or decision is made public or notified in some form or when it can be said to have left his hand. The date of communication of the order to the parties whose rights are affected is not relevant for the purpose of determining whether power has been exercised within the prescribed time so far as the party who is affected by the order or decision for seeking his remedies against, the same he should be made aware of the passing of such order. Therefore, the Hon'ble Supreme Court observed that the Courts have uniformly laid down as a rule of law that for seeking remedy, the limitation starts from the date on which the order was communicated to him or the date on which it was pronounced or published under such circumstances that the parties affected by it have a reasonable opportunity of knowing of passing of the order and what it contains. The knowledge of the party affected by such a decision, either actual or constructive is thus an essential element which must be satisfied before the decision can be said to have been concluded or binding on him. The Court observed, otherwise, the party affected by it will have no means of obeying the order or acting in conformity with it or of appealing against it or otherwise having it sent. The Supreme Court's observation has been that the ruling "a salutary and just principle" so far as the aggrieved party is concerned is not dependent on the provisions of a particular statute, but it is so under the general law. The ratio of this distinction the Court observed, may also be founded on the principle that the Government is bound by the proceedings of its officers but persons affected are not concluded by the decision. The Supreme Court further observed, that, it is not correct to equate Board to one of the two parties to quasi-judicial proceedings before the Collector and the Board "right under Section 35E to the exercise of the right of appeal by an aggrieved assessee from an order passed to its prejudice. The power under Section 35E is a power of superintendence conferred on a superior authority to ensure that the subordinate officers exercise this powers under the Act correctly and properly. Where a time is limited for the purpose of the statute, such power as under Section 33A(2) of the Income Tax Act, 1922 referred to in Muthia Chettiar, should be exercised within the specified period from the date of order sought to be reconsidered. The Supreme Court observed that the period of one year fixed under Sub-section (3) of Section 35E of the Act should be given its literal meaning and so construed the impugned direction of the Board was beyond the period of limitation prescribed therein and therefore ineffective. Before the Hon'ble Supreme Court the order-in-original dated 34/84 dated 28-11-1984 was contested by the Supdt. on 21-12-1984. The Board after consideration of the order issued on 11-12-1985 directed the Collector under the provisions of Section 35E(1) to apply to CEGAT for correct determination of the points arising out of the aforesaid order as directed under Section 35E(4), before the Tribunal. The Respondents urged that the reliance of the Collector's (adjudicating authority's) order under Section 35E(3) should be taken as date of the order-in-original dated 28-11-1984 end not 21-12-1984 when it was received by the respondents and on that basis the Board's order under Section 35E(2) of the Act should be held as beyond the period of one year from the date of decision or order of the adjudicating authority end therefore, the application before the Tribunal was incompetent. The Tribunal accepted this contention and held that the application was not maintainable and the Hon'ble Supreme Court has confirmed this view as noted by us.
5. In this appeal, the preliminary objection raised by the respondent is that the date of Collector's order is not 22-12-1988 which is written in the cause title. The date has been subsequently put. There is no date below the Collector's signature. But this date 22-12-1988 is the date on which the order was despatched. On consideration and scrutiny, we have seen the copy of the order-in-original attached to the appeal memo and it is noticed that in the cause title after the Order No. 65/87-Adjn., which is typed on the left side, on the right side the date mentioned is 22-12-1988. The figure 22 is written in hand while 12-1988 is typed. Below the Collector's signature, there is no date. However, below the signature, the order has been marked to five persons and below that there is a rubber stamp "DESPATCHED" and initialled on 26-12-1988. What is required to be seen is as to when the order has been passed. The date mentioned as noted above is 22-12-1988. The Board's order indicates that it has been issued on 20-12-1989 and the Order No. 59-R is dated 20-12-1989 and it appears that it is within time. However, serious objection has been raised that the order of the Board has not been signed and only "Sd/-" has been typed, and this is not an order in the eye of law. In this regard, the respondents have relied upon the judgment of the Hon'ble Supreme Court (supra) which clearly sets that limitation of one year commences from the date of decision or order to run from the date of signing of the decision or order of the concerned authority. The respondents also relied upon the judgment in the case of Solid Containers Ltd. v. CCE, reported in 1993 (68) E.L.T. 598 wherein also same view has been taken and this order also relies upon the judgment of the Hon'ble Supreme Court (supra). The contention of the learned Counsel for the respondents is that simply mentioning "Sd/-" does not make it an order. He also in this regard relied upon the judgment rendered in the case of CCE v. United Polymers reported in 1996 (87) E.L.T. 493 (Tribunal) wherein in para 6 the Tribunal has held as under:
6. We note that Collector of Central Excise has not put any date below his signature in the impugned order. There is, however, a remark "Attested" signed by R.P. Karyakarte, Superintendent (Adj.), Central Excise & Customs Hdqrs., Pune dated 14-3-1988 at the bottom. There is also endorsement at the bottom "More/10388/" which the ld. Advocate submits is the date the order was stencilled. We note that CBEC's order for review is dated 15-3-1989 and this Review Order is signed by Member, CBEC on 15-3-1989 itself. Since impugned order was attested on 14-3-1988 we have necessarily to presume that it was signed on that date, or any date prior to that date, since the Department has not put in any evidence in rebuttal in spite of series of opportunities given to them precisely for this purpose. Since the order at the latest could have been signed on 14-3-1988 a Review Order signed on 15-3-1989 was clearly beyond one year, though by an extremely thin margin of one day. In regard to date of decision or order in such cases the Hon'ble Apex Court in the case of Collector of Central Excise v. MM. Rubber Co. -1991 (51) E.L.T. 289 (S.C.) has held that in powers of suo motu review by Central Board of Excise and Customs and Collectors to direct filing of departmental appeals/applications - Limitation of 'one year from the date of the decision or order' is to run from the date of signing of the decision or order by the concerned authority. In that case a plea had been pressed by the appellants/Revenue that mere writing an order in file kept in the office is no order in the eye of law in the sense of affecting the rights of the parties for whom the order is meant and that though the order of the adjudicating authority was made on 28-11-1994 a copy of the same was sent to the respondents only on 21-12-1984 and received by them on the very day and that therefore the limitation would start only at the earliest from 21-12-1984. Negativing the contention the Apex Court distinguished two situations holding that limitation of one year from the date of the decision or order is to run from the date of signing of the decision or order by the concerned authority, but in case of the party seeking his appellate remedies, limitation is to run from the date of communication to him of the decision or order or the date of its pronouncement or publication. Since the position in regard to date in such cases is settled by the judgment of the Apex Court we hold that in the circumstances the order of review was passed beyond the limitation period of one year. In view of this all the four appeals are not maintainable and are dismissed as such without going into merits. Misc. Applications also stand disposed of accordingly.
Therefore, on a. reading of this judgment, the learned Counsel submitted that signature on the order is mandatory and merely writing "Sd/-" does not make it an order at all and hence the order is not only barred by limitation as the Collector's order is dated 22-12-1988, but also the order is not an order in the eye of law.
Further, the Collector has not put the date of order, but has signed the order and therefore, the Board's order dated 20-12-1988 is beyond the period of one year. We are not able to accept this contention, because we notice from the order itself that the same was attested on 26-12-1988 and hence the date of the order-in-original is dated 22-12-1988 even though the Collector has not put the date below his signature. The other ground urged by the respondents is that the Board's order has not been signed and merely putting "Sd/-" does not make it an order in the eye of law. The Bench had directed the Revenue to produce the case records to see whether there was order number or the despatch number of the Board. The case records have not been produced nor the signed order of the Member of the Board has been produced. Therefore, we have to hold that order No. 59-R, dated 20-12-1989 of the Board has not been signed, but only attested by the Senior Technical Officer by writing "Sd/-" dated 20-12-1989 end hence it cannot be construed to be an order as per Section 35E(1) of the C.E. Act, 1944. The assessee succeeds on this preliminary point itself and hence on this ground the appeal of the Revenue is rejected.
6. However, we also take into consideration the other points raised by the learned Counsel. He pointed out that the grounds raised in the order of the Board are beyond the grounds raised in the show cause notice. It has been his contention that in an identical matter in the case of CCE v. Sunita Textiles reported in 1993 (67) E.L.T. 932, the Tribunal after due consideration upheld the assessees' contention that fresh grounds raised in the Board's order cannot be considered. In this regard he pointed out that the original show cause notice was on the basis that the contentions of the respondents that their cloth did not fall under Chapter 59.01 "did not hold good". This is all that was there in the original show cause notice as is clear from para 4 of the show cause notice as follows:
"Further the description under Chapter 59.01 is not confined to Book Binding cloth alone but is given as "Textile fabrics" coated with gum or any amalyceous substances of a kind used for outer covers of books, or the like, tracing cloth, prepared painting canvas, buckram or similar stiffened textile fabrics.
As such the contention of Shri Malani that the book binding cloth manufactured by them is not exclusively used for book binding does not hold good, as it covers also other uses in definition "or the like". The cloth manufactured by the company fits in with the description and the classification under Chapter 59.01."
Therefore, he submitted that the review order raising altogether new grounds relating to genesis and scope and ambit of Chapter 52.06 mentioning of converted fabrics, water proofed gabardines or poplins etc. are new grounds and untenable in law. We find force in the submissions of the learned Counsel and in terms of the judgment of the Tribunal in the case of Sunita Textiles (supra) we hold that this ground cannot be urged in the review order.
7. However, the aspect pertaining to classification has been raised in the appeal. That is, chapter heading appropriate to the present case is only under 59.09 end not Chapter 52. On this the Counsel raised another plea that in the present case the issue was settled one and the classification of a long standing practice, in the matter for about 10 years, should not be disturbed. In this connection he relied upon the judgments in the following cases :
(a) 1985 (22) E.L.T. 487 (T) in the case of Steel Authority of India Ltd. v. CCE
(b) 1987 (31) E.L.T. 469 in the case of Inarco Ltd. v. CCE, Bombay
(c) 1990 (47) E.L.T. 449 (CEGAT) Indian Oxygen case.
(d) 1991 (51) E.L.T. A36 Supreme Court upholding the CEGAT' s Indian Oygen case.
His contention is that in such cases, the order have to take only have prospective effect and cannot upset the clearances made on approved classification list and closed and completed assessments. He also relied upon the judgment of the Hon'ble Supreme Court in the case of Rathi Alloys and Steel v. C.C.E., reported in 1990 (47) E.L.T. 205 in support of his contention. There is substance in his plea and in view of the judgment of the Hon'ble Supreme Court, we uphold the contentions raised by the learned Counsel for the respondent.
8. The other points raised by the learned Counsel is that the issue is covered by the judgment of the Tribunal in the case of Sunita Textiles reported in 1993 (67) E.L.T. 932. It has been held that cotton fabrics heavily sized but not having permanent stiffness is not treatable as similar to "Buckram" is classifiable under Chapter 52 and not under Chapter 59. He also relied upon another judgment in the case of Susma Textiles reported in 1998 (99) E.L.T. 158 (Tribunal). In both these judgments, the Tribunal has noted that the item is not stiffened fabric for classification under 59 and has upheld the classification under Chapter 52. This judgment also covers the issue.
9. The learned DR pointed out that the item is specifically covered by HSN under Chapter 59 as "book binding cloth". We notice that this aspect has been clearly distinguished by the Collector in the impugned order and has noted that in order to bring the goods under Chapter 59.03, the cotton fabrics should be impregnated or covered or laminated with plastics and has noted that in the present case, grey cloth is subjected to dyeing and coating with starch and china clay and grey cloth is not used for outer covers of books although used as adhesive tapes in book binding, as it is not impregnated or laminated, covered or coated with plastic material; the impugned goods will not be classifiable under Headings 59.01 or 59.03. We notice that the Tribunal in the case of Bhor Industries reported in 1997 (95) E.L.T. 377, which is a very detailed judgment, held that textile fabrics coated with starch and gummy material and other inorganic siliceous matter used by book binders for covering the books, outer side, in view of the various discussions in the order, the item is held to be classifiable under Chapter Heading 59.01. The Collector in the impugned order has given a categorical finding that the item is not used as outer covers of books. Therefore, this judgment is clearly distinguishable. It is also noted in the case of Bhor Industries that the chemical examiner has given a report that the sample on one side is smooth and somewhat rough on the other side. Each is treated as one side sizing material containing rough gummy matter and inorganic siliceous materials. It is also noted that a plain reading of Heading 52.06 shows that the process of coating the item with starch/gummy matter inorganic siliceous matter has not been indicated and a reading of Chapter 59.01 it is seen that it covers textile fabric coated with gum and those of amalyceous substances of the kind used for outer covers of the books or the like. The Tribunal made clear distinction of the tariff heading under 52.06 and those under Heading 59.01 in terms of page 814 of HSN. Ld. Collector in the impugned order has dealt in the present case that the item is merely dyed starch and coated with china clay and stiffness of the cloth is lost, when it is dipped in water and it cannot be used as outer covers of books to fall under Chapter 59.01 and it is merely used for tapes for binding the two edges of the books. In view of the clear distinction drawn by the Collector in respect of the item and in terms of the Tariff Heading under 52.01 in the context of page 814 of the HSN, we do not find any infirmity order and therefore, the judgment in the case of Bhor Industries classifying the goods used as outer covers is clearly distinguishable from the facts of the present case. In this view of the matter, for the reasons given in the order, we uphold the impugned order and dismiss the Revenue appeal.
10. The cross objection is also disposed of accordingly.