Judgment

YOGESHWAR DAYAL, J.

(1) THIS order will dispose of the aforesaid writ petitions under Article 32 of the Constitution of India. All these cases come under Item 18.1 and/or 18.3 and or 18-E of the Tariff contained in the schedule attached to the central Excises and Salt Act, 1944 (hereinafter referred to as the Act). For facility of reference we are giving the facts of the case of Civil Writ Petition No. 3 of 1983.

(2) THIS writ petition is stated to be covered by the decision of this court in J.K. Cotton Spinning and Weaving Mills Ltd. v. Union of India and the surviving prayer in the writ petition is "to declare that the duty of excise in respect of Tariff Item Nos. 18(I)(ii), 18(III)(ii) and 18-E is to be levied and collected on the weight of the unsized yam and not on the basis of the weight of the sized yarn".

(3) BEFORE we deal with the objections of the learned counsel for the respondents, it would be useful to examine the points which were involved in the aforesaid case of J.K. Cotton Mills. The appellants in the said case had a composite mill wherein it manufactured fabrics of different types. In order to manufacture the said fabrics, yarn was obtained at an intermediate stage. The yarn so obtained was further processed in an integrated process in the said composite mill for weaving the same into fabrics. The appellants did not dispute that the different kinds of fabrics which were manufactured in the mill were liable to payment of excise duty on their removal from the factory. They also did not dispute their liability in respect of yam which was also removed from the factory. It was the contention of the appellants therein that no duty of excise could be levied and collected in respect of yarn which was obtained at an intermediate stage and, thereafter subjected to an integrated process for the manufacture of different fabrics. On a writ petition, by those appellants, the Delhi High court by its judgment dated October 16, 1980 held that yam obtained and further processed within the factory for the manufacture of fabrics could not be subjected to duty of excise. It was the case of the appellants that in spite of the said decision of the Delhi High court, the central Board of Excise had wrongly issued a circular dated 24/09/1980 purporting to interpret Rules 9 and 49 of the central Excise Rules, 1944 (hereinafter referred to as the Rules) and directing the subordinate excise authorities to levy and collect duty of excise in accordance therewith. In the said circular, the Board had directed the subordinate excise authorities that "use of goods in manufacture of another commodity even within the place/premises that have been specified in this behalf by the central Excise Officers in terms of the powers conferred under Rule 9 of the Rules, will attract duty". As the said circular was being implemented to the prejudice of the appellants, they Filed the writ petition before the Delhi High court, inter alia, challenging the validity of the said circular.

(4) DURING the pendency of the writ petition in the Delhi High court, the central government by notification No. 20/82-C.E., dated 20/02/1982 amended Rules 9 and 49 of the Rules. Section 51 of the Finance Act provides that the amendments in Rules 9 and 49 of the Rules shall be deemed to have, and to have always had the effect on and from the date on which the Rules came into force i.e. 28/02/1944. After the said amendments of the Rules with retrospective effect, the appellants amended the writ petition and challenged the constitutional validity of Section 51 of the Finance Act, 1982 and of the amendments to Rules 9 and 49 of the Rules.

(5) THE High court came to the conclusion that Section 51 of the Finance Act, 1982 and Rules 9 and 49 of the Rules, as amended, were valid. It was further held that the retrospective effect given by Section 51 of the Finance Act, 1982 will be subject to the provisions of S. 11-A and 11-B