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1990 Supreme(AP) 292
Andhra Pradesh High Court
Judges : A.LAKSHMANA RAO, YOGESHWAR DAYAL
Ceat Limited., Glass Fibre Division Hyderabad - Appellant
Versus
Asst.Collector, Central Division, Central Excise - Respondent
Decided On : 08-03-90
The proper officer can modify an approved classification list suo-motu if the goods have been erroneously classified due to either mistake of fact or law.
Headnote:
CENTRAL EXCISE - CLASSIFICATION - YARN SPUN WHOLLY OUT OF GLASS FIBRE - EXEMPTION - APPROVAL OF CLASSIFICATION LIST - REVOCATION - POWER OF PROPER OFFICER - SECTION 11-A OF THE CENTRAL EXCISE AND SALT ACT, 1944 - RULE 173-B OF THE CENTRAL EXCISE RULES, 1944 - BOARD S LETTER DATED MAY 31, 1988 - VALIDITY - SCOPE OF SECTION 11-A - WHETHER THE PROPER OFFICER CAN MODIFY AN APPROVED CLASSIFICATION LIST SUO-MOTU IF THE GOODS HAVE BEEN ERRONEOUSLY CLASSIFIED DUE TO EITHER MISTAKE OF FACT OR LAW - WHETHER THE POWER CONFERRED UNDER RULE 173-B EITHER TO APPROVE OR NOT TO APPROVE A CLASSIFICATION LIST IS QUASI-JUDICIAL IN NATURE AND ONCE AN ORDER HAS BEEN PASSED GRANTING APPROVAL, SUCH ORDER CANNOT BE REVIEWED BY THE SAME AUTHORITY AS NO SUCH POWER HAS BEEN CONFERRED EITHER UNDER THE PROVISIONS OF THE ACT OR THE RULES MADE THEREUNDER - WHETHER THE BOARD S LETTER DATED MAY 31, 1988 IS ILLEGAL, ARBITRARY AND CAPRICIOUS AND THE PROCEEDINGS INITIATED BY THE RESPONDENTS 1 AND 2 PURSUANT TO THE INSTRUCTIONS OF THE BOARD ARE A NULLITY.
Fact of the Case:
The petitioner company is a manufacturer of glass fibre products. With effect from March 16,1976 excise duty was levied on glass fibre products for the first time under Tariff Item No. 22-F of the first schedule to the Central Excise and Salt Act, 1944 (for short the Act ). Tariff Item 22-F. "mineral Fibres and yarn and manufactures therefrom in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power, the following, namely (1) glass fibre and yarn including glass tissues and glass wool 15% advalorem.
Finding of the Court:
1. The proper officer can modify an approved classification list suo-motu if the goods have been erroneously classified due to either mistake of fact or law. 2. The power conferred under Rule 173-B either to approve or not to approve a classification list is quasi-judicial in nature and once an order has been passed granting approval, such order cannot be reviewed by the same authority as no such power has been conferred either under the provisions of the Act or the rules made thereunder. 3. The Board s letter dated May 31, 1988 is not illegal, arbitrary and capricious and the proceedings initiated by the respondents 1 and 2 pursuant to the instructions of the Board are not a nullity.
Issues: 1. Whether the proper officer can modify an approved classification list suo-motu if the goods have been erroneously classified due to either mistake of fact or law? 2. Whether the power conferred under Rule 173-B either to approve or not to approve a classification list is quasi-judicial in nature and once an order has been passed granting approval, such order cannot be reviewed by the same authority as no such power has been conferred either under the provisions of the Act or the rules made thereunder? 3. Whether the Board s letter dated May 31, 1988 is illegal, arbitrary and capricious and the proceedings initiated by the respondents 1 and 2 pursuant to the instructions of the Board are a nullity?
Ratio Decidendi: 1. The power to review the approved classification list is inherent in the very nature of power conferred on the original authority under Section 11-A for recovery of excise duty not levied or not paid or short-levied or short paid during the past period. 2. The power to review the approved classification list is inherent in the very nature of power conferred on the original authority under Section 11-A for recovery of excise duty not levied or not paid or short-levied or short paid during the past period. 3. The Board s letter dated May 31, 1988 is not illegal, arbitrary and capricious and the proceedings initiated by the respondents 1 and 2 pursuant to the instructions of the Board are not a nullity.
Final Decision: Writ petition dismissed with costs.
( 1 ) THE petitioner company is a manufacturer of glass fibre products. With effect from March 16,1976 excise duty was levied on glass fibre products for the first time under Tariff Item No. 22-F of the first schedule to the Central Excise and Salt Act, 1944 (for short the Act ). Tariff Item 22-F. "mineral Fibres and yarn and manufactures therefrom in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power, the following, namely (1) glass fibre and yarn including glass tissues and glass wool 15% advalorem.
( 2 ) UNDER notification No. 87/76 C. E. dated March 16, 1976 the central Government had exempted mineral fibres and yarn and manufactures therefrom, falling under Tariff Item No. 22-F from the whole of the duty of excise leviable thereon. "notification No. 87/76 dated 16-3-1976 : in exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Exise Rules, 1944, the Central Government hereby exempts mineral fibres and yarn and manufactures therefrom, falling under Item No. 22-F of the First Schedule to the Central Excise and salt Act, 1944 (1 of 1944), specified in column (2) of the Table hereto annexed, from the whole of the duty of excise leviable thereon. TABLE
SI. No.
Description
(1)
(2)
1.
Rock wool
2.
Yarn spun wholly out of glass fibres
3.
Glass fabrics.
( 3 ) BY the notification No. 206/81 C. E. dated December 30, 1981 an explanation was added. Explanation : in the notification "yarn spun wholly out of glass fibres shall not include continuous filament yarn.
( 4 ) WHEN the Central Excise Tariff Act, 1985 came into force on february 28, 1986, glass fibre products were categorised under Item 70-14-00 which reads as follows : TABLE
Heading
No.
Sub-
Head ing
No.
Description
Rate of Duty
(1)
(2)
(3)
(4)
70. 14
7014. 00
Glass fibres (including glass wool and Glass filaments and articles there of (for example, yarn, woven fabrics), whether or not impregnated, coated, covered or laminated with plastics or varnish.
30%
( 5 ) THE concession by way of exemption in respect of yarn spun wholly out of glass fibres was extended by notification No. 52/86 C. E. dated February TABLE
SI.
No.
Heading
Or Sub-
Heading
No.
Description
of
Goods
Rate
of
Duty
Condition
(1)
(2)
(3)
(4)
(5)
9.
7014. 00
Yarn spun wholly out of glass fibres (excluding continuous
filament yarn)
Nil
( 6 ) ON April 6. 1981 the petitioner-company had filed a classification list with the proper officer for approval under rule 173-B of the Central excise Rules, 1974 (hereinafter referred to as the rules) claiming exemption in respect of what it called spun yarn made wholly out of glass fibre,
( 7 ) THE Assistant Collector had passed an order dated June 15, 1981 denying exemption and treating the product as filament yarn. Aggrieved by that order, the petitioner-company preferred an appeal to the Appellate collector, Madras. He set aside the order of the Assistant Collector by an order dated October 31, 1981 and remanded the case for fresh consideration. On remand, the Assistant Collector passed an order dated June 15, 1982 again denying exemption on the basis of the report of the Chief Chemist. That order was again challenged by the petitioner company before the Appellate collector. He again set aside the order of the Assistant Collector by his order dated October 23, 1982 and remanded the case for re-consideration. The relevant portion of the order of remand reads as follows: in the circumstances, I am left with no other alternative except to remand the case once more to the lower authority so that he may again make appropriate reference to the Chief Chemist on the particular aspect referred in his examination and considered opinion. On the basis of such re-examination and report of the Chief Chemist, the case may be finally decided. " on remand, the Assistant Collector, Hyderabad-II Division re-considered the matter and granted exemption by his order dated May 17, 1985. The relevant portion of the order
