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High Court Of Calcutta
Suhas Chandra Sen
GOPAL HOSIERY - Appellant
Versus
ASSISTANT COLLECTOR OF C.EX. - Respondent
Civil Rule 1298 (W) Of 1984
Decided On : 04/08/1988
CENTRAL EXCISE - REFUND OF DUTY - EXEMPTION - ARTICLES OF HOSIERY - TARIFF ITEM NO. 22D AND 68 OF THE CENTRAL EXCISES AND SALT ACT, 1944 - INTERPRETATION.
Fact of the Case:
The petitioner, a registered partnership firm, manufactured "articles of hosiery" which were not liable to excise duty under the Central Excises and Salt Act, 1944. In 1971, tariff item No. 22d was introduced, which brought "articles of ready-to-wear apparel" under the levy of excise duty, but specifically excluded "articles of hosiery" manufactured with the aid of power. In 1975, tariff item No. 68 was introduced as a residuary item, subjecting "all other goods, not elsewhere specified" to excise duty. The petitioner paid excise duty on its hosiery products from 1975 to 1980 under protest, claiming that the goods were not liable to duty. In 1980, an Explanation was added to tariff item No. 68, deeming goods referred to in any preceding item for the purpose of exclusion from that item to be goods not specified in that item. Subsequently, notifications were issued exempting "articles of hosiery" from excise duty. The petitioner sought a refund of the excise duty paid, claiming it was paid under a mistake of law.
Finding of the Court:
The court held that the hosiery goods manufactured by the petitioner were not liable to excise duty under tariff item No. 68 of the Central Excises and Salt Act, 1944. The court found that the phrase "all other goods, not elsewhere specified" in tariff item No. 68 only meant goods that had not been specified in tariff item Nos. 1 to 67 either for the imposition of duty or for the purpose of granting exemption from duty. The court also held that the Explanation added to tariff item No. 68 in 1980 had the effect of enlarging the ambit of the item and was not merely clarificatory.
Issues: 1. Whether "articles of hosiery" manufactured by the petitioner were liable to excise duty under tariff item No. 68 of the Central Excises and Salt Act, 1944? 2. Whether the petitioner was entitled to a refund of the excise duty paid?
Ratio Decidendi: 1. The court interpreted the phrase "all other goods, not elsewhere specified" in tariff item No. 68 to mean only goods that had not been specified in tariff item Nos. 1 to 67 either for the imposition of duty or for the purpose of granting exemption from duty. The court found that "articles of hosiery" had been specifically excluded from the ambit of taxation under tariff item No. 22d and were therefore not liable to duty under tariff item No. 68. 2. The court did not decide the issue of whether the petitioner was entitled to a refund of the excise duty paid, as this issue had not been considered by the Appellate Collector. The court directed the Appellate Collector to consider the issue of limitation and pass a fresh order in accordance with law.
Final Decision: The court set aside the order of the Appellate Collector and directed the Appellate Collector to consider the issue of limitation and pass a fresh order in accordance with law.
( 1 ) THE petitioner No. 1 is a registered partnership firm. Its factory and office are located at 61, Ibrahimpur Road, Jadavpur, 24-Parganas. The petitioner No. 2 is a partner No 3
( 2 ) IT is the case of the petitioners that they manufacture "articles of hosiery". The products manufactured by the petitioners were not liable to levy of any excise duty under the Central Excises and Salt Act, 1944, and was not subjected to tax since the petitioners began its business even before 1962.
( 3 ) IN the year 1971 by the Finance Act, 1971, a new tariff item No. 22d was introduced in the First Schedule to the Central Excises and Salt Act, 1944. Under the said item No. 22d "articles of ready-to-wear apparel and body supporting garments" were for the first time brought under the levy of C. E. duty. The tariff description was as under:
Item
No. (1) 22d Articles of ready-to-wear apparel (known commercially (2) (3) Ten per cent ad
Description of goods. Rate of duty.
as ready-made-garments), including under garments and valorem .
body supporting garments but excluding articles of
hosiery, in or in relation to the manufacture of which any
process is ordinarily carried on with the aid of power.
( 4 ) IT is to be noted that "articles of hosiery" in or in relation to the manufacture of which any process was ordinarily carried on with the aid of power were expressly excluded from taxability under tariff item No. 22d.
( 5 ) THE contention of the petitioner is that Section 3 which is the charging Section of the Central Excises and Salt Act, 1944, provides for levy and collection of Central excise duty at the rates set forth in the First Schedule to the Act. The products manufactured by the petitioners, namely, "the articles of hosiery" have not been expressly and specifically excluded from the ambit of taxation under tariff item No. 22d continue to be immuned from operation of the Central Excises and Salt Act, and the rules framed thereunder. The petitioners neither paid nor was asked to pay any duty of excise on the goods manufactured by the petitioners that is, "articles of hosiery".
( 6 ) IN the year 1975, by the Finance Act, 1975, a new tariff item No. 68 was introduced in the First Schedule to the said Act. The said item No. 68 was a residuary item and was as under:-
Item
No. (1) (2) (3)
Description of goods Rate of duty
One percent ad
valorem
(a) Alcohol, all sorts, including alcoholic liquors for human consumption;
(b) Opium, Indian hemp and other narcotic drugs and narcotics; and
68 All other goods, not elsewhere specified,
manufactured in a factory but excluding
(c) Dutiable goods as defined in Section 2 (c) of the Medicinal and Toilet Preparations (Excise Duties) Act 1955 (16 of 1955)
Explanation.- In this item, the expression "factory" has the meaning assigned to it in Section 2 (m) pf the Factories Act, 1948.
( 7 ) IT has been contended by the petitioners that even after introduction of the tariff Item No. 68 the goods manufactured by the petitioners renamed non-excisable. According to the petitioners, the new tariff Item No. 68 subjected such goods of levy of excise duty, "which were not elsewhere specified in the Schedule to the Act". According to the petitioners, the "articles of hosiery" had been specifically made non-excisable under tariff Item No. 22d.
( 8 ) IMMEDIATELY after the introduction of tariff Item No. 68 in the Central Excise Tariff on 28th January, 1975 the petitioners received a letter from the Assistant Collector of Central Excise, Calcutta VII Division, in which an officer of Central Excise was authorised to obtain from the petitioners within 24 hours of its service a declaration in the form appeared to that letter about all the stocks of excisable goods as in store on the midnight of 28th February, and 1st March, 1975. This was followed up by another letter dated 6th August, 1975 asking the petitioners to comply with the various provisions
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