TYAGI (Actg.) CJ.—M/s. S. Zoraster & Company (Supplies) Pvt. Ltd has field this writ petition under Art. 226 of the Constitution praying that the Union of India may be restrained by issuing a writ of prohibition from levying and collecting excise duty on their product; namely, woollen industrial felt under the Central Excise and Salt Tax Act, 1944 (hereinafter referred to as the Act). It was further prayed that the amount of Rs.7,52,220.50 paisa collected by the respondent as excise duty from the petitioner company be ordered to be refunded to the petitioner.

2. The petitioner-company manufactures woollen felts at Jaipur. The woollen felts and allied product manufactured by the company, according to the petitioner, are used for industrial purposes, and not for wearing apparels and therefore it does not fall within the expression woollen fabrics as used in Item No. 21 of Schedule-I annexed to the Act under which the excise duty is charged.

3. According to the averments made by the petitioner-company there is similar factory known as Gujarat Woollen Felt Mills, Baroda producing exactly the similar material. That Mill challenged in the Gujarat High Court the levy and collection of excise duty on their produce and the Gujarat High Court by their judgment in Special Civil Application No. 442 of 1967 under Art, 226 of the Constitution in the matter of Gujarat Woollen Felt Mills, a partnership firm vs. The Union of India held that the woollen felt manufactured by that firm could not be taxed under Item No. 21 of Schedule I to the Act. On the basis of this judgment of the Gujarat High Court the petitioner company wrote to the excise authorities not to levy and collect the excise duty on the woollen felt produced by it but inspite of its repeated requests made by the petitioner the excise authorities did not agree and continued to levy and collect the excise duty on the product of the petitioner-company. It is under these circumstances that the petitioner has filed this writ petition with the prayer as aforementioned.

4. The Union of India joined issues with the petitioner-company and urged that Item No,21 of Schedule I to the Act only speaks of the woollen fabrics which, according to the replying respondent, covers the woollen felt. It was also averred that the purpose or use of the woollen felt has no bearing on the levy and collection of the excise duty under the said provision of law. It was denied that the product of the petitioner-company is used for ammunition industry, aviation industry, telephone industry, agriculture industry and for oil filters used in automobile industry, etc. According to the Union of India the purpose for which the petitioner-company is alleged to be manufacturing felt has no bearing whatsoever on their liability for payment of excise duty under Item No. 21 of Schedule I of the Act.

5. Mr. Daphtary argued that fabric is a term which covers all textiles, no matter how manufactured and the nature of material from which it is made. Felts, according to him, can never fall within the ambit of textiles as the process used by the petitioner-company for manufacturing the woollen felts is different from the process employed for manufacturing the fabrics. The compressed felt sheets manufactured by the petitioner company, according to Mr. Daphtary, are quite different from the apparel cloth as it does not stand the course of washing. According to the petitioner, the finished product of the company is obtained by the process of making the compressed woollen felts both with manual labour as well as with the help of two or three imported and also indigenously fabricated machines, and the process of making the compressed woollen felts is just to put the fabrics of the wool symmetrically and press it with the help of multi roller using chemicals as well. The felts are manufactured in sheets of various thickness in length and width and are used for industrial purposes. Therefore, in his opinion felt industry cannot be linked

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