The term 'cycle' in item 35 of the First Schedule to the Central Excises and Salt Act, 1944, includes cycles despatched in CKD condition.

VENUGOPAL J

The appellant-writ petitioner is a manufacturer of cycles. Item 35 in the First Schedule to the Central Excises and Salt Act, 1944 (hereinafter to be referred to as the Act) reads as follows-

"T.I. 35 Cycles, Parts of cycles other than Motor Cycles, namely

(i) Free wheels ... Rs. 2 each

(ii) Rims ... Rs. 4 each.'

2.By Finance Act, 1975, Item 68 was introduced in the First Schedule to the Act with effect from 1-3-1975 and it reads as follows :" *

T.I. 68 All other goods, not elsewhere specified.

All other goods, pot elsewhere specified, manufactured in a factory but excluding -

(a) 1% ad valorem.

"3.By Finance Act of 1976, while retaining Item 68, the word 'cycles' in item 35 was deleted and it was as under :" *

T.I. 35 Cycle parts

Parts of cycles other than motor cycle, namely-

(i) Free wheels ... Rs. 2 each

(ii) Rims ... Rs. 4 each.'

Till the introduction of item 68 on 1-3-1975, there was no levy of excise duty on cycles cleared from the factory in fully assembled condition, or cycles cleared in unassembled condition known to the trade as 'completely' knocked down condition (hereinafter to be referred as CKD condition). After the introduction of the residuary item 68, the Excise department took the stand that in respect of cycles cleared from the factory in CKD condition, free wheels and rims will be charged to excise duty under item 35, and the other parts of the cycle under the residuary item No. 68. The cycle manufacturers represented to the Government that the term 'cycle' in item 35 would include cycles already cleared in CKD condition and in respect of such cycles, only free wheels and rims are liable to excise duty, and that entry applies to manufacturers of cycles, clearing and despatching them in CKD condition. It was further pointed out that in the subsequent year the position has been clarified by deleting the word 'cycle' in item 35 and making it clear that only parts of cycles like free wheels and rims alone are liable for excise duty and hence cycles despatched in CKD condition (i.e., in unassembled condition) should also be taken as 'cycles' for purposes of item 35 and excise duty levied on free wheels and rims and there is absolutely no scope for invoking the residuary item 68 to levy excise duty on other cycle parts. Not accepting the representations made by the trade, the Department issued a Trade Notice (Central Excise) No. 21/76, dated 5-2-1976, stating 'The Trade is advised that supplies of cycles in unassembled condition is basically supplies of different parts of a cycle and so except for rims and free wheels which are classified under item 35 of the First Schedule to the Act.' Aggrieved by the Trade Notice and demand made for payment of excise duty under item 68, the appellants filed a writ petition for a writ ofmandamusrestraining the respondents from giving effect to the Trade Notice, or demanding or collecting excise duty in pursuance of the Trade Notice.Inter aliacontending:1. Traditionally and for many years cycles have been sold by the manufacturer/importer and bought by the wholesaler/retailer only in CKD condition and the word 'cycle' has been understood by the trade as 'cycle in CKD condition'. A cycle despatched in CKD condition is nevertheless a cycle, falling within the ambit of item 35 of the First Schedule to the Act, and item 68 has no application to cycles despatched in CKD condition.

2. The appellant-writ petitioner is a manufacturer of cycles and not parts of cycles, and if the cycles are cleared in unassembled condition i.e., CKD condition, they would fall only under item 35, viz., 'cycles'.

3. Brussels Trade Nomenclature treats the goods manufactured and despatched in CKD condition as if they are complete or finished articles.

4.The writ petition was resisted by the department on the ground that entry 35 is unambiguous and clear and it refers only to 'cycles' and in ordinary sense, it can never mean unassembled cycles, and should necessarily mean 'cycle ready to be used as