Back
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE PADMANABHAN & THE HONOURABLE MR. JUSTICE PADMANABHAN
Madras Aluminium Company Limited and Another - Appellant
Versus
Union of India - Respondent
Case No : W.P. Nos. 4629 to 4631 of 1975
Decided On : 27 November 1979
CENTRAL EXCISE - REFUND OF DUTY - LIMITATION - RULES 11 AND 173-J OF CENTRAL EXCISE RULES - WHETHER BARRED - LIABILITY TO DUTY - ALUMINIUM PROPERZI RODS - WHETHER EXCISABLE - ITEM 27(A) OF CENTRAL EXCISE TARIFF - WHETHER APPLICABLE - MANUFACTURE OF ALUMINIUM IN CRUDE FORM - WHETHER LIABLE TO DUTY - WHETHER EXCISE DUTY CAN BE LEVIED ON MOLTEN ALUMINIUM - WHETHER EXCISE DUTY IS PASSED ON TO CONSUMERS - WHETHER PETITIONERS ENTITLED TO REFUND.
Fact of the Case:
The petitioners, manufacturers of aluminium properzi rods, claimed refund of excise duty paid by them on the ground that the same was not exigible. The authorities rejected the claim on the ground of limitation. The petitioners filed writ petitions challenging the rejection of their claim.
Finding of the Court:
1. The claim for refund of excise duty is not barred by limitation under Rules 11 and 173-J of the Central Excise Rules, as the duty was paid under a mistake of law and the petitioners had exhausted all remedies available to them before the excise authorities before filing the writ petitions. 2. Aluminium properzi rods are not liable to excise duty as they do not fall under any of the sub-Items of Item 27 of the Central Excise Tariff. 3. Molten aluminium produced by the petitioners during the process of manufacturing properzi rods is liable to excise duty under Item 27(a) of the Central Excise Tariff as aluminium in crude form. 4. Excise duty can be levied on molten aluminium as it is aluminium in crude form. 5. Excise duty is passed on to consumers by the manufacturers or producers.
Issues: 1. Whether the claim for refund of excise duty is barred by limitation under Rules 11 and 173-J of the Central Excise Rules? 2. Whether aluminium properzi rods are liable to excise duty? 3. Whether molten aluminium produced by the petitioners during the process of manufacturing properzi rods is liable to excise duty? 4. Whether excise duty can be levied on molten aluminium? 5. Whether excise duty is passed on to consumers by the manufacturers or producers?
Ratio Decidendi: 1. The claim for refund of excise duty is not barred by limitation under Rules 11 and 173-J of the Central Excise Rules, as the duty was paid under a mistake of law and the petitioners had exhausted all remedies available to them before the excise authorities before filing the writ petitions. 2. Aluminium properzi rods are not liable to excise duty as they do not fall under any of the sub-Items of Item 27 of the Central Excise Tariff. 3. Molten aluminium produced by the petitioners during the process of manufacturing properzi rods is liable to excise duty under Item 27(a) of the Central Excise Tariff as aluminium in crude form. 4. Excise duty can be levied on molten aluminium as it is aluminium in crude form. 5. Excise duty is passed on to consumers by the manufacturers or producers.
Final Decision: The writ petitions were dismissed. However, the petitioners were granted leave to appeal to the Supreme Court.
RAMANUJAM J.
The first two writ petitions have been filed by Messrs Madras Aluminium Co. Ltd., hereinafter referred to as Malco, engaged in the business of manufacture and sale of wire rods. The third writ petition has been filed byM/s. Industrial Cables (India) Ltd., manufacturer and seller of power cables and conductors made out of aluminium wire rods purchased from Malco and other manufacturers of wire rods.
2.Malco started manufacturing E.C. Grade aluminium wire rods of 3/8' diameter popularly known as Properzi rods since January 1967, in the Properzi plant imported by them in the year 1966. The rods are machine wrung in nature and the process of manufacture of these rods is as under -
"Liquid aluminium produced in electrolytic pots after degasification and fluxing is fed through a cast iron tube into a rotating water cooled copper vessel, which is also water chilled on the outside. The cast rod is approximately triangular in shape and is continuous and is fed into a series of rollers having reducing diameter. The cross Section of the emerging rod is now approximately circular and the diameter is 3/8. This is then wound into a coil and sent to cable and wire manufacturers for final drawing and stranding into cables of wire." *
3.By its letter dated 20-1-1967 Malco informed the Inspector of Central Excise, Salem, that they were commencing manufacture of properzi rods shortly and requested him to inform them of the excise duty payable on the above-mentioned rods. The Inspector of Central Excise by this letter dated 30-1-1967, replied that the Superintendent of Central Excise has given the following orders :-
"Extruded rods of aluminium are assessable under Tariff Item No. 27- Aluminium Extruded rods-which will pay duty at the rate of 10 %ad valoremor Rs. 300 per tonne whichever is less plus the special excise duty of 20% on E.C.D.To determine the exact duty amount realisable on rods the duty on the basis ofad valoremassessment and that based on concession rate of Rs. 300 per tonne has to be worked out and shown in the AK-1 itself to satisfy that 'basic duty is collected on extruded rods besides S.E.D." *
4.By further letter dated 27-2-1967, the Inspector of Central Excise wrote to Malco stating that the Government of India, Ministry of Finance, by their Notification No. 13/67 dated 21-1-1967 has prescribed the Tariff value of Rs. 6500/- per metric tonne for aluminium extruded shapes and Sections other than extruded hollow Sections including pipes and tubes and that this tariff value be incorporated in the AR 1 in future. By a still further communication dated 5-5-1967, the Inspector of Central Excise wrote to Malco stating that as per Government of India, Ministry of Finance Notification No. 48/67-X dated 1-4-1967, extruded aluminium rods in straight lengths with a circular arc like (part of a circle) cross Section only are assessable at Rs. 300 per tonne plus usual special excise duty; otherwise the assessment shall be at 10%ad valoremplus the usual special excise duty, based on the tariff value of Rs. 6500 per tonne already fixed by the Government of India. On 30-5-1967 Malco wrote to the Assistant Collector of Central Excise, IDO, Salem; seeking his decision regarding the classification of excise duty on Properzi rods and stating that they are manufacturing 3/8, diameter rod out of the aluminium produced in their factory and this was only a raw material for the manufacture of cables and wires. On 30-5-1967 the Assistant Collector of Central Excise IDO, Salem classified properzi rods and aluminium ingots for purposes of assessment as follows -
Tariff Item No. Rate of duty
Properzi Rod 27(d) of the Central Excise Tariff 20%ad valoremas basic duty and 20% special excise duty
Aluminium Ingot 27(a) of the Central Excise Tariff Rs. 950 per metric tonne and 20% special excise duty.
The Inspector of Central Excise, Mettur Dam, also informed Malco on 30-5-1967, that the following rates of duty were effective from 16-5-1967
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
