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1983 Supreme(Mad) 355
1987 31 ELT 344 Mad
S Mohan
T.I. Miller Ltd.
Versus
Union Of India And Anr.
Decided On : 20/7/1983
.
Cycle lamps are accessories and not parts of cycles. Exemption granted earlier cannot be withdrawn without following the proper procedure.
Headnote:
CENTRAL EXCISE - CLASSIFICATION - CYCLE LAMPS - WHETHER PART OF CYCLE OR ACCESSORY - POPULAR COMMERCIAL VIEW - EXEMPTION GRANTED EARLIER - WITHDRAWAL - PROCEDURE - CENTRAL EXCISE RULES, 1944, RULE 10.
Fact of the Case:
The petitioner, a manufacturer of cycle lamps, was granted exemption from excise duty on the ground that cycle lamps were parts of cycles. Subsequently, the department issued a show cause notice proposing to withdraw the exemption and demand differential duty for the period during which the exemption was granted. The petitioner challenged the show cause notice and the subsequent order confirming the demand, contending that cycle lamps were parts of cycles and not accessories.
Finding of the Court:
The court held that the popular commercial view was that cycle lamps were accessories and not parts of cycles. The court relied on the Supreme Court decision in State of U.P. Vs. Kores (India) Ltd., which held that a typewriter ribbon was an accessory and not a part of the typewriter. The court also held that the exemption granted earlier could not be withdrawn without following the proper procedure.
Issues: 1. Whether cycle lamps are parts of cycles or accessories? 2. Whether the exemption granted earlier could be withdrawn without following the proper procedure?
Ratio Decidendi: 1. The court held that the popular commercial view was that cycle lamps were accessories and not parts of cycles. The court relied on the Supreme Court decision in State of U.P. Vs. Kores (India) Ltd., which held that a typewriter ribbon was an accessory and not a part of the typewriter. The court also held that the exemption granted earlier could not be withdrawn without following the proper procedure. 2. The court held that the exemption granted earlier could not be withdrawn without following the proper procedure.
Final Decision: The court quashed the impugned order and granted liberty to the respondent to proceed afresh if it was permissible in law.
1. This Writ Petition coming on for hearing on Thursday, the seventh; fourteenth, Friday the 15th, Tuesday, the 19th day of July, 1983; and on this day upon persuing the petition and the affidavit filed in support thereof the order of the High Court, dated 23-2-1981 and made herein, and of the records relating to the order C. No. V. 68/(N.S.)3/41/79, dated 31-1-1981 as amended by order C. No. V/68(N.S.) 3/41/79, dated 5-2-1981, on the file of the 2nd respondent comprised in the return of the respondents to the writ made by the High Court, and upon hearing the arguments of Mr. Habibullah Badsha, Advocate for the Petitioner, and of Mr. T. Somasundaram, Additional Central Government standing counsel on behalf of the Respondents, the court made the following Order :
2. The Writ Petition is directed against the order dated 5-2-1981, of the Assistant Collector of Central Excise (2nd respondent) confirming the demand for Rs. 5,79,449.13 substituting the original demand for Rs. 7,09,237-84. This order is sequal to the order of Assistant Collector, dated 31st January, 1981. The short facts are as follows :
3. The petitioner company is engaged in the manufacture of cycle lamps among other things. The lamps so manufactured are supplied to cycle dealers. The cycle lamps fall under Item 68 of the First Schedule to the Central Excises and Salt Act, 1944. As required under Rule 173-B of the Central Excise Rules, the petitioner company was filing classification lists for the goods manufactured and cleared by them. The classification list filed by the petitioner was approved by the department from time to time. Since the department itself treated cycle lamps as part of the cycle, the Government of India acting under Rule 8 of the Central Excise Rules exempted cycles and parts thereof under Notification No. 55 of 1975 as amended by Notification No. 102 of 1980 dated 18-6-1980. As a result, cycle parts were not liable for payment of duty from 18-6-1980.
4. The second respondent issued a show cause notice on 24-10-1980 as follows :
"M/s. T. I. Miller Limited, Ambathur, Madras-53 are holders of Central Excise Licence 37/75 for the manufacture of Cycle Parts and accessories. The said item is covered under Item 68 of the First Schedule to the Central Excises and Salt Act, 1944 and governed by Chapter VII-A of the Central Excise Rules, 1944. As required under Rule 173-B of the Central Excise Rules, 1944, the company has been filing classification lists for the items intended to be manufactured in the licenced premises.
2. Among various parts and accessories of Cycles, the Company manufactures lamps and parts thereof and they have filed classification lists for the cycle lamps and parts thereof. These lists were approved upto 18-6-1980 under 86/79. dated 1-3-1979, giving a concessional rate of 5% ad valorem and after 18-6-1980, these parts are being assessed to duly at Nil rate as per Notification No. 55/75, as amended by Notification No. 102/80, dated 18-6-1980.
3. Whereas it appears now that the exemption given under Notification No. 86/79, dated 1-3-1979, and Notification 55/75 as amended by Notification 102/80 dated 18-6-1980 are for parts of Cycles only and items, cycle lamps and parts thereof are not to be considered as parts of cycles eligible for exemption under the said notification, hence M/s. T. I. Miller Limited, as hereby directed to show cause to the undersigned within one month from the date of receipt of show cause notice as to why the exemption given under Notification 55/75 as amended by Notification 102/80 from 18-6-1980 onwards and under 86/79, dated 1-3-1979 upto 18-6-1980, should not be denied to them, and why the present assessments should not be revised and why the differential duty for the clearances made in the last 6 months prior to the date of this show cause notice should not be collected under Rule 10 of the Central Excise Rules, 1944.
4. M/s. T. I. Miller Limited, should at the time of showing cause indicate whether they d
