LexADITYA MILLS LTD. versus UNION OF INDIA
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ADITYA MILLS LTD.
v.
UNION OF INDIA
AUGUST 29, 1988
[SABYASACHIMUKHARJI AND S. RANGANATHAN, JJ.]
Central Excises and Salt Act, 1944/Central Excise Rules, 1944:
Schedule I Tariff Item ISE/Rule 173B-PPRF yarn-Levy of excise
duty-Polyster spun yarn and Rayon filament yarn-Difference bet-
ween-'New commodity' distinct and separate coming into existence-
Necessity for it to be commercially known.
Statutory Construction: Fiscal entry-Ascertaining correct mepn-
ing-Correct guide is the context and the trade meaning-Trade mean-
ing always given preference.
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According to the appellant company, PPRF yarn consists of two
varieties of yarn on which duty has already been paid, namely, two plies
of polyster spun yarn (PP) and one ply of Rayon Filament Yarn (RF),
which are doubled together and the resultant yarn is referred to as
PJ>RF yarn. The appellant tiled classification list under Rule l73B of
the Central Excise Rules stating that it intended to clear PPRF yarn, on
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which duty has been paid. Hut it was rejected with a direction to file a
fresh. classification list showing PPRF yarn under Tariff Item 68.
Since the appellant was not permitted to clear PPRF yarn without
further payment of duty under Tariff Item 68, it started making clea-
rance on payment of duty under protest. When it filed claim for refund
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of the same, it was issued a show cause notice as to why the claim should
not be rejected. Appellant tiled its reply. The refund claim was rejected
by the Assistant Collector which was later upheld by the Appellat<
Collector. On appeal the Central Excise & Gold Control Appellate
Tribunal also held that PPRF yarn was taxable under Tariff Item 68
and that no refund was due to the appellant.
This appeal, a statutory one, is against the Tribunal's Order.
Dismissing the appeal,
HELD: 1. Excise duty is a duty on the manufacture of goods and
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not onisale. Manufacture is complete as soon as by the application of
668
ADITY A MILLS v. U.0.1.
669
one or more process, the raw material undergoes some change. If a new
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substance is brought into existence or if a new or different article having
a distinct name, character or use results from particular "process or
processes, such process or a~tivity would amount to manufacture. The
moment there is transformation into a .new commodity commercially
known as a separate and distinct commodity having its own character
and nse, 'manufacture' takes place. [671C-F]
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Union of India v. Delhi Cloth & General Mills, [1963l·Suppl. l
SCR 586; Union of India v. HUF Business known as Ramlal Man.
sukhrai Rowari ~ Anr., [1971) l SCR 936; A/lenburry Engineers P.
Ltd. v. Ramakrishna Da/mia & Ors., !1973] 2 SCR 257; Deputy Com·
missioner, Sales Tax (Law) Board of Revenue (Taxes) Ernaku/am v.
Pio Food Packers, [1980) 3 SCR 1271; Chowgule & Co. Pvt. Ltd. &
Anr. v. Union of India, .[J981] l SCC 653 and Empire Industries Lta. &
Ors. v. Union of India & Ors., U985] Suppl. I SCR 292, relied on ·
Hyderabad Asbestos Cement Product Ltd. & Anr. v. ·union of
India & Ors., [1980] ELT 735 and Piramal Spg. & Wvg. Mills Ltd. v.
Union of India & Ors., [1982) ELT 145, referred to.
2. l The question is not whether it is a mixture of two yarns,
where as a process of mixing, a.separate an~ distinct good known in the
market as such, comes into being. for ascertaining ·~he correct meaning
of a fiscal entry reference to a dictionary is apt to be a somewhat
delusive guide, as it gives all the different shades of meaning. The
correct guide is the context and. the tr,ade meaning. The trade meaning
is always to be given preference. [672C-D)
2.2 The Tribunal has found that indisputably a new yarn has
come into being which is known in the market on the evidence adduced
before it, and that PPRF is treated differently from Polyster Spun Yarn
and Rayon.Filament Yarn. The Tribunal rightly came to the conclusion
that this is a separate and distinct item. (672EJ
Commissioner of Sales Tax, U.P. v .. Sarin Textile Mills, {1975] 35
STC 634, referred to.
The King v. Planters, [1951] CLR1(Ex) 122, relied on.
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CIVIL APPELLATE JURISDICTION: Civil Appeal Np. 2124
~-I 'of1984.
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670
SUPREME COURT REPORTS
[1988] Supp, 2 S.C.R.
From. the Order dated 4.6.1983 of the Customs Excise and Gold
A (Control) Appellate Tribunal, New Delhi in Ed (SB) (T) A No. '312/
80-D 'and Order No. D-395/1983.
Harish N. Salve, Ravinder Narain. P.K. Ram and D.N. MishExcerpt shown. Read the full judgment & AI analysis in Lexace.