AHMEDABAD MANUFACTURING AND CALICO versus UNION OF INDIA AND ORS.

Citation: [1993] 1 S.C.R. 142 · Decided: 12-01-1993 · Supreme Court of India · Bench: J.S. VERMA · Disposal: Case Allowed
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Judgment (excerpt)

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AHMEDABAD MANUFACTURING AND CALICO 
PRIN11NG CO. LTD. AND ANR. 
v. 
UNION OF INDIA AND ORS. 
JANUARY 12, 1993 
(J.S. VERMA, YOGESHWAR DAYAL AND 
N. VENKATACHALA, JJ.] 
Central Excises and Salt Act, 1944/Central Excise. Rules, 1944: 
C Schedule I-Tariff Items 18.1, 18. III and 15E/Ru/es 9 and 49-Notification 
dated 20.2.1982 amending the Rules retrospectively-Yam sized for purpose 
of weaving the same into fabrics-Levy of duty on the weight of sized 
yam-Validity of 
The petitioners challenged before the High Court the levy of excise 
D duty on the weight of the yarn sized for the purpose of weaving them into 
fabrics. The High Court held that no duty could be levied on the weight of 
the sizing material contained in yarn, and directed that the duty should 
be refunded since it has been levied not on the basis of yarn at the spindle 
stage, but on the weight of the sized yarn. 
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After the said judgment, the Central Government by Notification 
dated 20.2.1982 amended Rules 9 and 49 of the Central Excises and Salt 
Act, 1944 and Section 51 of the Finance Act, 1982 with retrospective effect. 
In accordance with the said Notification, Central Excise Department is-
sued show cause notices to the petitioners. The constitutional validity of 
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these amendments are challenged by the petitioners in the present Writ 
Petitions filed before this Court. 
On behalf of the petitioners, it was contended that their cases were 
covered by the decision of this Court in J.K Cotton Spinning and Weaving 
Mills Ltd. & Anr. v. Union of India and Ors., [1988) 1 SCR 700 and that 
G excise duty could be levied on the weight of the unsized yarn and not on 
the basis of the weight of
0the sized yarn. 
Allowing the petitions, this Court 
HELD: 1.1. The Vires of Rules 9 and 49 of the Central Excise Rules, 
H 1944 as well as section 51 of the Finance Act, 1982 and the retrospective 
142 
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). .. 
AHMEDABAD MFG. & PTG. CO. v. U.O.l [DAYAL, J.] 
143 
application of the same has already been upheld by this Court. [145E] 
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1.2. The sized yarn which is actually put into the integrated process 
will not again be subjected to payment of excise duty, for the unsized yam 
which is sized for the purpose, does not change the nature of commodity 
as yarn. Thus excise duty cannot be levied on the weight of the yarn after 
the yam is sized for the purpose of weaving the same into fabrics. [145G] 
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1.3. Practically nine years have gone by since the show cause notices . 
were issued by virtue of the same directives which were subject matter of 
J.K Cotton Mills case. In view of this peculiar fact it would not be in the 
interest of justice if the petitioners are directed to contest the individu.d 
show cause notices issued by the respondents. In order to avoid multi· 
plicity of proceedings involving time and expense, the show cause notices 
in all these cases are quashed. [148F·G] 
J.K Cotton Spinning and Weaving Mills Ltd. & Anr. v. Union of India 
& Ors., (1988] 1 S.C.R. 700, applied. 
ORIGINAL JURISDICTION : Writ Petition (Civil) No. 3 of 1983. 
(Under Article 32 of the Constitution of India). 
WITH 
W.P. Nos. 400-402, 425, 492, 2493-2495, 2526-2528 of 1983 and 1256 
of 1987. 
Soli J. Sorabjee, Ravinder Narain, DA. Dave and P.H. Parekh, 
for the Petitioners. 
A.K. Ganguli, T.V.S.N. Chari, Ms. Radha Rangaswamy and P. Par-
meshwaran for the Respondents. 
The Judgment of the Court was delivered by 
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YOGESHWAR DAYAL, J. This order will dispose of the aforesaid G 
writ petitions under Article 32 of the Constitution of India. All these cases 
come under Item 18.l and/or 18.III and/or 18E of the Tariff contained in 
the schedule attached to the Central Excise and Salt Act 1944 (hereinafter 
referred to as 'the Act'). For facility of reference we are giving the facts of 
the case of Civil Writ Petition No. 3 of 1983. 
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SUPREME COURT REPORTS 
(1993] l S.C.R. 
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This Writ Petition is stated to be covered by the decision of this 
Court in J.K Cotton Spinning and Weaving Mills Ltd. & another v. Union 
of India and others, (1988] 1 S.C.R. 700 and the surviving prayer in the writ 
petition is to declare that the duty of excise in respect of Tariff Item Nos. 
18 (A) (ii), 18 (III) (ii) and 18E is to be levied and collected on the weight 
B of the unsized yarn and not on the basis of the weight of the sized yarn". 
Before we deal with the objections of the learned counsel for the 
respondents, it would be useful to examine the points which w
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