CANNANORE SPINNING AND WEAVING MILLS LTD versus COLLECTOR OF CUSTOMS AND CENTRAL EXCISE COCHIN AND ORS.

Citation: [1970] 2 S.C.R. 830 · Decided: 15-10-1969 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Appeal(s) allowed

Cited by 4 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

830 
CANNANORE SPINNING AND WEAVING MILLS LTD. 
A 
v. 
COLLECTOR OF CUSTOMS AND CENTRAL 
COCHIN AND ORS. 
October 15, 1969 
(J. C. SHAH AND K. S. HEGDE, JJ.] 
EXCmE 
Central Excise & Salt Act, 1944-Excise duty-Notification exem11-
ting cotton yarn of particular count cleared out in 'honks'.:_Explanalion 
added with retrospective effect defining 'hank' to mean any coil of cotton 
yarn less than 768 metres length-Whether 'hank' used In th• tochnlcal 
sense-Retrospecti've notificati'on, validity of, 
The appellant was manufacturing cotton yarn of varyina counts rana· 
ing from 20 to 32. 
In June, 1962 the government issued a notification 
which exempted from payment of excise duty cotton yam of 17 counts 
or more but less than 35 counts, if cleared out of the factory in 'hanks'. 
In view of the notification the appellant objected to the demand of excise 
duty in respect of the single yam produced by it and cleared out of the 
factory in coils during the period August 1962 to November 1962. Dur-
ing the pendency of the proceedings, in February 1963, by another noti· 
fication an explanation was added to the effect that the term 'hank' meant 
-'hank' "which does not contain more than 768 metres of yarn in plain 
(straight) reel". The notification was given retrospective effect. After un-
successfully contesting the demand in departmental proceedings the appel-
lant moved the High Court to quash the demand. The High Court 
accepted the contention of the department that the word 'hank' has been 
used in the relevant notifications to convey a special meaning i.e. a circular 
loop or coil of cotton yarn 840 yards (768 metres) in length and held 
that the appellant was not entitled lo the exemption granted under. those 
notifications because, the length of the cotton yarn in the 'hanks' cleared 
cut of the appellant's factory was admittedly much more than 850 yards. 
Allowing the appeal lo this Court, 
HELD : The explanation giYen in the notification dated February 1963 
does not accord with the meaning given to the word 'hank' in commercial 
circles. Any coil of cotton yarn less than 768 metres in length according 
to that notification has also Jo be consideied as a 'bank'. But according 
to the technical meaning acquired by the word 
'hank' in commercial 
circles, the length of the cotton yarn in the reel should be neither more 
nor Je.ss than 768 metres (840 yards). This notification makes it clear 
that when the government issued the notification dated June, 1962 it in· 
tended to give the word 'hank' the meaning 'a coil of yarn' and nothing 
more. 
Further, if the word 'hank' had been used in the way it was under-
stood in commercial circles there was no point in giving retrospective 
effect to the explanation added by noti69ation dated February 1963. 
[833 
F-HJ 
(ii) The rule-making authority had not been vested with the power 
under the Central Excise and Salt Act to make rules with retrospective 
effect. 
Therefore, the retrospective effect purported to be given to the 
exolanation was beyond the powers of the rulemaking authority. 
[834 
DJ 
. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2346 of 
1966. 
B 
c 
D 
E 
F 
G 
H 
CANNANORE MILLS v. COLLECTOR (Hegde, J.) 
831 
A 
Appeal by special leave from the judgment and order dated 
November 22, 1965 o[ the Kerala High Court in Writ Appeal 
No. 158 of 1965. 
B 
c 
D 
E 
F 
G 
H 
M. C. Chagla, Sardar Bahadur, Yougindra Khushalani and 
Vishnu B. Saharya, for the appellant. 
V. A. Seyid Muhammad, B. Dutta and S. P. Nayar, for the 
respondents. 
The Judgment of the Court was delivered by 
Hegde, J, The only question for decision in this appeal by 
Special Leave is whether the coils of cotton yarn cleared out of 
the appellant's factory during the period from 
17-8-1962 
to 
14-11-1962 are exempt from excise duty in view of Exts. P. 2 
and P. 3 which exempt from payment of excise duty cotton 
yarn of 17 counts or more but less than 35 counts, if cleared 
out of factory in 'hanks'. 
The appellant is a company engaged in the manufacture and 
sale of cotton yarn. It has been manufacturing cotton yarn of 
varying counts ranging from 20 to 32. Under the provisions of 
the Central Excises and Salt Act, 1944, cotton yarn is liable to 
excise duty at the rate prescribed in the Sch. to the said Act. By 
s 13(i) of the Finance Act, 1961 (Act XIV of 1961) all cotton 
yarns leso than 35 counts were subject to excise duty at the rate 
of 10 Np. per Kg. 
This provision took effect fro

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