MADHUMILAN SYNTEX (P) LTD. versus UNION OF INDIA

Citation: [1997] 2 S.C.R. 665 · Decided: 04-03-1997 · Supreme Court of India · Bench: S.C. AGRAWAL · Disposal: Appeal(s) allowed

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Judgment (excerpt)

MADHUMILAN SYNTEX (P) LTD. 
v. 
UNION OF INDIA 
MARCH 4, 1997 
[S.C. AGRAWAL AND S.C. SEN, JJ.] 
Central Excises and Salt Act, 1944 : First Schedul~Tariff Item No. 
18-III(i) and (ii)-'Spun yam'-Classification of-Assessee's list classifying 
A 
B 
the spun yam, manufactured by it, under Item 18-III(i) approved by Assistant 
Collector--Later, Assistant Collector reclassifying the product under Item C 
18-I!I(ii)-Demand notice sent for realisation of differential duty-In writ 
petition High Court held the reclassification bad in law and directed Collector 
(Appeals) to decide the matter on merits-Collector (Appeals upheld reclas-
sification which was affinned by High Cowt-Held, previous High Court 
judgment had quashed both the demand notice and the reclassifica- D 
tion--Order of Collector (Appeals) modifying classification list contrary to 
earlier d.ecision of High Court set aside-Order of Assistant Collector modify-
ing the classification stands quashed. 
The appellant, manufacturers spun yarn, had claimed through a 
classification list that the said yarn was covered under Tariff Item No. E 
18-lll(i) of First Schedule to the Central Excises and Salt Act, 1944 which 
was approved by the Assistant Collector. Later, the Superintendent of 
Central Excise issued a demand notice for realising a differential duty 
after receiving the chemical analysis according to the subsequent notice 
higher duty was payable under Tariff Item No. 18-Ill(ii), instead of Tariff F 
Item No. 18-Ill(i) of the First Schedule to the Act. 
The appellant filed a Writ Petition before the High Court, which by 
an interim order stayed the said recovery. 
I 
The Assistant Collector reclassified the manufactured yarn and held G 
that the modified approval will be effective from the date of production i.e. 
July 1983, onwards. He later on made the said revised classification final 
and confirmed the short levy against which an appeal was filed before 
Collector (Appeals). However in view of the stay granted by the High 
Court, Revenue cold not enforce recoveries. 
665 
H 
666 
SUPREME COURT REPORTS 
(1997] 2 S.C.R. 
A 
High Court disposed the writ petition, quashing the demand notice 
for differential duty. However the question regarding reclassification was 
left open for the Collector (Appeals) to decide on merits. The respondents 
appealed before this Court against the said judgment and the same was 
dismissed. The Collector (Appeals) upheld the said reclassification 
B against which another writ petition was filed before the High Court. 
During the pendency of the writ petition another demand notice for a 
different period was served, and the same was also challenged in the said 
Writ Petition. High Court upheld the order pertaining to reclassification 
made by the Collector (Appeals) but quashed the later demand notice. 
C 
Aggrieved the appellant-company appealed to this Court contending 
that the High Court was in error in constructin~ its earlier jndgment; that 
by the said judgment, it had held the reclassification order to be bad in 
law and that this Court while dealing with the appeal of the respondents 
against the said judgment had also construed it to mean the same. 
D 
Allowing the appeal, the Court 
HELD : 1.1. The order passed by the Assistant Collector, Central 
Excise modifying the classification lists stands quashed. [674-F] 
1.2. The observations of the High Court clearly indicate that there 
E was no material on the basis of which the order modifying the classification 
lists could be passed by the Assistant Collector of Central Excise and 
excess duty under Tariff Item No. 18-llI(ii) could be demanded prospec-
tively. [672-F] 
F 
. 2.1. This court has construed, in an earlier appeal filed by the 
respondents, the previous judgment of the High Court to mean that both 
the judges have held the order of the Assistant Collector of Central Excise 
modifying the classification lists was bad in law and had ordered that the 
same be quashed. Thus the High Court was in error in proceeding on the 
basis that the said order of reclassification had not been quashed by its 
G previous judgment and that the Collector did not commit any error in 
dismissing the appeal filed by the appellant company against those orders. 
[674-C] 
2.2. The Collector (Appeals) by dismissing the appeal filed by the 
appellant company against the order modifying the classification lists has 
H affirmed the modification with effect from the date the appellant com

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