UGAM CHAND BHANDARI versus COMMISSIONER OF CENTRAL EXCISE, MADRAS

Citation: [2004] SUPP. 2 S.C.R. 58 · Decided: 05-05-2004 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Case Partly allowed
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Judgment (excerpt)

A 
UGAM CHAND BHANDARI 
v. 
COMMISSIONER OF CENTRAL EXCISE, MADRAS 
MAY 5, 2004 
B 
[RAJENDRA BABU, CJ. AND G.P. MATHUR, J.] 
Central Excise : 
Central Excise Act, 1944--Section 11 A, Proviso-Extended limitation 
C period-Invocation of-Water-proof fabrics-Wrong classification iJy 
assessee--Department officials had been regular.Ty visiting the factory of 
assessee and were aware of the manufacturing process adopted by them-
Held, no fi-aitd was played on the Department-Consequently extended 
limitation period is not invocable. 
D 
Central Excise Tariff Act, 1985-Tariff Heading 59.06-Water-proof 
fabrics-Nature of-Found on test by the chemical examiner to be an 
impregnated/coated fabric with the layer of coating visible to naked eye-
Tribunal rightly classified the product under Tariff Heading 59.06. 
E 
The questions that arose for consideration in the appeals are 
whether the water-proofed fabrics are classifiable under Heading 
52.07 of the Central Excise Tariff Schedule as claimed by the appellant-
manufacturer or under Heading 59.06 as held by the Tribunal, and 
whether the extended period oflimitation under proviso to Section 11 A 
F of the Central Excise Act, 1944 is invokable. 
Partly allowing the appeals, the Court 
HELD : 1.1. The finding recorded by the Tribunal as to the nature 
of the product is after examining relevant material with reference to 
G relevant entries. The Tribunal held that the fabric manufactured by the 
appellants is impregnated and, therefore, has to be considered as fabric 
impregnated with materials other than those mentioned under Tariff 
59.02 and 59.05. Such impregnation clearly indicated that under the 
scheme of the Central Excise Tariff the impregnated fabrics with a 
H coating and which is visible to the naked eye on the material on record 
58 
r 
' 
U.C. BHANDARI v. C.C.E. [RAJENDRA BABU, CJ.] 
59 
being of the finding of fact, cannot be interfered with, (62-D-Fl 
A 
1.2. Apart from the fact that there was difference of opinion even 
in the Department, the fact remains that the department officials had 
been regularly visiting the factory of the appellants and were in the 
kno~ of the process of manufacture adopted by the appellants and to B 
state that the appellants had played fraud on the department is difficult 
to sustain. In the circumstances, the application of the extended period 
of limitation as provided under Section I IA of the Act is not correct. 
Therefor.e, that part of the order where the Tribunal has rejected the 
prayer of the appellants not to invoke Section llA is set aside and in 
other respects the order made by the Tribunal is maintained. [63-A-BJ C 
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1751-
1752 of 1997. 
From the Judgment and Order dated 3.8.96 of the Central Excise, D 
(;:ustoms and Gold (Control) Appellate Tribunal, South Zonal Bench at 
Madras in F.O. No. 1402/96 in A. Nos. E/R 783-784 of 1995. 
WITH 
C .A. Nos. 1778, 1795-1796 of 1997. 
V. Lakshmikumaran, Alok Yadav and V. Balachandran for the 
Appellants. 
E 
Gourishankar Murthy, Siddhartha Chowdhury and B.K. Prasad for 
the Respondent. 
F 
The Judgment of the Court was delivered by 
RAJENDRA BABU, CJ. : These appeals arise out of an order made 
on 3.8.1996 by the Customs, Excise and Gold (Control) Appellate Tribunal G 
(for short the Tribunal) in which questions that arise for consideration are 
(i) whether the water-proofed fabrics are classifiable under Heading 52.07 
of the Central Excise Tariff Schedule as claimed by the appellant or undei· 
Heading 59.06 as held by the Tribunal, and (ii) whether the extended period 
oflimitation under proviso to Section 11 A of the Central Excise Act, 1944 H 
60 
SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R. 
A is invokable m the present case and consequently whether penalty 
under rule I 73Q of the Central Excise Rules, 1944 is imposable on the 
appellant. 
B 
c 
D 
E 
F 
a 
The two competing entries are as under :-
"'Heading 52.07. 
Cotton fabrics (including fabrics covered under Heading Nos. 
52.09, 52.10 and 52.11 ), -
(a) 
woven on looms other than handlooms, and 
(b) 
subjected to the process of bleaching. mercerizing, dyeing, 
printing, water-proofing, shrink-proofing, organdie processing 
or any other process or any two or more of these processes 
without the aid of power of steam" 
"Heading 59.06. 
Textile fabrics, otherwise impregnated, coated or covered (including 
fabrics covered partially or fully with textile flocks or with 
prepara
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