LexUNION OF INDIA & ORS. versus AHMEDABAD MANUFACTURING AND CALICO PRINTING CO. LTD. (CALICO MILLS), AHMEDABAD.
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. UNION OF INDIA & ORS. AllMEllABAD MANUFACTURING AND CALICO PRINTING CO. LTD. (CALICO MILLS), AHMEDABAD. AUGUST 12, 1985· l E. S. VENKATARAMµ\H AND R. a. MISRA, J J. J 537 Central Excise and Salt Act, 1944, Tariff Item No.19 and 22, First Schedule - Excise duty -· Whether leviable ·at intermediate stage of production or at final stage. · · Processed fabric - "Galikut Special" - Excise duty - lev1- ability of. The respondent was manufacturing processed fabrics known as "Galikut Special" since 1965. At the intermediate stage of the' A B c production, the said fabrics contained 46 per cent · of syothetie D fibres (Art Silk) and the cotton content was about 54 per cent. Due to further processing, when goods reached the final stage of production, the cotton contents of the said goods was .reduced to about 38;48 per cent and 61.52 per cent to the fabrics consisted of Artificial Silk. Having regard to the cotton content of the final product, which was less than 40 per cent the said goods were being treated all along as Artificial Silk Fabrics and E excise duty was being levied under· item No. 22 of the First Sche- dule to· the Central Excise & Salt Act, 1944. · ·· ,. In 1967· the Excise Department issued a Notice to· the respondent to show cause why the "Galikut Special" should not· be subjected to excise duty under Item No. 19 because in the f intermediate stage of production the cotton content was more t:ian 40 per cent while Artificial Silk content was less than 60 per cent. After considering the explanation of the respondent, the Assistant Collector, Central Excise held that the goods in ·ques- tion ~ere liable to payment pf -excise duty under Item No. 19 and not under Item No.22. The respondent questioned the validity of G the said order of Assistant Collector under Article 226 and the same was quashed by the High Court. Dismissing the appeal of the Union of India, HELD:- l. If the product manufactured by the. respondent· contained cotton and less tlian 60 per cent by weight of Rayon or 538 SUPRtJME COURT REPORTS [1985] SUPP.2 s.c.R. A Artificial Silk it wquld fall outside Item No.22 because Item No.22 excludes such prpduct from its scope and it would be cotton fabrics as stated in item No.19. [540 G-H] ' 2. In the instant case,. having regard to the process involved in the manufatcui:e of "Calikut Special" by the B respondent it is not possible to hold that the character of the goods at the intermed:Lllte stage of production could be taken into consideration for det~rmining the liability under the Act. The processes involved ~fter the intermediate stage formed an integral part of the manufacture of the product in the question and the classificatio.I of the manufactured product for purposes of excise duty should depend upon its nature and character at its c final stage of production unless a contrary intention appears frOlll the statutue. [541 E-F] ' Clause (vii) of section 2(f) of the Central Excises and Salt Act, 1944 introduced 'subsequently, shows that bleaching, heat setting etc. are incidental and ancillary processes necessary for the completion of thJ manufactured product fall.lug under Item u No.22. This amendment ~s only clarificatory in nature. 'l'herefore, even though. the product in question might have fallen under Item No. 19 in the First Schedule lo the Act at the intermediate stage of production, at the 1 final stage when the duty became exigible it became taxable undef Item No.22 only. [541 G-H, 542 A] ~ Vijay Te:&tiles a Partnership l!'im at Plot 'o.4. Nerol A)>endaly v. Union of ~. 1979 E.L.T.(J 181) held O\.!r-ruled. Empire Industries Ltd. & Ors. v. Union of l.nd1a & Ors. [1985] (20) E.L.T. 179 (S.C.) referred to. F CIVIL APPELLATE J,URISDICTION : Civil Appeal No. 259 (N) of 1972. . From the Judgment and Order dated. 30.4.1970 of the Gujarat High Court in s.c.A. No. 67 of 1968. G Govind Das and R.N. Poddar for the Appellant. Ii Soli J. Sorabjee,. A.N. llaksar, Ravindra Nath, R.K.Ram and Miss Ratna Kapur for tl\e Respondent. The Judgment of tl/e Court was delivered by u.o.r. v. AHMEOAllAD MFG. co. [VENKATARAMlAll, J.] 539 VENKATARAMIAI!, J, This a~peal by special leave is filed against the judgment dated April 30, 1970 of the High Court of Gujarat at Ahmedabad in opecial Civil Application No. 67 of 1968. The only question which l'lrises for consideration in this appeal ·is whether the goods calle
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