LexUNION OF INDIA & ORS. versus MADHUMILAN SYNTEX PVT. LTD. & ANR.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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UNION OF INDIA & ORS.
v.
MADHUMILAN SYNTEX PVT. LTD. & ANR.
MAY 3, 1988
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IR.S. PATHAK, CJI AND M.H. KANIA, J.]
"I' ~
Central Excises and Salt Act, 1944-Challenging demand of
short payment of excise duty being violative of provisions of section
11-Aof.
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The respondent No. 1 in this appeal was manufacturing Spun
yarn. In the manufacture of the said product, the respondents used as
'
raw material cellnlosic fibres and non-cellnlosic fibres. Prior to 7th
Joly, 1983, the respondents had filed a classification list in respect of
the spun yam manufactured by them showing the same as covered by
Item No. 18 (III) (i) in the first schedule to the Central Excises and Salts
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Act, 1944 ("Central Excises Act"). This classification was on the basis
that the spnn yarn was manufactured by them out of non-collnlosic
synthetic waste. The said classification list was approved by the excise
authorities on 7th Joly, 1983. A supplementary classification list was
approved on 15th October, 1983.
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Samples were drawn out of the spun yarn manufactured by the
respondents and sent for chemical analysis. Reports were submitted by
the Chemical Analyser. On 7th February, 1984, the Superintendent of
Central Excises issued a demand notice against the respondent No. 1 on
the footing that there was short payment of excise duty as the goods
manufactured by the respondents were liable to he classified under >_/
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Central Excises Tariff Item No. 18(111) (ii). The respondents filed a writ
petition in the High Court, challenging the notice of demand. On 9th
February, 1984, the Assistant Collector of Central Excises passed an
order modifying the approval granted to the classification lists submit-
led by the respondents and classifying the aforesaid product of the
respondents under Item No. 18(111) (ii) of Schedule I of the Central
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Excises Act, on the basis of which the Superintendent, Central Excises,
issued on the 10th February, 1984, a notice to the respondent No. I,
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calling upon them to show cause why duty short-levied should not be
recovered from them under the provisions of section 11-A of the Central
E;xcises Act. A second similar show-cause notice was also issued.
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The Assistant Collector passed orders of adjudication dated 5th
838
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U.0.1. v. MADHUMILAN SYN1EX
839
March, 1984, modifying the classification lists and confirming the
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demand made under the aforesaid notice of demand. The respondents-
petitioners thereupon amended their aforesaid writ petition to challenge
the two show-cause notices and the orders of adjudication. The petition-
ers also filed an appeal before the Collector of Central Excises against
the said orders of adjudication.
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The High Court allowed the writ petition in part, quashing the
notice of demand for the period 15th August, 1983 to 6th February,
1984, and the orders modifying the classification lists, and directing the
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Collector, Central Excises to hear the appeal of the petitioners on merits
considering their evidence in respect of the period from 7th February,
1984 onwards. The High Court took the view that the show-cause notice c
served on the petitioner could be treated as valid only in respect of the
period from 7th February, 1984, onwards and not retrospectively from
15th August, 1983 to 6th February, 1984. The Union of India, the
Collec~r of Central Excises and other Excise officers then moved this
Court by this appeal against the decision of the High Court.
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Dismissing the appeal, the Court,
HELD: H the Cellulosic spun yarn made by a manufacturer with
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the aid'of·power contains man-made fibre ofnon-celluloslc origin, it will
fall under Item No, 18(111) (ii), but if it does not contain any man-made
fibre of non-cellulosic origin, it will fall under Item No. 18(111) (I) and
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duty would be Ieviable !here at a lower rate. [843B-CI
Under the11rovisions of Section 11-A of the Central Excises Act,
"·'(,
before any demand is made on any person chargeable in respect of
non-levy or short levy or under-payment of duty, a notice requiring him
to show cause why he should not pay the amounts specified in the
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notice must be served on him. In this case, no such notice was served.
The aforesaid notice of demand dated 7th February, 1984, was in viola-
tion of the provisions of Section 11-A and is I>ad in law, and the High
Court was fully justified in quashing the same. [843G-H; 844G-HI
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