1977 (2) TMI 25 - HC - Central Excise

Cycles - Item 35 CET - Connotation of - Classification of goods for purposes of duty - Whether High Court can interfere

Summary

Issues:
Interpretation of the word 'cycles' under Item 35 of the Central Excises and Salt Act, 1944 before amendment by Act 66 of 1976.

Analysis:
The judgment pertains to a writ petition challenging the levy of excise duty on cycles cleared from the factory in unassembled condition, termed as CKD condition. The petitioner argued that cycles in unassembled condition fall within the word 'cycles' under Item 35. The department contended that 'cycles' in Item 35 refer only to fully assembled cycles ready for use as a means of transport. The court considered the interpretation of 'cycles' in its ordinary and popular sense, emphasizing the utilitarian test. The department's stand was supported by a previous judgment, highlighting that unassembled parts lack the essential character of a cycle. The court rejected the petitioner's contentions, stating that the interpretation adopted by the department was reasonable and within its discretion to classify. The court dismissed the writ petition with costs, upholding the levy of excise duty on fully assembled cycles under Item 35.

The judgment discussed the amendments made to Item 35, clarifying that only fully assembled cycles would fall under the category. The court emphasized that 'cycles' in the ordinary sense connote assembled cycles used as a means of transport, not unassembled parts. The petitioner's reliance on trade practices and international nomenclature was deemed irrelevant, as the focus was on the excise duty classification of fully assembled cycles. The court noted that the department's interpretation was reasonable and not subject to interference under Article 226 of the Constitution of India. The judgment highlighted the distinction between unassembled parts and fully assembled cycles, affirming that the latter was the intended subject of excise duty under Item 35.

In conclusion, the court dismissed the writ petition challenging the levy of excise duty on cycles in unassembled condition. The judgment underscored the importance of interpreting 'cycles' under Item 35 in its ordinary and popular sense, focusing on fully assembled cycles as the subject of excise duty. The court upheld the department's classification of fully assembled cycles for excise duty purposes, rejecting the petitioner's arguments based on trade practices and international standards. The decision emphasized the discretion of the department in classifying goods for excise duty and affirmed the levy on fully assembled cycles as per Item 35.