1987 (7) TMI 200 - AT - Central Excise

Summary

Issues:
Government's power under Section 36(2) of Central Excises and Salt Act; Refund claim based on Notification 226/77; Interpretation of drill specifications; Comparison of Textile Commissioner's definitions; Review of Collector (Appeals) order; Controlled drill definition; Legislation by incorporation; Application of CEGAT judgments.

Analysis:
The case involved the Government issuing a Show Cause Notice under Section 36(2) of the Central Excises and Salt Act to review a refund claim by M/s New Shorrock Mills based on Notification 226/77. The dispute centered around the classification of the drill fabric produced by the appellants and whether it fell under the controlled or non-controlled category as per the Textile Commissioner's definitions from 1964, 1967, and 1968. The Assistant Collector rejected the refund claim, but the Collector (Appeals) allowed it, leading to a review sought by the Government.

The Departmental Representative argued that the drill fabric manufactured by the appellants met the weight and weave requirements specified in the 1964 and 1967 definitions, making it fall under the controlled category. He also contended that the distinction made by the respondent based on the fixation of maximum price by the Textile Commissioner was not valid, citing Notification 301/79. Additionally, he refuted the reliance on a CEGAT judgment due to factual errors in its observations regarding the Textile Commissioner's definitions and their supersession.

On the other hand, the respondent's counsel argued that the refund claims were made before the introduction of the term "controlled drill" in Notification 301/79, and thus, they were covered under Notification 226/77. He emphasized the legislative incorporation of terms from the Textile Commissioner's notifications into the Central Excise notifications, supporting the respondent's position.

The Tribunal considered the arguments and previous CEGAT judgments, particularly the Jiyajeerao Cotton Mills case, which dealt with similar issues under Notification 226/77. The Tribunal noted that the amendment by Notification 301/79 restricted the scope of "drill" to "controlled drill," affecting the eligibility for concessions. Given the interpretation of the notifications and the precedent set by previous judgments, the Tribunal upheld the Collector (Appeals) order, discharged the show cause notice, and dismissed the appeal.

In conclusion, the Tribunal's decision was based on the proper interpretation of the notifications, the historical context of the definitions provided by the Textile Commissioner, and the legislative changes introduced through subsequent notifications. The application of previous judgments and the specific timeline of events played a crucial role in determining the outcome of the case.