TMI Blog1978 (9) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... for a writ in the nature of mandamus prohibiting the respondents from treating nylon or rayon warpsheets arranged or assembled by the petitioner company as excisable items and/or demanding, levying or collecting any excise duty in respect of such nylon or rayon warp sheets. 2. The petitioner's case, in short, is that the petitioner is required by some of its customers to arrange nylon or rayon yarn supplied by such customers in parallel rows loosely held together by cotton yarn supplied by the petitioner company. Such arrangement of rayon or nylon is called a tyre cord warp sheets. The petitioner states that to make a warp sheet, the petitioner first winds the nylon or rayon yarn supplied by its customers into bobbins. The yarn is then twisted in a twisting machine and thereafter used as a warp on a loom, cotton yarn being used at widely spaced intervals as a weft to hold the nylon or rayon yarn in position. According to the petitioner, a given length of warp sheets consists of 99.4% nylon and 0 6% cotton and excepting the process as stated hereinbefore, no manufacturing process is involved in making warp sheets and no new commodity known to commerce or industry comes into being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall refer to such contention later on. As the Central Excise authorities had been demanding payment of excise duty in respect of nylon and rayon warp sheets which fell within Item 68 of the First Schedule and as such, was liable to 1% ad valorem excise duty, the petitioner had to pay under protest unjust demand of excise duty for the period between 24th March, 1975 and 7th May, 1957. The petitioner also contended that on or about 30th April, 1975, the respondent No. 4 issued a notification exempting goods falling under Item 68 of the First Schedule manufactured in a factory as a job work from so much of the duty of excise leviable thereon as is in excess of the duty calculated on the basis of the amount charged for the job work. The said circular was annexed to the writ application being Annexure 'III . The petitioner stated that from 7th of May, 1975 up to the time of moving the instant writ application before this court, the petitioner company under protest had been paying the duty at the said rate of 1% of the conversion charges, that is, the amount it charges to its customers for arranging the nylon or rayon yarn in the manner stated hereinbefore. It appears from the writ pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocess of manufacture by the assessee. Accordingly, the contention of the taxing authority was not accepted by the Supreme Court. Relying on the aforesaid decision Mr. Ginwala contended that the steps taken for getting the said warp sheets were fully described by the petitioner company in the writ petition and such operation for getting the said warpsheets was also accepted by the respondents in their affidavit-in-opposition. It is thus quite apparent from the said facts that warp sheets were no new material but the warp sheets were really rayon or nylon yarns arranged in a particular way by holding them loosely at a distance by cotton wefts. Accordingly, on the admitted position by the parties, there was no occasion for the Excise authorities to proceed on the footing that a new commodity was really manufactured or processed by the petitioner company so that such new commodity can be grouped under Item 68 of the First Schedule. Mr. Ginwala also referred to another decision of the Supreme Court in this connection, namely, the decision made in the ease of Allenbury Engineers Pvt. Limited v. Ram Krishna Dalmia, reported in A.I.R. 1973 S.C. 425. In the said decision, the manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ATION Central Excise G.S.R. In exercise of the powers conferred by sub-Rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts goods falling under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (I of 1944), manufactured in a factory as a job work, from so much of the duty of excise leviable thereon as is in excess of the duty calculated on the basis of the amount charged for the job work. Explanation: For the purpose of this notification, the expression 'job work' shall mean such item of work where an article intended to undergo manufacturing process is supplied to the job worker and that article is returned by the job worker to the supplier, after the article has undergone the intended manufacturing process on charging only for the job work done by him. P.N. Malhotra, Under Secretary to the Govt. of India." Mr. Ginwala contended that the petitioner company really did a job work on the materials, namely, the nylon and/or rayon yarns supplied by the customers to the petitioner company and charged for such job work only and as such in any event, the petitioner company was entitled to the exemption on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as a matter of fact, the petitioner company only made representation before the Central Board of Revenue, against the decision by the Collector that warp sheets could be taxed under Item 68 of the First Schedule. 7. Mr. Sen produced the original records before this court and submitted that court-fee was affixed on the said representation and the alleged representation was nothing but an appeal under the Act. Mr. Sen then contended that even assuming that under the 42nd Amendment of the Constitution the alternative remedy by way of appeal did not operate as a bar to move the writ court in the facts and circumstances of the case, the petitioner company having availed of and elected for a particular remedy under the Excise Act should not be allowed to move the writ court without exhausting the said remedy. In this connection, Mr. Sen referred to a decision of the Supreme Court made in the case of K.S. Rashid v. Income-tax Investigating Commissioner, reported in A.I.R. 1954 S.C. page 207. It was held by the Supreme Court in the said decision that the appellants having availed of the remedy as provided for in Section 8 (5) of the Investigation Commission Act and reference having bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot also be determined by the Writ Court on the basis of the materials on record and in such circumstances, in the special facts of the case, there should be no interference by the Writ Court but the parties must be relegated to a different forum where all such questions can be properly decided. In this connection Mr. Sen referred to the decision made in the case of Delhi Cloth and General Mills Co. Ltd. v. R. R. Gupta reported in 1976(3) S C.C. 444 - A.I.R. 1977 S.C. page 2086. In the said case, dispute arose as to in what stage the nylon and/or rayon warp sheets become fabric and it was held by the Supreme Court that the question was really a technical question and in any case it was a question where two views were possible on apparent facts and neither of the two views could be rejected outright as untenable. It requires careful consideration of the technical processes of manufacturing of the composition of the Tyre-Cord fabrics and evaluation of the opinion of the experts on the question was necessary for the purpose of deciding the question satisfactorily. The Supreme Court held that in such circumstances, the High Court was quite justified in refusing to decide the said qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... periods, and wait for adjudication by Central Board of Revenue after a lapse of considerable length of time. Mr. Ginwala contended that the decision had already been taken by the Excise authorities for which the petitioner was suffering continuously and for such succeeding period and as such, it was quite open to the petitioner to move the constitutional writ jurisdiction of this-court so that the adjudication is made by this court and the parties get a final decision on the disputes raised. In this connection Mr. Ginwala also referred to a decision of the Supreme Court made in the case of Raja Jadambika Pratap Narayan Singh v. The Central Board of Direct Taxes, reported in 100 I.T.R. 698. It appears from the said decision that the Raja Jagadambika Pratap was assessed for the income derived from a Mango grove for the Assessment year 1939-40 by the Income Tax authorities under the Income Tax repelling the contention of the Raja that the income derived from such mango grove cannot be assessed under the Income Tax Act but such income was liable to be assessed under the Agricultural Income Tax Act. On the said basis that the said income was liable to be taxed under the Income Tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as pending adjudication before the Allahabad High Court, the Supreme Court was of the view that the interference in another jurisdiction by the said Court under Article 226 was not warranted. Mr. Ginwala also submitted that the decision made by this Court in Ray Company's case (supra) can also be distinguished in the facts and circumstances of the present case. Mr. Ginwala contended that it will appear from the said decision that after moving the writ jurisdiction of this Court and appeal was preferred under the Income Tax Act, by the petitioner and the said fact was also not disclosed by the petitioner at any point of time. In such circumstances, this court proceeded on the footing that there was lack of candour on the part of petitioner and as there was a chance of reference to this court under the Income Tax Act, it was held by this court that there should not be conflict of the decision of this court exercising jurisdiction under Article 226 and thereafter exercising jurisdiction under the Income Tax Act as a reference Bench. Mr. Ginwala contended that there was no question of any reference to this court under the Act and in any event, if the petitioner intends to come to thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany. Mr. Ginwala contended that the aforesaid facts are really undisputed and the question of taking expert and/or technical opinion does not arise in the facts and circumstances of the case. Mr. Ginwala also submitted that the facts involved in Delhi Cotton and General Mills Company Limited case (supra) are entirely different. In the said case there was a serious dispute as to when the goods in question become fabric. While the manufacturers contended that the goods were really fabric, the taxing authorities contended that it was no fabric and as such it was got to be decided whether the warps sheet really became fabric. In such circumstances, the Supreme Court held that a technical question was involved in the matter and on the said technical question, the two different views expressed by the parties were possible and none of the views could be rejected outright as untenable. In such circumstances it was held by the Supreme Court that without getting proper technical opinion by the Experts on the subject, it was not proper for the Writ Court to decide the said dispute. Mr. Ginwala contended that in the instant case the simple process for holding the nylon and/or rayon yarn with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliefs which are set forth in the instant writ application could not be obtained in any of the appeals preferred under the Act. In the special facts and circumstances of the case it cannot also be contended that there was really any efficacious alternative remedy. It also does not appear to me that the petitioner company really elected to an efficacious alternative remedy and thereafter did not pursue such remedy but moved the instant writ application and for such election on the ground of expediency, the writ court should not exercise its discretionary jurisdiction. Accordingly I am of the view that the writ application is not liable to be dismissed in limine on the aforesaid grounds. So far as the non-maintainability of writ petition on the ground of disputed question of facts is concerned, it may be stated that there is, however, no absolute bar for the writ court to entertain a writ application where some disputed questions of fact are involved. But as unlike in suits, witnesses are not examined in a writ proceeding and the case is decided on affidavits of parties, it has been held by Supreme Court and the different High Courts that on the ground of expediency writ petition con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. In the instant case, however, it does not appear to me that there is any dispute as to the process for conversion of nylon and/or rayon yarns into warp sheets. The fact that the nylon and/or rayon yarns have been held loosely by cotton wefts is an admitted position and the only dispute is as to whether by such holding loosely nylon and/or rayon yarns by cotton wefts the said nylon and/or rayon will lose its character and will become a new product. In the facts and circumstances stated hereinbefore, it appears to me that the contention of the petitioner that the warp sheets are cotton and/or nylon yarns and no new product is justified and I am inclined to accept the same. Accordingly the Excise authorities are not entitled to treat the warp sheets unspecified and distinct and separate manufactured product to be classified under the said residuary Item No. 68. Even assuming that warp sheets are excisable goods under Items No. 68 it appears to me that for conversion of nylon and/or rayon yarns into warp sheets the petitioner is also entitled to exemption in terms of the said notification dated 30th of April, 1975. It will appear from the explanation under the said notification tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doing the job work and as such on the plain reading of the notification along with the explanation thereunder the petitioner company is entitled to claim relief for the job work done by the petitioner company on the said rayon and/or nylon yarn under the said notification, even assuming that such rayon and/or nylon yarn underwent some changes due to the aforesaid processes and became a new product. It may also be noted, in this connection, that the goods in question, namely the warp sheets were not the properties of the petitioner company and as such saleable by petitioner-company in view of the fact that the nylon and/or rayon yarns all along belonged to other concerns who supplied such yarns to the petitioner company for having the job work done on the same. 11. Accordingly, this Rule must succeed and the same is made absolute. All interim orders are vacated. But I make no order as to costs in the facts and circumstances of the case. 12. The petitioner will be entitled to withdraw the deposits made by the petitioner company in terms of the interim order passed by this Court in this Rule on 7th of June, 1976. 13. Mr. Mitra, the learned Counsel appearing for the respondents, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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