TMI Blog1985 (7) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... sheets, rayon tyre cord warp sheets and grey industrial cotton fabrics, for the manufacture of tyres and repair materials for repair of tyres. These tyre cord warp sheets and cotton fabrics go into the basic structure of tyres, after being duly rubberised in an integrated and continuous process. It appears that these rubberised tyre cord warp sheets are of a sticky nature, having a limited shelf life of about six weeks and requiring to be handled with liner cloth. 3. It further appears that no excise duty was being charged to the petitioners on account of rubberised tyre cord warp sheets being used in the process of manufacturing automobile tyres and that the petitioners had filed on 25th August, 1981, a classification list claiming that rubberised cotton warp sheets (cotton tyre cord) to fall under Item 16A (2) of the Central Excise Tariff. However, by a notice dated 21st October, 1981, the third respondent required the petitioners to show cause why the said classification list should be accepted and the product should not be reclassified under Item 191 (b). The petitioners , replied on 25th November, 1981, to the said show cause notice and finally, the second respondent made t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eets constitute a new saleable manufactured product, commercially known and considered in the trade to be different from the tyre cord warp sheets. And if so, whether the rubber contents in such rubberised tyre cord warp sheets predominate over its cotton contents. We are one with the learned Counsel in this regard, for we indeed do think that these are the only relevant and material questions that need be considered and determined for the decision of the present writ petition. We will, therefore, address ourselves to those questions. 5. But, before proceeding to deal with them, it is expedient, proper and necessary to express our views on the question as to whether or not this Court should exercise its extraordinary writ jurisdiction in the present case where, admittedly, the petitioners did not avail themselves of the statutory remedies by way of appeal or revision provided by the Central Excises and Salt Act and, on the contrary, directly approached this Court with the present writ petition. 6. Ordinarily, the High Court will not exercise its extraordinary writ jurisdiction when the statute provides for adequate remedy to give redress to a party to his grievances. However, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 per cent per annum from the date of assessment till payment. Pursuant to the said order of this Court, the petitioners had approached the respondents requesting them to state at what stage the assessment of the rubberised tyre cord warp sheets should be done for the purposes of excise duty. In spite of that, the respondents did not take any action and it is apparent from these facts that they themselves wanted an adjudication of the issue by the Court. Fourthly, the learned Counsel submitted that three elements utilised in the tyre manufacture viz., (i) bead chafer fabric, (ii) bead wrap fabric and (iii) breaker fabric are being treated by the respondents as rubber products which are not assessable as fabrics under Tariff Item 19 nor are they assessable to duty under Tariff Item l6A on account of the existing exemption notifications. As such, there is a clear departure on the part of the respondents in respect of the rubberised tyre cord warp sheets for the purpose of their classification for assessment of excise duty. All these circumstances fully justify the interference by this Court in the exercise, of its writ jurisdiction. 8. This view was, however, strongly opposed by Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whether or not the rubberised tyre cord warp sheets constitute a new product is disputed. However, this disputed question is not of much relevance for the disposal of this petition as we presently will show and, therefore, will not justify the non-exercise by this Court of its writ jurisdiction. As regards the second point which, according to the learned Counsel for the respondents, is disputed, we fail to agree with him. In fact, as rightly pointed out by Mr. Nariman, the respondents had acted, while passing the impugned order, on the basis that predominance of weight of cotton or rubber is not at all relevant for the purpose of classifying the rubberised tyre cord warp sheets for the assessment to excise duty. We say so because, in the impugned order dated 15-10-1982, the second respondent has specifically stated that in case tyre cord warp sheets falling under Tariff Item 19 or Tariff Item 22 are rubberised, the final product would still remain as rubberised cotton fabrics or man-made fabrics, as the case may be, even though the rubber content predominates in weight. This clearly shows that, to the mind of the second respondent, the question of predominance of weight of cotto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the petitioners had specifically stated in the petition that the impugned orders were made by following the Tariff Advice dated 22nd September, 1980, and that is why no reasons were given as to why the tyre cord warp sheets when rubberised continue to be rubberised cotton fabrics and are assessable under Tariff Item 19. The petitioners challenges in the present writ petition the said Tariff Advice also and no appeal lies against such Tariff Advice. Then, as rightly pointed out by Mr. Nariman, this writ petition was admitted after hearing the respondents oh 14-2-1983. Thereafter, on 7th March, 1983, this Court granted interim relief to the petitioners on some conditions and further permitted the respondents to make assessment as and when necessary. It appears that in spite of this interim order of this Court and in spite of the fact that the petitioners moved the respondents in that respect, no action was taken. Now, as held by this Court in Leukoplast (India) Private Limited, following the decision of the Supreme Court in L. Hirday Narain's case (AIR 1971 S.C. 33), when an alternative remedy exists and the High Court entertains a petition and hears it on merits in spite of such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a new commodity commercially known as distinct and separate commodity having its own character, use and name, and only then such commodity is liable to duty. This view of the Supreme Court is, he further added, in line with its earlier decision in Deputy Commissioner, Sales Tax (Law) Board of Revenue (Taxes) Ernakulam v. Pio Food Packers, 1980 E.L.T. 343 (S.C.) = (1980) 3 SCR 1271, wherein the Supreme Court observed that there are several criteria for determining whether a commodity is consumed in the manufacture of another and that the generally prevalent test is whether the article produced is regarded in the trade, by those who deal in it, as distinct in identity from the commodity involved in its manufacture and that when there is no essential difference in identity between the original commodity and the processed article, it is not possible to say that one commodity has been consumed in the manufacture of another. The same view had been taken by the Supreme Court in Chowgule Co. Pvt Ltd. and another v. Union of India Others (1981 1 SCC 653). Therefore, according to the learned Counsel, for the purposes of making a particular commodity used in the manufacture of another ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ising changes of the warp sheets, become a commercially known different product which is saleable and is available in the market. He, in fact, urged that though the original cotton tyre cord warp sheets undergo a change, nonetheless the rubberising of the said warp sheets do not make them a new product since the process or processes utilised in such rubberising do not make them a complete product. In fact, the rubberised tyre cord warp sheets are in a continuous process of change and become an integral part of the tyre itself. Such rubberised tyre cord warp sheets are of a very sticky nature and have a very limited shelf life. Consequently, according to the learned Counsel, such products cannot be said to be manufactured products falling within its meaning as explained by the Supreme Court in the above referred to authorities. We are, however, unable to agree with the learned Counsel in this regard because, first of all, the material before us is not sufficient to make us arrive at a clear finding that the rubberised tyre cord warp sheets are not a complete product after the process of rubberising is done. We have already observed that the second respondent has specifically taken t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e substance produced by the manufacturer at an intermediate stage is not put in the market would not make any difference to the Chargeability of the substance to excise duty if it is covered by an item in Schedule I of the Act. We, in the circumstances, are of the clear view that the original tyre cord warp sheets, after their rubberisation, undergo due to the said process a substantial and basic change and they are transformed in a new product which is substantially different from the original one in its identity. Therefore, though admittedly such rubberised tyre cord warp sheets are not put in the market, nevertheless that is not a relevant consideration for the purposes of not making them liable to the payment of excise duty. 14. This takes us to the next contention of Mr. Nariman. According to him, even if rubberised tyre cord warp sheets are a product different from the original one, nonetheless they are exempted from payment of excise duty because, due to the predominance of rubber, they constitute rubberised products which are covered by the exemption from excise duty granted by Notification No. 71/68-C.E., dated 1st April, 1968 as amended by Notification No. 27/73-C.E., d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elves, for on the basis of such interpretation, they issued Tariff Advice No. 49/84, dated 1st October, 1984, in relation to rubberised cotton fabrics. In the said Advice the fourth respondents expressed themselves as under :- "It is considered that 'Rubberised Cotton Fabrics' are classifiable under Item 19(1)(b) of the C.E.T. if the cotton predominates in weight on the basis of the total weight of the Rubberised Fabrics under consideration. If it does not, the 'Rubberised Fabrics' would get classified under Item 16A(2) or 68 of the C.E.T., depending on whether or not these could be considered as rubber plates, sheets or strips, unhardened." And this Advice was followed by the Customs, Excised Gold (Control) Appellate Tribunal in M/s. Falcon Tyres Ltd., Mysore v. Collector of Central Excise, Bangalore, (Appeal No. 829 of 1983) decided on 24th April, 1985 ,a copy of which was placed before the Court by the petitioners. It is thus clear that the Central Board of Excise and Customs, the fourth respondent herein, has realised that the test of predominance in weight is the criterion to be followed in order to classify a product as cotton fabric under Item 19. 15. Now, it is clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the rubberised tyre cord warp sheets having a predominant rubber contents are to be considered as rubber products. 16. Rubberised tyre cord warp sheets undoubtedly fall, in our view, under Item 16A (2) of the Central Excise Tariff, for such Item covers unhardened rubber products, whether vulcenised or not and whether combined with any textile material or otherwise. But, are such rubberised tyre cord warp sheets exempted from excise duty ? The learned Counsel for the petitioners answered this question in the affirmative because, according to him, by virtue of the Notification No. 71/68-C.E., dated 1-4-1968 as amended by Notification No. 27/73-C.E., dated 1-3-1973, such products are exempted from excise duty. The said notification deals with exemptions from excise duty accorded to plates, sheets and strips unhardened and reads as under :- "In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, and in suppression of the notification of the Government of India in the M.F. (D. R.) No. 31/64-C.E., dated 1-3-1964 the Central Government hereby exempts all rubber products, in the form of plates, sheets and strips unhardened whether vulcanise ..... X X X X Extracts X X X X X X X X Extracts X X X X
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