TMI Blog1988 (4) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... 5th August 1981 the Excise Department provisionally classified the product under tariff item 19(iii) of the 1st Schedule to the Central Excises and Salt Act, 1944. The petitioners have thereafter been clearing the goods manufactured by them by paying excise duty under tariff item 19(iii). 3. In view of the judgment of the Supreme Court in the case of Union of India and Others v. Ahmedabad Manufacturing and Calico Printing Co. Ltd., reported in 1985 (21) E.L.T. 633 (S.C.) which was delivered in August 1985 the petitioners realized that they had paid excise duty under tariff item 19(iii) wrongly and under a mistake of law. In October 1985 they applied for refund of excise duty so paid under a mistake of law. On 21st October, 1985 the petitioners also filed a revised classification list classifying their product under tariff item 68. On 26th November, 1985 the petitioners filed a refund claim for duty paid upto 31st October, 1985. The petitioners' claim was rejected by an order dated 20th March, 1986. The petitioners have also been issued a show cause notice which is annexed as Exhibit 'J' to show cause why their refund claim should not be rejected on the basis of the findings in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of classification. This is so held by the Supreme Court in the case of Union of India v. Ahmedabad Manufacturing and Calico Printing Co. Ltd., decided in 1985 (21) E.L.T. 635 (S.C.). In that case the Supreme Court was concerned with a fabric known as "Calikut Special" which contained 38.48% Cotton and 61.52% Artificial silk at the final finishing stage. At the intermediate stage this fabric contains 54% of cotton and 46% of artificial silk. The Supreme Court said that contents of the fabric at the final finishing stage after all integral processes had been completed is the basis for classification. The nature and character of .goods at intermediate stage is irrelevant. It therefore held that the fabric was to be classified under tariff item 22 which deals with man-made fabrics and not under item 19. 6. In the case of Collector of Central Excise v. Multiple Fabrics Pvt. Ltd., 1987 (29) E.L.T. 481 (S.C.) the Supreme Court considered the question of classification of PVC Conveyor Belting. The Excise Department submitted that it should be classified under Tariff item 22 which dealt with man-made fabrics. The Supreme Court held that PVC conveyor belting could not be treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y used in the process of manufacture does not make the item classifiable as a cotton fabric under item 19. The final product in the present case cannot be considered as a cotton fabric, coated, laminated or, otherwise. 11. Mr. B.A. Desai learned counsel for the respondents relied heavily upon a decision of the Supreme Court in the case of Delhi Cloth General Mills Co. Ltd. v. State of Rajasthan Others, reported in 1980 E.L.T. 383 (S.C.). In that case the Supreme Court was required to consider whether Tyre cord fabric was Rayon fabric covered by item 18 of the schedule to the Rajasthan Sales Tax Act 1924. For the manufacture of Rayon tyre cord fabric Rayon fibre is spun into Rayon and twisted into cord. The cords are arranged lengthwise and are commonly described as the "warp". They are packed 25 to the inch. By a process of weaving, cotton threads are wefted through a loom across the cords. The wefts are thinner and fewer than the cords, being not more that two to five per inch. Rayon cord fabric so manufactured is used as a component in the manufacture of tyres. The Supreme Court considered the definition of fabric and of textile. It said, "What is fabric? The Mercury Dictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce, as contended by Mr. Desai. Mr. Hidayatullah, learned counsel for the petitioners urged that the observations of the Supreme Court are "sub silentio". 14. In fact the observations of the Supreme Court do not even fall under the category of a precedent "sub silentio". Where in a case, a particular point of law involved in the decision is not perceived by the court or present to its mind, although such a point was logically involved in the facts and a decision is given without pronouncing on the point, the point passes sub silentio. (See Salmond or Jurisprudence, 12th Ed. P.27). The decision will not be a precedent. In the case before the Supreme Court the question of classification of PVC cloth did not arise even remotely. The observations merely reproduce some illustrative items given by the Advocate for the respondents as falling under item 22 without any consideration. Such observations cannot have any binding force. 15. Mr. Desai also relied upon a decision of the Calcutta High Court in the case of Saifuddin Ebrahimbhai Vadnagaiwalla v. Assistant Commissioner of Commercial Taxes and Others, reported in 1976 Sales Tax Cases 463. In that case the question was whether rubbe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent case the product is not manufactured from man-made fibres or yarn at all. It i is not classifiable under tariff item 22. 18. It was next submitted by the respondents that there is a delay in filing the petition. But the petitioners have paid excise duty under a mistake of law. They discovered their mistake in 1985 after the Supreme Court judgment in the case of Union of India v. Ahmedabad Manufacturing and Calico Printing Co. Ltd. Immediately thereafter they have applied for revised classification and refund. They have filed this petition on 21st July 1986. This is a fit case for condonation of delay. The petitioners are therefore entitled to claim refund of excise duty so paid under a mistake of law. 19. It was lastly argued that an alternate remedy by way of appeal is available. After this petition has been fully argued I am not inclined to reject it on the ground that .an alternate remedy is available. There is a serious dispute as to classification involving a substantial point of law. At the stage of final. hearing the petition cannot be dismissed on this ground [See in this connection Ashok Leyland Limited v. Union of India - 1986 (26) E.L.T. 676, M.R.F. Ltd. v. Unio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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