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Judgment
The above Writ Petition has been filed for a Writ of Certiorari to call for and quash the proceedings of the first respondent in his file C. No.
V/68/3/12/82-VC, dated 25-5-1983 and of the second respondent Order No. 500/83(M) dated 21-12-1983 confirming the orders of the first
respondent.
The petitioners are manufacturers of carbon and zinc elements in their unit and they also purchase caustic soda, glass jar, oil bottle, porcelain
cover for A.D. cell from the market. The petitioners actually manufactured A.D. wet cells falling under T.I. 68 of Central Excise Tariff and they
have been duly licensed under the Central Excise Tariff for the manufacture of goods under T.I. 68. While so, the first respondent issued a show
cause notice dated 28-7-1982 calling upon them to show cause as to why Central Excise duty of Rs. 99,957.56 should not be demanded from
them on 15100 sets of A.D. wet cells cleared by them during the period from 1-3-1982 to 30-6-1982 under Rule 9(2) of the Central Excise
Rules. The first respondent, after hearing the petitioners confirmed the proposals and issued a demand for the recovery of the differential duty
referred to above. A penalty of Rs. 250/- was also levied.
Aggrieved the petitioner has filed an appeal before the second respondent. Before the Appellate Authority it was contended that the petitioners
were not manufacturing A.D. wet cells, nor were they manufacturing all the parts of the A.D. wet cells, that they were only manufacturing
carbon/zinc elements and all other parts of A.D. wet cells were purchased in the open market and they were subsequently supplied to the
Railways. The appellate Authority rejected the plea on behalf of the petitioners and therefore the above writ petition has been filed.
It is not in controversy that in respect of the very case of the petitioners for an earlier year in similar circumstances the petitioners pursued the
matter before the CEGAT Tribunal and in the decision reported in 1984 ECR 2530 the claim of the petitioner was upheld. It was held therein
when the petitioners who were the appellants before the Tribunal, manufactured only carbon/zinc elements paying duty thereon under Items 68
C.E.T. and they procured all the remaining components and materials from outside and supplied the cells in unassembled condition, there was no
scope for holding that the petitioners manufactured complete cells and rendered themselves liable for duty. As a matter of fact, it is stated that
pursuant to the said order of the Tribunal refund has also been granted, though the department has also pursued the matter on further appeal before
the Supreme Court by filing a petition for special leave. It is since reported by the learned counsel for the respondents that Civil Appeal No.
2099/85 filed against the order of the Tribunal referred to supra was rejected by the Supreme Court on 15-1-1990.
After hearing the learned counsel on either side, I am of the view that inasmuch as the petitioners'' claim in respect of an earlier year came to be
sustained by the Tribunal and it has become now final at any rate on account of the rejection of the appeal filed before the Supreme Court, the
petitioners shall be entitled to the benefit of the order of the Tribunal even for the year in question and in respect of the demand now made by the
respondents from the petitioners. Applying the ratio of the said decision of the Tribunal which squarely covers the case in favour of the petitioner
the impugned orders are hereby quashed and the Writ Petition shall stand allowed accordingly. But, in the circumstances, there will be no orders as
to cost.