Sylvania Laxman Ltd. vs Union of India and Others

Gokal Chand Mital, C.J.

(1) In this writ petition the petitioner has challenged the show cause notices dated 5th June, 1990, 21st June. 1990 and 28th June, 1990 issued by the collector. Central Excise, New Delhi, u/s 11-A of the Central Excise & Salt Act, 1944 (hereinafter referred to as ''the Act'') which ''seeks to raise the demand of excise duty amounting to Rs. 62,59,579.75.

(2) By order dated 19th July, 1990 the writ petition was admitted and the proceedings pursuant to the show cause notices dated 5.6.1990. 21.6.1990 and 28.6.1990 were stayed during the pendency of the writ petition.

(3) The petitioner company is engaged in the manufacture of Gls lamps, electric bulbs and fluorescent lighting tubes which are covered by Chapter 85 of the Schedule annexed to the Act and classifiable under subheading 8539.00. Vide notification No. 67/83CE dated 1st March, 1983 vacuum and gas filled bulbs not exceeding 60 watts are subject to nil duty. it has been alleged in the impugned notice that during the process of manufacturing electric bulbs/fluorescent tubes, an item called "stem" comes into existence. Since this item is in identifiable form and shape having distinct name, character and use. it was subject to levy of excise duty.

(4) Mr. Dholakia, learned counsel for the petitioner submitted that the petitioner company is a composite unit and the manufacturing of electric bulbs and fluorescent is done by automatic machines in a continuous process. He further submitted that in this continuous operation the item called ''stem'' comes into being but the said item is not a product by itself coming into existence and is not capable of being sold in the market. The said item when used for bulbs not exceeding 60 watts is not subject to any duty in terms of the notification No. 67/83CE dated 1st March, 1983 read with Rule 49 (4) of the Excise Rules. In the counter-affidavit the respondents have admitted that the process of manufacturing of electric bulbs is a continuous one but it was pointed out that "stem" acquire their identity as such and are admitted to be capable of storage though for a short period in the case of the petitioner. However, the case of the petitioner is that in order to ensure uniformity in standard and quality of the bulbs which is absolutely necessary, the ''stem'' are not stored and rather immediately put to further process. Even the left over of the stock of the day is consumed on the next date.

(5) In view of the facts admitted in the counter affidavit and the submissions made by the learned counsel for the petitioner, we are of the view that the charge of suppression in the present case is without any force. In the present case the item ''stem'' which are used by the petitioner in manufacturing electric bulbs not exceeding 60 watts are not subject to levy of excise duty in terms of the notification No. 67/ 83CE dated 1st March, 1983 read with Rule 49(4) of the Excise Rules. The impugned show cause notices issued by the respondents are, Therefore, without jurisdiction.

(6) Is view of the above discussion the writ petition is allowed and the impugned notices are quashed. However, we leave the parties to bear their own costs.