Tribeni Tissues Ltd. vs CEGAT

Umesh Chandra Banerjee, J.—In this writ petition the petitioner has prayed for issuance of a writ in the nature of prohibition prohibiting the respondents from giving any effect or acting in terms of or taking any steps pursuant to the order bearing No. 212/83-C of the Tribunal and from giving effect to or acting in terms of or taking any steps in terms of the notice bearing Nos. V-14(15)72-CE/WB/75/Pt.II/15680-C dated 24th August, 1983 issued by the Collector, Central Excise, West Bengal, Calcutta, being Annexure ''I'' to the petition, with a further prayer on the same count for issuance of a writ of prohibition prohibiting the respondents from charging, demanding or realising any excise duty on precipitated chalk manufactured by the Company or to be sold, used or to be used by the Company. There is also a prayer for a further writ of mandamus directing the respondents to refund and restore to the petitioner all excise duties so far realised on precipitated chalk sold by the company and to refrain from charging, demanding or realising any excise duty on such chalk produced and sold or to be produced and sold by the company.

On the factual score it appears that the Collector of Central Excise and Customs, West Bengal, Calcutta had decided that 1448,6 tonnes precipitated chalk manufactured and sold by the petitioner herein during the period January, 1961 to December, 1963, 3960 tonnes between January, 1964 to September, 1974 and 59 tonnes during the period October, 1974 to September, 1975, should be levied to duty under Item 14(1)(5) of the Central Excise Tariff. By its order dated 30th June, 1979 the Board, however, remanded the case to the Collector to take a fresh decision after making detailed enquiries about the use to which the precipitated chalk was put.

Subsequently, however, by process of time the matter came up before the Customs Excise and Gold (Control) Appellate Tribunal (CEGAT), New Delhi, Special Bench ''C wherein the Tribunal, however, remanded the matter back to the Collector of Central Excise with the observation as follows:

"We think that the Central Excise Assessing Authorities should first determine the assessment of precipitated chalk, If it is decided that it is excisable under Item 14 as a pigment, the Assessing Authorities should issue an order to explain in detail the reasoning for its decision. Only then can the denial of Notification 23/55 be effective."

It is this order of remand which is under challenge in this writ petition. Significantly, however, it is to be noted that the Tribunal, subsequent to the above-noted order, in the case of 1985 ECR 726 as also in the case of 1986 (6) ECR 248 and in the case of 1988 (18) ECC 30 had held that precipitated chalk is eligible to the benefit of end-use. As a matter of fact, such a decision of the Tribunal will also appear from the Tribunal''s order in the case of 1988 (16) ECC 180

It is to be noted that against the orders noted above, excepting Oriental Products matter, by the Tribunal, the Central Government had filed special leave petitions before the Supreme Court but the same were eventually withdrawn by the Board and as regards the Oriental Products Matter no SLP was filed against the order of the Tribunal.

Considering the above-noted facts and circumstances of the matter in issue and considering the fact of the Tribunal''s own finding that the benefit of exemption under the Notification No. 23/55 irrespective or the end-use ought to be granted, in my view, no further useful purpose shall be sub-served in remitting the matter back to the Tribunal, more so by reason of the specific finding of the Tribunal.

In this context reference to the Show Cause Notice ought to foe made at this juncture. The Show Cause Notice expressly provides as follows:

"Ground on which the aforesaid amount is proposed to be recovered. The factory M/s. Tribeni Tissues Ltd. are the manufacturer of precipitated chalk and declared the product as non-excisable.

Precipitated chalk is known to be used in Chemical process industry as well. The Central Excise Notification No. 23/55-CL dated 29-4-1955 under Item 14 of C. Ex. Tariff exempts chalk including precipitated chalk from the payment of duty where used "as extender, suspending agents or fillers or as diluents." This exemption can be availed of in respect of precipitated chalk only when it is used in paint formulations or when used as diluents of other pigments, and this concession should not be extended to chalk precipitated when used as a filler in other industries like paper or rubber or used as medicine or in dentrifices or in Chemical process Industry. The product is therefore excisable as "Pigments, colours, paints and enamels not otherwise specified falling under T.C. 141(5). In view of the above, and usage, marketability etc. the product is treated as excisable and falling under T.C. 141 (5). As such the duty liability of the products vests from the date of its manufacture and hence the demand."

On the wake of the finding of the Tribunal and on the wake of the acceptance of that finding by the Court, in my view, however, this action will stand the test of reasonableness.

As such, this writ petition succeeds. Rule in terms of prayers (a), (b) and (c) is made absolute.