w w w . L a w y e r S e r v i c e s . i n



Gopal Hosiery v/s Assistant Collector of C Ex


Company & Directors' Information:- J G HOSIERY PRIVATE LIMITED [Active] CIN = U18101TZ2001PTC009707

Company & Directors' Information:- K D S HOSIERY PRIVATE LIMITED [Active] CIN = U18101PB2001FTC024327

Company & Directors' Information:- R M H HOSIERY PRIVATE LIMITED [Active] CIN = U17125DL2007PTC167271

Company & Directors' Information:- P T M HOSIERY PVT LTD [Active] CIN = U52322WB1994PTC062394

Company & Directors' Information:- M G HOSIERY PRIVATE LIMITED [Active] CIN = U17124TZ2002PTC010195

Company & Directors' Information:- D D HOSIERY PVT LTD [Active] CIN = U18101WB1973PTC028694

Company & Directors' Information:- M. B. HOSIERY PRIVATE LIMITED [Active] CIN = U18101WB2008PTC125110

Company & Directors' Information:- R R HOSIERY PRIVATE LIMITED [Active] CIN = U18101MH1984PTC034394

Company & Directors' Information:- K K HOSIERY PRIVATE LIMITED [Active] CIN = U18204MH2014PTC251777

Company & Directors' Information:- B B HOSIERY PRIVATE LIMITED [Strike Off] CIN = U74999MH2015PTC267158

Company & Directors' Information:- M C S HOSIERY PRIVATE LIMITED [Strike Off] CIN = U51311WB2001PTC093781

Company & Directors' Information:- GOPAL HOSIERY PVT LTD [Active] CIN = U51311WB1994PTC061862

Company & Directors' Information:- S P HOSIERY PVT LTD [Strike Off] CIN = U51311PB1985PTC006113

    Civil Rule 1298 (W) of 1984

    Decided On, 08 April 1988

    At, High Court of Judicature at Calcutta

    By, THE HONOURABLE MR. JUSTICE SUHAS CHANDRA SEN

    For the Appearing Parties: N.C. Roy Chaudhary, Narilal Banerjee, P.P. Ginwalla, Uma Sanyal Mishra, Advocates.



Judgment Text

SUHAS CHANDRA SEN, J.


(1) THE petitioner No. 1 is a registered partnership firm. Its factory and office are located at 61, Ibrahimpur Road, Jadavpur, 24-Parganas. The petitioner No. 2 is a partner No 3


(2) IT is the case of the petitioners that they manufacture "articles of hosiery". The products manufactured by the petitioners were not liable to levy of any excise duty under the Central Excises and Salt Act, 1944, and was not subjected to tax since the petitioners began its business even before 1962.


(3) IN the year 1971 by the Finance Act, 1971, a new tariff item No. 22d was introduced in the First Schedule to the Central Excises and Salt Act, 1944. Under the said item No. 22d "articles of ready-to-wear apparel and body supporting garments" were for the first time brought under the levy of C. E. duty. The tariff description was as under:


Item


No.


Description of goods.


Rate of duty.



? (1)


(2)


???????? (3)



22d


? Articles of ready-to-wear apparel (known commercially ??


as ready-made-garments), including under garments and ????


body supporting garments but excluding articles of


hosiery, in or in relation to the manufacture of which any


process is ordinarily carried on with the aid of power.


Ten per cent ad


?? valorem .


(4) IT is to be noted that "articles of hosiery" in or in relation to the manufacture of which any process was ordinarily carried on with the aid of power were expressly excluded from taxability under tariff item No. 22d.


(5) THE contention of the petitioner is that Section 3 which is the charging Section of the Central Excises and Salt Act, 1944, provides for levy and collection of Central excise duty at the rates set forth in the First Schedule to the Act. The products manufactured by the petitioners, namely, "the articles of hosiery" have not been expressly and specifically excluded from the ambit of taxation under tariff item No. 22d continue to be immuned from operation of the Central Excises and Salt Act, and the rules framed thereunder. The petitioners neither paid nor was asked to pay any duty of excise on the goods manufactured by the petitioners that is, "articles of hosiery".


(6) IN the year 1975, by the Finance Act, 1975, a new tariff item No. 68 was introduced in the First Schedule to the said Act. The said item No. 68 was a residuary item and was as under:-


? ????


Item


No.


Description of goods


Rate of duty



(1)


(2)


(3)



68


All other goods, not elsewhere specified,


manufactured in a factory but excluding


One percent ad


valorem


(a) Alcohol, all sorts, including alcoholic liquors for human consumption;


(b) Opium, Indian hemp and other narcotic drugs and narcotics; and



(c) Dutiable goods as defined in Section 2 (c) of the Medicinal and Toilet Preparations (Excise Duties) Act 1955 (16 of 1955)



Explanation.- In this item, the expression "factory" has the meaning assigned to it in Section 2 (m) pf the Factories Act, 1948.



(7) IT has been contended by the petitioners that even after introduction of the tariff Item No. 68 the goods manufactured by the petitioners renamed non-excisable. According to the petitioners, the new tariff Item No. 68 subjected such goods of levy of excise duty, "which were not elsewhere specified in the Schedule to the Act". According to the petitioners, the "articles of hosiery" had been specifically made non-excisable under tariff Item No. 22d.


(8) IMMEDIATELY after the introduction of tariff Item No. 68 in the Central Excise Tariff on 28th January, 1975 the petitioners received a letter from the Assistant Collector of Central Excise, Calcutta VII Division, in which an officer of Central Excise was authorised to obtain from the petitioners within 24 hours of its service a declaration in the form appeared to that letter about all the stocks of excisable goods as in store on the midnight of 28th February, and 1st March, 1975. This was followed up by another letter dated 6th August, 1975 asking the petitioners to comply with the various provisions of Central Excise Rules from the 1st day of March, 1975. The petitioners complied with all the directions and gave necessary declaration on the 10th March, 1975, to the Central Excise Authorities.


(9) THEREAFTER, the petitioner was informed by the Central Excise Department that the products manufactured by the petitioners at their factory, namely "articles of the hosiery" would come under the newly introduced tariff Item No. 68 of the First Schedule to the Act, and the petitioner was accordingly asked to obtain Central Excise Licence in accordance with the provisions of the Central Excises and Salt Act, 1944, and the rules framed thereunder.


(10) THE petitioners thereafter obtained Central Excise Licence in Form No. 14 as prescribed under Rule 174 of the Central Excise Rules and observed all formalities under the Central Excise Rules. The petitioners commenced payments of excise duty at 1% ad valorem as levied under the Finance Act, 1975, which was thereafter increased to 2% by the Finance Act, 1977, and then increased to 5% by the Finance Act, 1978 and finally increased to 8% by the Finance Act, 1979. It has been stated by the petitioners that they have paid excise duty from March, 1975 to 31st March, 1980 at the appropriate rates. From July, 1977 the petitioners commenced payments of Central Excise Duty under protest because the petitioners realised that the payment was not justified under the provisions of the said Act and the rules.


(11) ON or about 18th June, 1980 by the Finance Act (No. 2) of 1980 a new Explanation was added to Item No. 68 of the First Schedule to the Act which is as under :-


"explanation. For the purpose of this item goods which are referred to in any preceding item in this Schedule for the purpose of excluding such goods from the description of goods in that Item (whether such exclusion is by means of an Expalanation to such item or by words of exclusion in the description itself or in any other manner) shall be deemed to be goods not specified in that item. "


(12) IMMEDIATELY thereafter the Government of India issued on 19th June, 1980 a notification exemption "articles of hosiery" made from fabrics from the whole of the duty of excise leviable thereon. The notification is as under


"in exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts articles of hosiery, made from fabrics, manufactured- (i) wholly from cotton, or (ii) from a blend of cotton with viscose fibre or yarn falling under item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from the whole of the duty of excise leviable thereon. "


(13) THE aforesaid Notification No. 104/80-C. E. dated 19th June, 1980 was subsequently superseded by a latter Notification No. 45/81-C. E. dated 1st March, 1981 which was as follows: -


"in exercise of the powers conferred by Sub-rule (1) of the Central Excise Rules, 1944, and in supersession of the Notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 104/80-Central Excise, dated the 19th June, 1980, the Central Government hereby exempts articles of hosiery, falling under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from the whole of the duty of excise leviable thereon. "


(14) THE question, in this case, is whether "articles on hosiery" manufactured by the petitioners during the period 1st March, 1975 to 31st March, 1980 was dutiable under the provisions of the Central Excises and Salt Act. The aforesaid Explanation as well as the Notifications did not exist at the relevant time when the impugned duties of excise were paid by the petitioners.


(15) BY a letter dated 13th June, 1980 addressed to the Assistant Collector of Central Excise, Calcutta-XII Division, the respondent No. 1 herein the petitioners claimed refund of the duties of excise so long realised by them since all the impugned realisation were, prima facie, illegal, invalid, without jurisdiction and authority of the law inasmuch as the products manufactured at their factory were not at all liable to excise duty under tariff item No. 68 of the Tariff Schedule. On 4th August, 1980 the petitioner applied in the prescribed form for refund of the entire amount of excise duty paid by them between March, 1975 and 31st March, 1980, totalling a sum of Rs. 7,28,178. 35p. According to the petitioners, Rs. l,ll,580. 86p. was paid under a mistake of law during the period March, 1975 to June, 1977 and a sum of Rs. 6,16,597. 4?p. was paid by the petitioners "under protest" during July, 1977 to March, 1980. In their application for refund dated 13th June, 1980 and 4th August, 1980 the petitioners relied on a decision of the Gujarat High Court dated 30th April, 1980 in the case of Darshan Hosiery Works v. Union of India, 1980 EX. T, 390.


(16) THE Assistant Collector of Central Excise, Calcutta-XIII by his letter dated 25th April, 1981 informed the petitioners that their claim for refund could not be allowed and the petitioners were bound to pay duty till 18. 6. 1980. The Assistant Collector of Central Excise asked the petitioner to show cause within 30 days of the receipt of the letter as to why the claim for refund lodged by the petitioners should not be formally rejected. Thereafter, the petitioners gave a written reply and were called for personal hearing,


(17) THE Assistant Collector in his adjudication order dated 22nd January, 1983 held that the petitioners were not entitled to the refund claimed. The Assistant Collector further observed that the judgment of the Gujarat High Court in the case of Darshan Hosiery Works v. Union of India 1980 E. L. T. 390, could not be accepted in a generalised way to be binding on each and every case. The petitioners thereafter preferred an appeal to the Collector of Appeals of Central Excise, Calcutta. By his order in appeal dated 24th October, 1983 the appellate authority rejected the petitioners' appeal.


(18) THE contention of the petitioners before the Appellate Collectorate was that normally the products of the petitioner fell under item No. 22d of the Central Excises and Salt Act, 1944, which was introduced from 29. 5. 1971. In view of the judgment of the Gujarat High Court in the case of Darshan Hosieryworks v. Union of India, 1980 E. L. T. 390, this hosiery goods could not be classified under Item No. 68 until the Explanation below that time was inserted with effect from 18. 6. 1980. The duty was paid under protest and, therefore, the time limit for refund under Section 11b could not be applied. The refund claimed covered a period up to 31. 3. 1980, that is, the period prior to the period of the insertion below item 68. Therefore, the duty paid by them was paid under mistake of law.


(19) THE Appellate Collector held:-


"it is clear that the hosiery garments were correctly classifiable under item 68 and duties were leviable under that item till the issue of exemption notification No. 104/80, dated 10. 6. 1980. Therefore, the duties have been correctly paid and there was no mistake of law. The question of refunding duties paid according to law does not arise. The appeal is, therefore, rejected. ".


(20) THERE is no dispute that tariff item No. 22d which was introduced in the First Schedule to the Central Excises and Salt Act, 1944, by the Finance Act, 1971 describes the dutiable item as


"articles of ready-to-wear apparel (known commercially as ready-made garments)". It was specifically made clear that the description of "articles of ready-to-wear apparel" would include under garments and body supporting garments; but would exclude articles of hosiery, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power". The legislators proceeded on the assumption that under the generic heading "articles of ready-to-wear apparel", "articles of hosiery" would come in; but hosiery goods which were manufactured with the aid of power was kept out of the ambit of taxation. Other articles of hosiery which were not manufactured with the aid of power would remain within the description "articles of ready-to-wear apparel". , But for the specific exclusion made in item No. 22d "articles of hosiery" manufactured with the aid of power would have come under the general heading "articles of the ready-to-wear apparel. "


(21) TARIFF Item No. 68 was introduced by the Finance Act, 1975. It is a residuary item under which all other goods "not elsewhere specified, manufactured in a factory" has been brought under the excise levy. There are certain goods mentioned in that article which have been specifically exempted.


(22) THE dispute in this case is about the scope of the expression "all other goods, not elsewhere specified". The contention on behalf of the respondents is that throughout the First Schedule to the Act in many places the expression "not elsewhere specified" have been mentioned.


(23) MY attention was drawn to tariff item Nos. 33 (b) and 39 to show that any goods which have been specified at taxable in tariff item Nos. 1 to 67 of the First Schedule would fall under Item No. 68 which was a residuary item and the intention of the Parliament was to rope in all such manufactured goods.


(24) THE case of the respondents is that Section 2 (d) which defines "excisable Goods" read with Section 3 of the Central Excises and Salt Act, 1944, makes it clear that the goods specified in the First Schedule are liable to duty. The object of specifying the goods in the First Schedule is for making the goods taxable. There is no provision for exempting any goods from taxation in the First Schedule. Hosiery goods have not been specified in Item No. 22d of the Schedule as taxable. Therefore, such goods were not liable to excise duty tariff item No. 68 was introduced.


(25) THE Parliament has empowered the Central Government by Section 37 (xvii) to exempt goods from excise levy. In exercise of this power, Rule 8 has been framed. Such exemption can only apply in respect of goods which are already liable to duty under Section 3 of the Act. In the present case Item No. 22d of the Schedule (introduced in 1971) includes "under garments and body supporting garments". But "articles of hosiery" have been specifically excluded from the category of "undergarments and body supporting garments". Therefore, the exclusion of "articles of hosiery" from the specified goods, viz. , under garments and body supporting garments is not in relation to taxability but is in relation to the description of the goods in Item No. 22d.


(26) I am unable to uphold this argument. The charging Section of the Act is Section 3. It declares that there shall be levied and collected duties of excise on all excisable goods which are produced or manufactured in India. Excisable goods have been defined by Section 2 (3) to mean goods specified in the Schedule to the Central Excise Tariff Act, as being subject to a duty of excise. Section 6 empowers the Central Government to provide by notification that as from a specified date, no person shall except under the authority and in terms and conditions of a licence granted under the Act, engage in the production and manufacture of any specified goods included in the Schedule to the Central Excise Tariff Act, 1985. In this case, there is no dispute that initially the hosiery goods manufacture by the petitioner were not dutiable. Tariff Item No. 22d which was introduced by the Finance Act, 1971, brought to tax articles of readymade garments but specifically excluded hosiery goods from that item if such were manufactured with the aid of power. Therefore, the intention of the Legislature was to grant exemption to such goods even though these goods might otherwise come under the head "articles of ready-to-wear apparel. "


(27) THE Finance Act, 1975, which introduced tariff item No. 68 in the First Schedule has generally imposed a duty on "all other goods, not elsewhere specified. " It cannot be readily inferred that the intention of the Legislature was to impose duties not only on goods which not specified at all in item Nos. 1 to 67 but also those goods which were specifically mentioned for the purpose of granting exemption. The general rule of construction is that "where there are general words in a later Act capable of reasonable and sensible application without extending them to subjects especially dealt with by earlier legislation you are not to hold that earlier and special legislation indirectly repealed, altered or derogated from merely by a force of such general words, without any indication of a particular intention to do so. " [. . . v. Veracruz, (1884) 10 A. C. 59,68)]. It was also observed in the case of Barker v. Edger, (1898) A. C. 748,754 (P. C.) :


"when the legislature has given its attention to a separate subject and made provision for it, the presumption is that a subsequent general enactment is not intended to interfere with the special provision unless it manifests that intention very clearly. Each enactment must be construed in that respect according to its own subject-matter and its own terms".


Therefore, it cannot be readily presumed that by introduction of tariff item No. 68, the Finance Act, 1975 was trying to take away special exemption granted to hosiery goods by the Finance Act, 1971. In fact, the wording of the tariff item No. 68 also tends to support the contention of the petitioner "all other goods not elsewhere specified". There is no reason to give a restricted meaning to the description "all other goods, not elsewhere specified". The words "elsewhere" must mean elsewhere in the First Schedule. There is no dispute on this point. Some goods have been specified for the purpose of taxation under item nos. 1 to 67. In those categories of goods some goods have been specified as exempt from duty. The goods which have been specified for the purpose of exemption do not cease to stand as specified in the First Schedule only because those goods have been mentioned for the purpose of exemption.


(28) IN other words, the residuary item No. 68 only deals with goods have not been specified also where in the First Schedule either for the purpose of imposition of duty or granting exemption from duty. That appears to be the clear and natural meaning of the phrase "not elsewhere specified". To say "not elsewhere specified" means only not elsewhere specified for the purpose of imposition of duty is to introduce words of limitation which were not there in the statute.


(29) IN my judgment, this appears to be the proper construction of tariff item no. I 68. Even if two constructions are possible of the phrase "not elsewhere specified" the construction which favours the tax-payer must be preferred.


(30) THEREFORE, in my judgment, the expression "all other goods, not else where specified" appearing in tariff item No. 68 would only mean goods which have not been specified under tariff item Nos. 1 to 67 either for the imposition of duty or for the purpose of granting exemption from duty.


(31) MY attention was also drawn to the Explanation which was introduced to tariff item No. 68 by which it was laid down that goods which had been specifically mentioned in tariff item nos. 1 to 67 for the purpose of excluding such goods from duty "shall be deemed to be goods not specified in that item. " In the context of Section, 6th Explanation which was introduced on 18th June, 1980 by the Finance Act (No. 2) of 1980 was not merely clarificatory. The Explanation had the effect of enlarging the ambit of tariff item No. 68. It is significant that the Explanation states "goods which are referred to in preceding item in this Schedule. " This can only mean goods which have been specifically mentioned in any preceding item of the Schedule. Therefore, the Explanation really seeks to bring within the ambit of tariff Item No. 68 goods which had been specifically mentioned in tariff item nos. 1 to 67 for the purpose of granting exemption from duty. The Explanation has only prospective effect and cannot affect the question of taxability at the time the goods were cleared. It is also of significance that at the time of inserting the Explanation, the Central Government simultaneously issued a notification exempting "articles of hosiery" from duty. This makes it clear that it was always the intention of the legislature that such goods should not be subjected to excise duty.


(32) THE real question involved in this case is what the word "specified" means in its ordinary and natural sense. The word "specified" means specifically named or mentioned, that is to say mentioned in specie or as a species. In item 22d of the Schedule to the Act articles of hosiery are specifically mentioned as a species of a ready-to-wear garments and hence they are specified, although it is made clear that they are excluded from the purview of the tax. It would be absurd to attribute to the Legislature an intention to exclude such articles from the purview of the tax under Item 22d where they properly belong and to make them taxable under a residuary item such as item 68. This interpretation will have the effect of attributing an irrational inconsistency to the Legislature.


(33) IT has been argued on behalf of the respondents that the exclusion of articles of hosiery from the specified goods, that is under garments and body-supporting garments, is not in relation to taxability but is in relation to the description of the goods in Item 22d, the argument is that the Legislature intended to exclude articles of hosiery from the general description "under garments and body-supporting garments". This, however, is not a possible construction of the language used in the Item. The Phrase is "including under garments and body-supporting garments but excluding articles of hosiery" that is to say, the two clauses beginning with the words "including" and "excluding" are parallel clauses and the effect of them is to include in the net of taxability under garments and body-supporting garments but to exclude articles of hosiery from the articles which are to be taxed.


(34) THE respondents have referred to Section 6 to suggest that the judgment of the Gujarat High Court in the case of Darshan Hosiery Works v. Union of India, 1980 E. L. T. 390 is wrong. The argument is that under Section 6 if the goods are treated as specified in the First Schedule a licence would be necessary even if they are not excisable. This is a misreading of the provisions of Section 6 which are for convenience set out below : -


"6. The Central Government may by notification in the Official Gazette, provide that from such date as may be specified in the notification no person shall except under the authority and in accordance with the terms and conditions of a licence granted under this Act, engage in (a) the production or manufacture or any process of the production or manufacture of any specified goods included in the First Schedule or of saltpetre or of any specified component parts or ingredients of such goods or of specified containers of such goods. (b) the wholesale purchase

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or sale whether on his own account or at a broker or commission agent or the storage of any specified goods included in the First Schedule. " (35) THE word "specified" in this Section refers to specification in the notification as is clear from the opening words "provide that from such date as may be specified in the notification" and the reference is to "specified goods included in the First Schedule. The effect of the Section is that a licence is necessary in respect of goods included in the First Schedule which are specified in the notification referred to and the prohibition is also from the date that is specified in the notification. It is clear that if the Legislature had intended to refer to goods specified in the First Schedule it would have used those words and would not have referred to "specified goods included in the First Schedule". The First Schedule is referred to in this Section for the purpose of determining what goods are included in it: such of the goods that are included in the First Schedule as are specified in the notification referred to in the Section cannot be produced or manufactured without a licence. " (36) THEREFORE, I am of the view that the Appellate Collector had erred in holding that the hosiery garments manufactured by the petitioner were correctly classified under Item No. 68 and duties were leviable under that item till the issue of exemption notification No. 104/80, dated 10-6-1980. This order must be set aside. (37) THE next question is whether the petitioner is entitled to get refund. Normally, if duty has been erroneously levied and collected from a person that person when he succeeds in a proceeding questioning levy of duty, is entitled to get a refund of the duty. On behalf of the respondents it has been contended that limitation has set in this case. Elaborate arguments were advanced on this aspect of the matter. But I find that this question have not been gone into by the Appellate Collector. (38) IN my view, this is a question which should be gone into by the Appellate Collector in the first instance. (39) THEREFORE, in this case, the rule is made absolute. There will be orders as prayed for in terms of prayers (a) and (b). The Collector (Appeals), however, is directed to go into the question of limitation and pass a fresh order in accordance with law after giving a hearing to the petitioners only on the point of limitation. The Collector (Appeals) must dispose of this case within a period of six months from the date of communication of this order. The writ petition is finally disposed of as above. Each party will pay and bear its own costs.
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