JUDGMENT
Ruma Pal, J.
1. The petitioners, inter alia, manufacture vacuum hoses.
The petitioners had been clearing the hoses under the Tariff sub-heading
4009.92 of Chapter 40 of Schedule-II to the Central Excise Tariff Act of 1985. The
Tariff sub-heading 4009.92 reads as follows :-
“Designed to perform the function of conveying air, gas or
liquid.”
Under this sub-heading 30% Duty was leviable.
2. According to the petitioners, the vacuum hoses, manufactured by
them, are in fact, vacuum brake hoses and are supplied to the Railway
Authorities for the purpose of functioning as vacuum brake or as parts thereof.
In fact, the petitioner-Company is registered with the Railway Authorities, inter
alia, for supply of vacuum brake hose pipes. According to the petitioners, there
are limited suppliers of vacuum brake hose pipes to the Railways in the
country. Of the 11 such suppliers, most are Small Scale Industry and are by
virtue thereof exempted from payment of Excise Duty. The petitioner-Company is not a Small Scale Industry. One of the rivals of the petitioners in this
trade, called M/s. Rubber Products Pvt. Ltd., is also not a Small Scale Industry.
M/s. Rubber Products Pvt. Ltd. carries on business in the State of Maharashtra.
M/s. Rubber Products Pvt. Ltd. had also been clearing its vacuum hoses under
sub-heading 4009.92. It submitted a revised classification list for re-classification of the vacuum hose pipes under sub-heading 4009.99, of the schedule to
the 1985 Act. Sub-heading 4009.99 is the residuary sub-heading. The rate of
Duty is nil. The application for re-classification, made by M/s. Rubber
Products Pvt. Ltd., was rejected by the Assistant Collector, Thane. An appeal
was preferred by M/s. Rubbar Products Pvt. Ltd. before the Appellate Collector. After hearing the parties, the Appellate Collector came to the conclusion
that a vacuum brake hose was properly classifiable under sub-heading 4009.99
and not under 4009.92. This decision of the Appellate Collector appears to have
been delivered in 1988. On the basis of the decision of the Appellate Collector,
M/s. Rubber Products Pvt. Ltd. applied for refund of the Duties paid by it at
30% under sub-heading 4009.92. The refund application was disallowed. M/s.
Rubber Products Pvt. Ltd. filed a writ application before the Bombay High
Court. The Bombay High Court allowed the writ application of M/s. Rubber
Products Pvt. Ltd. by a decision . The Bombay High Court held that the order of the Appellate
Collector was final and that the respondent-Authorities were bound to refund
the amount paid by M/s. Rubber Products Pvt. Ltd. under sub-heading
4009.92. It appears from the judgment that the order of the Appellate Collector
had been appealed from by the respondent-Authorities before the Tribunal;
but the Tribunal dismissed the appeal preferred by the Excise Authorities on
the ground that it was barred by Laws of Limitation.
3. Coming to know of the decision of the Appellate Collector from the
reported judgment of the Bombay High Court, the petitioners filed a revised
classification list before the Assistant Collector and prayed for re-classification
of the vacuum hoses manufactured by them under sub-heading 4009.99. The
decision of the Bombay High Court was referred to by the petitioners.
4. In my view, there can be no doubt that the Excise Authorities in
Bengal are found to act in consonance with the decision of the Appellate
Authority in Bombay. Otherwise, this would lead to discrimination between
M/s. Rubber Products Pvt. Ltd. and the petitioners. The Excise Authorities in
Maharashtra have accepted the re-classification of M/s. Rubber Products Pvt.
Ltd.’ s vacuum hoses under sub-heading 4009.99. This acceptance may have
been a forced one, but nevertheless, is the one that is being abided by. As a
result, M/s. Rubber Products Pvt. Ltd. is not paying any Excise Duty on its
products. If the petitioners are manufacturing the same product as that of M/s.
Rubber Products Pvt. Ltd., the Excise Authorities in Bengal cannot foist the
petitioners with the liability to pay Excise Duty under sub-heading 4009.92.
This view is supported by several Judicial Authorities, namely, (1) “Mercantile
Company Pvt. Ltd. v. Assistant Collector of Customs and Ors.“, (2)” Godrej & Boyce Manufacturing Co. Pvt. Ltd., Bombay and
Another v. Union of India and Ors.”, , (3)
“Sandip Agarwal v. Collector of Customs”, ,
and (4) “Suhrid Giegy Ltd., Ahmedabad v. Union of India and Ors.”, .
5. The Assistant Collector in this case by the impugned order has
sought to distinguish the decision of the Appellate Collector in M/s. Rubber
Products Pvt. Ltd.’s case by stating that the vacuum hoses manufactured by the
petitioners were not the same as the vacuum hoses manufactured by M/s.
Rubber Products Pvt. Ltd. The observation of the Assistant Collector appears to
be somewhat contradictory to his own finding in paragraph 2 of the impugned
order. However, in my view, the question should be resolved finally by the fact
finding Appellate Authority.
6. Accordingly the writ application is disposed of by granting liberty to
the petitioners to prefer an appeal before the Appellate Authority from the
impugned order dated 22nd July, 1993 passed by the Assistant Collector. As the
matter has been pending adjudication before this Court, the question of limitation does not arise.
7. The Appellate Authority will only consider whether indeed the
petitioner’s vacuum hoses are the vacuum brake hoses as contended by them.
The petitioners will be at liberty to produce all evidence before the Appellate
Collector.
8. If the Appellate Collector finds that the vacuum hoses, manufactured
by the petitioners, are vacuum brake hoses, the Appellate Collector will allow
re-classification, as sought for by the petitioners, with effect from the date of
filing of the Revised Classification List. In that event, all payments made by the
petitioners to the respondent-Authorities subsequent to the filing of the Reclassification List as well as the payments made by the petitioners to the Special
Officer pursuant to the interim order of this Court must be refunded to the
petitioners within a week from the date of the Appellate Collector’s decision.
9. The Appellate Collector will dispose of the matter within a period of
4 weeks from the date of communication of the Dictated Order to him. The
Appellate Collector must give a notice of hearing to the petitioners. At least 48
hours clear notice must be given. The Appellate Authority will give reasons for
its decision.
10. Subject to the petitioners furnishing a Bank Guarantee for an
amount of Rs. 5,00,000/- representing approximately the Duty payable on the
basis that the petitioner’s vacuum hoses are classifiable under sub-heading
4009.92 within a period of 4 weeks from date, the Excise Authorities will allow
the petitioners clearance of the vacuum hoses without payment of any Duty.
11. The Bank Guarantee to be furnished by the petitioners in favour of
the Collector of Central Excise, Calcutta-II, Collectorate, must be of a
Nationalised Bank and must be kept renewed by the petitioners pending
disposal of the matter by the Appellate Collector. The Bank Guarantee must
also contain a clause to the effect that in the event the petitioners fail to renew
the Bank Guarantee, the Bank will of its own and forthwith deposit the entire
guaranteed amount with the Collector of Customs.
12. In the event the Appellate Collector decides against the petitioner,
no steps will be taken to enforce the Bank Guarantee for a period of 2 weeks
from the date of such decision.
13. There will be no order as to costs.
14. All parties concerned including the Appellate Collector and the
Branch Manager of the concerned Bank are to act on a signed copy of this
Dictated Order on the usual undertaking.