JUDGMENT
D.K. Jain, J.
(1) The challenge in these two writ petitions, being decided by this common judgment, is to the two orders, dated 20th January, 1982 (in C.W’.P. No. 1312182) and 15th March, 1982 (in C.W.P. No. 3418;S2) passed by the Government of India on petitioners revision application. By the impugned orders the Government of India upheld the orders passed by the Collector, Customs & Central Excise under section 35A of the Central Excise and Salt Act, 1944 (in short the ‘Act’) holding that yarn containing 70 per cent polypropylene fibre and 30 per cent acrylic fibre did not fall within the ambit of Tariff item l8E in the First Schedule of the Act.
(2) The petitioners are manufacturers of various type? of yarn and also undertake spinning of yarn on job work basis. In August/October, 1978 the petitioners entered into agreements to manufacture and supply to other concerns polypropylene spun yam which is stated to be made from polypropylene fibre and acrylic fibre in the ratio of 70 : 30. However, before commencing production of the said product one of the petitioners’, vide its letter dated 7th September, 1978 sought confirmation from the Excise Department that the polypropylene spun yarn manufactured with the aforesaid ratio of acrylic fibre would be free from excise duty under notification No. 332/77-F and No. JC/9/77 -CSII dated 1st December, 1977, which exempted “Polypropylene spun yarn”, falling under Tariff item No. 18E of ‘the First Schedule to the Ad, from the whole of the duty of Excise leviable thereon. The Assistant Collector, Central Excise Division. Ludhiana vide his communication dated 11th September, 1978 informed the said petitioner that the said blends of polypropylene yarn containing 70 per cent polypropylene and 30 per cent acrylic fibre would be classifiable under Tariff item 18E and entitled to exemption under the said notification.
(3) To comply with the relevant rules, the petitioners filed classification list in the prescribed form with the excise authorities giving description of the goods to be manufactured by them as under .- “POLYPRUPYLENE Spun YARN” Polypropylene Spun Yarn contains Polypropylene Fibres 70 per cent and Acrylic Fibre 30 per cent and in or in relation to the manufacture of which any process is ordinarily carried on with aid of power”.
(4) In the said form the petitioners had claimed that the said product was not liable to excise duty, being exempt under the aforesaid notification. The said classification was accepted by the Superintendent and the Assistant Collector, Central Excise. The petitioners, thus during the months of October, November and December, 1978 manufactured the said product and cleared the same without paying any excise duty. Thereafter, the Superintendent, Central Excuse (Range Iii ), Ludhiana, vide his notice dated 24th March, 1979, purporting to he under Rule 10 of the Central Excise Rules, 1944 asked the petiotioners to show cause to the Assistant Collector. Central Excise., Ludhiana, why excise duty be not levied on the said polypropylene vim and the amount so determined be not recovered from them. A reply to the said notice was filed wherein it was pleaded that polypropylene yarn was exempt from excise duty under the aforesaid notification. In this behalf reliance was also placed on the aforesaid communication of the Assistant Collector. Central Excise, dated 8th September, 1978 On a due consideration of the reply filed by the petitioners, the Assistant Collector, vide his, order dated 2nd June. 1979 held that polypropylene yarn containing per cent polypropylene fibre and 30 per cent Acrylic fibre was not liable to excise duty as the basic criteria of predominance of polypropylene more m the yarn was fulfillled. He thus discharged the notice.
(5) It appears, however, that the department had a second look at the matter. The Collector, Central Excise, apparently not satisfied with the aforesaid order of the Assistant Collector, he, in the exercise of his powers under Section 35-A of the Act (As it stood at the relevant time.), issued a show case notice to the petitioners on 2nd February, 1980, seeking to revise the order of the Assistant Collector dated 2nd June, 1979. The petitioners were asked to show cause as to why excise duty be not imposed on the polypropylene yam manufactured by them. In the said notice, an elaborated one, it was pointed out that the aforesaid notification exempted pure polypropylene yarn spun from polypropylene fibre only and not a blended yarn which only had predominantly polypropylene fibre in it. I he reply filed by the petitioners to the said show cause notice did not find favor with the Collector and he, vide his order dated 19th December, 19SO, held that the polypropylene yarn spun from 70 per cent polypropylene fibre and 30 per cent acrylic fibre, manufactured by the petitioners, was not classifiable as “polypropylene spun yarn” and therefore, iot entitled to exemption under the said notifition. While so! holding the Collector also observed that the petitioners had failed to prove that the said product manufactured by the petitioners was known as polypropylene spun yarn in common parlance.
(6) Being aggrieved by the said order, the petitioners filed revision applications under section 36 of the Act (as it then existed), raising the same pleas which were raised before the Collector. The revision petitions filed by the petitioners were, however, dismissed. Hence the present petitions.
(7) The short question that falls for consideration is whether a polypropylene yarn spun out of 70 per cent polypropylene fibre and 30 per cent acrylic fibre could be classified as “non cellulosic spun yarn” within the meaning of Tariff item No. 18E of the First Schedule with the Act, and thus qualified for exemption under Notification No. 332/77-F and No. 1O/9l77-CSII, dated 1st December, 1977.
(8) Before we proceed to examine the contentions of the petitioners on the interpretation of Tariff item 18E, it will be convenient io dispose of at this stage a technical plea, touching the jurisdiction of the Collector, raised by their Ld. counsel, Mr. Anil Kumar. It is contended that Rule 10 having been omitted by notification No. 177/80-CE, dated 12th November, 1980, with effect from 17th November, 1980, no further proceedings, under the said Rule could be taken as the show cause notice issued by the Collector had lapsed in the eye of law on 17th November, 1980. He submits that though Section 11A of the Act, inserted an-.l enf( ‘iced with effect from 17th November, 1980 is in pari materia with Rule 10 but the amending Act does not contain any saving Clause to the effect that proceedings pending under Rule 10 on the date when the aforesaid provision came into effect would be treated as proceedings under this Section. He, therefore, submits that the order passed by the Collector is without jurisdiction. Ld. counsel has sought to derive support from the judgments of the Allahabad High Court and Gujarat High Court in Ajanta Paper Products, Ratanpara, Agra-4, Vs. Collector, Central Excise, Kanpur & Anr. 39Sc2(1) Elt 201(1) and Amit Processors Pvt. Ltd. Vs. Union of India and others 1985 (21) Elt 242(2), respectively.
(9) It is true that the above mentioned two judgments tend to support the contention of the Ld. counsel, but so far as this court is concerned, to our mind. the question is no longer res integra. The principle underlying the question has been considered by a Division Bench of this Court in Kolhapur Cane Sugar Works Limited Vs. Union of India and Another 1986 (24) Elt 205(3). In that case, Rules 10 and 10A were repeater and i new Rule 10 was substituted without having any saving clause. The question that arose was as to whether proceedings initiated before repeal of Rule 10 and 10A will cease to exist for want of a saving clause. Taking note of Section 6 of the General Clauses Act, 1897, which provides that a repeal, unless contrary intention appears, does not effect the previous operation of the repeated enactment as if the repealing Act had no been passed, the Bench observed that the applicability of the said Section cannot be ruled out when there is repeal of an enactment followed by fresh legislation. It was held that Section 6 of the said Act would be applicable in such cases also unless .he new legislation manifests an intention incompatible with or contrary to the provisions of this section and such incompatibility would have to be ascertained from a consideration of all the provisions of the new law. It was Finally held that since new Rule 10 showed no different intention what the law was prior to its substitution, Section 6 of the General Clauses Act would apply. Applying the same principle as enunciated in the said pronouncement, with which we respectfully agree, to the facts of the present case, we are of the view that since there is no change in the legislative intent in bringing into the statute book Section 11A in place of eld Rule 10 with effect from 17th November, 1980, and when in fact the provisions of Section 11A are substantially the same as those of Rule 10, as it then existed, on the principles of Section 6 of the General Clauses Act, the rights and obligations of the parties will have to be decided on the basis of continued application of Rule 10. We, accordingly, reject this contention of the petitioners.
(10) On merits, the contention of the Id. counsel for the petitioners is that in the first instance, the department itself had recognised and accepted lie fact that the blends of polypropylene yarn manufactured by the petitioners qualified for classification under Tariff item 18E. Secondly, he submits that even assuming fiat the respondents arc no bound by the view taken by one of their officers, from the. bare reading of !he said entry, it is clear that the basic criteria for determining as to when the yarn manufactured by the petitioners is a “non-cellulosic spun yarn” within the meaning of Tariff item 18E is the predominant presence, in weight, of the man made fibre of non cellulosic origin other than acrylic fibre. He urges that in the present case, polypropylene yarn manufactured by the petitioners having 70 per cent polypropylene fibre and only 30 per cent acrylic fibre squarely’ falls within the classification contemplated under the said Tariff item.
(11) In order to appreciate the contentions put. forth on behalf of the petitioners, it is necessary to refer to the relevant entry in the First Schedule to the Act. Tariff item No. 18E is as under : 18E. Non-cellulosic spun yarn– Spun (discontinuous) yarn, in wh’ch man-made fibres of non-cellulosic origin, other than acrylic fibre, predominate in weight and. in or in relation to the manufacture of which any process is ordinarily carried (,in with the aid of power. Explanation.-Explanation Iii under Sub-item Hi of item No. 18 shall, .so far as may be, apply in relation to this item as it applies in relation to that item. For the sake of convenience notification dated 1st December, 1987 may also be reproduced below : ”In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 11944 the Central Government hereby exempts polypropylene spun yarn falling under item No. 18E of the ‘First Schedule to the Central Excise and Salt Act, 1944 (1 of 1944) from the whole of the duty of Excise leviable thereon. This notification shall remain in force up to and inclusive of the 31st March, 1979.”
(12) If we read the plain words of item No. 18E, its construction does not, in our view, pose any difficulty at all. While specifying the nature of product as ”non-Cellulosic Spun Yarn”, care has been taken to specifically mention as to which type of Non-Cellulosic Spun Yarn shall be covered under this item. The said entry only postulates that the Non-Cellulosic Spun Yarn should be a spun yarn in which man-made fibres of non cellulosic origin, other than the acrylic fibre, should predominate in weight and nothing more. It is not deputed that polypropylene ore is a man-made fibre of non-cellulosic origin. Now coming to the question of applicability of notification of 1st December, 977 to the product manufactured by the petitioners, to our mind, keeping in view the language of the notification, the stand of the respondents that only polypropylene yarn spun from cent per cent polypropylene fibre is covered un der the said notification is devoid of any merit. In this connection what is to be born in mind is that the commodity which is a subject matter of exemption from excise duty, under the above noted notification, is the polypropylene spun yarn, falling under Item No. 18E of the First’ Schedule of the Act . This would mean that polypropylene spun yarn which has to qualify for exemption must necessarily have the ingredients of an item falling within the purview of item 18E. Applying this principle the facts of the present case, admittedly, the spun yarn manufactured by the petitioners contained 70 per cent of the polypropylene fibre and 30 per cent. acrylic fibre, meaning thereby at the basic requirement of predominance of any man-made fibre of non-cellulosic origin other than the acrylic fibre, within meaning of item 18E is fulfillled.
(13) It is well settled that while construing an entry it must be so read as to give effect to all parts of the entry. In the present case as we read item No. 18E, the inaction of the Legislature is very clear that only that non-cellulosic spun yarn was to be subjected to levy of excise duty at the rate of Rs. 24 per kilogram in which man-made fibre, dominated in weight, in our view, the said entry being in very clear and unambiguous terms is not capable of any other interpretation other than the. one we leave given it above, therefore, on the, plain words of the entry we are inclined to accept the contention of the petitioner’s that for the purpose of classification under Tariff Item No. 18E, the basic criteria is the predominance of a fibre in the blended yarn.
(14) As already pointed out, in the matter of construction of an entry, primary guide has to be the language used therein. The same principle would apply while construing the effect of the said notification. If we do so the only manner in which the interpretation of the said notification can be made in a reasonable sense is that once a commodity is classifiable under item No. 18E, it will be eligible for exemption under the said notification. The basic fallacy in the respondents reasoning appears to be that they have attempted to interpret the said notification de-horse the relevant entry, i.e., item No. 18E. Having noted above that the polypropylene spun yam manufactured by the petitioners falls within the ambit of Item No. 18E, we have no hesitation in repelling the contention of the respondents that exemption under the said notification is restricted only to yarns exclusively spun out of the polypropylene. fibre. We do not read any such stipulation in the said notification.
(15) Before parting with the case we may also take note of yet another contention of the petitioners. The contention is that the department having accepted petitioners’ stand on two occasions, firstly when the petitioners had sought clarification before commencing production and secondly when Superintendent Central Excise’s Show cause notice dated 24th March, 1979 was discharged, the excise department is estopped from now taking a different stand. Since we have upheld petitioners contention on the main issue of interpretation of the relevant entry and the notification. we do ‘not propose to dwell on the issue :’i1 any detail. Suffice it to say that it is well settled that the plea of estoppel is a rule of equity and cannot prevail against the provisions of a statute.
(16) In view of the foregoing discussion,we are in agreement with the petitioner’s that they are entitled to exemption under Notification No. 332/276-F and No. J0/77-CS II. dated 1st December 1977.
(17) In the result, these petitions succeed. The Impugned orders of the Government of India and those of the Collector, Customs and Central Excise, passed under the Central Excise and Salt Act, 1944, an; set aside.
(18) Rule is- made absolute
(19) In the circumstances of the case there will be no order as to costs.
