Order
1. The petitioner is a public limited company having its factory at Parel, where it manufactures various kinds of cotton textiles and fabrics, including a material known as “black dyed drill”, made from coarse tightly woven grey cloth of a cheap rough fabric manufactured from coarse Indian cottons. This fabric is meant only for industrial use as it is too rough. coarse and tightly woven to be used as wearing apparel. This fabric is dye with sulphur dyes and is subjected to a process involving the working into the cloth cold wax emulsion and cold aluminium acetate. According to the petitioner-company, these two processes are a part of the general dyeing process in sulphur dyeing, necessary to render the cloth supply and to improve the fastness of the dye.
At all relevant times, cotton textile fabrics were attracted to excise duty under Item 19 and 18A of the Tariff to the Central Excises and Salt Act, 1944. In this petition, two Notifications issued under rule 8 of the Central Excise Rules, are germane. The first is Notification No. 29 of 1966, as modified by Notification No. 41 of 1968, which was in force during the relevant period, namely, 1st March, 1968 till 1st March, 1969. Textile fabrics were classified in the following principal categories, namely :-
(a) Grey (unprocessed),
(b) bleached or/and dyed,
(c) printed mercerized or/and water proofed whether rot proofed or not including rubberized,
(d) processed in any other manner including shrink proofed and/or organdie processed.
The rates of duty payable were higher for each succeeding category
2. Under the second Notification No. 88 of 1969, which was in force after 1st March, 1969, the earlier classification was altered as follows :-
(a) Grey (unprocessed),
(b) Bleached or/and dyed, but not printed.
(c) bleached or/and dyed.
(d) Mercerized or/and water proofed whether rot proofed or not including rubberized but not printed.
(e) Mercerized or/and water proofed where rot proofed or not including rubberized and printed.
(f) processed in any other manner including shrink proofed and/or organdie processed but not printed.
(g) processed in any other manner including shrink proofed and/or organdie processed and printed.
Higher rate of excise duty was payable on each succeeding category.
3. By his letter dated 25th April 1968, the Inspector, Central Excise, enquired of the petitioner – company whether it manufactured any water repellent fabrics. This query was replied in the negative by the petitioner’s letter dated 2nd May, 1968. At the behest of the Central Excise, the petitioner-company also furnished samples of its product to the Central Excise, on 16th July, 1968, followed by further information given on 1st November 1968. On 7th November, 1968, the Deputy Chief Chemist opined that the petitioner’s cloth, viz., “black dyed drill”, had the characteristics of water, repellant fabrics. The gist of that opinion was forward by the Inspector Central Excise, to the petitioner on 12th November, 1968 with a query whether the petitioner agreed with the opinion expressed by the Deputy Chief Chemist. on 10th December, 1968, the petitioner addressed a letter to the Inspector, Central Excise, stating that the petitioner did not agree with the opinion of the Deputy Chief Chemist and requested that the matter be referred to the Chief Chemist for his opinion. On 9th December, 1968, the Inspector, Central Excise, issued a demand notice to the petitioner for payment of a sum of Rs. 1,67,462.7 pertaining to the clearance effected by the petitioner during the period 4th April, 1968 till 26th September, 1968.
4. A communication was addressed on 15th April, 1969 to the petitioner, giving therein the gist of the chief Chemist’s opinion, namely, that the processing by the wax emulsion was one of the methods of producing water repellent fabrics, that the petitioner’s materials was not water-proofed and fell in the category of “processed in any other manner”, namely, category (d) of the first Notification, viz. Notification No. 29 of 1966 as modified by Notification No. 41 of 1968 and in category (f) of the second Notification, viz., Notification No. 88 of 1969. Here it may be stated that the petitioner had paid duty until 7th April, 1969 under category (b) of these Notifications.
5. The demand notice dated 9th December, 1968 was followed by another demand notice dated 20th April, 1969 from the Inspector, Central Excise, for a sum of Rs. 1,36,953.25, pertaining to the clearance effected by the petitioner between 24th December, 1968 and 7th April, 1969. By an order dated 20th June, 1969, passed by the Assistant Collector, the demands contained in both the notices dated 9th December, 1968 and 20th April, 1969, were confirmed. On 17th July, 1969, the petitioner filed the requisite appeal on merits and also urged that the first demand notice dated 9th December 1968 was time- barred. On 24th October 1973, the appellate authority passed an order allowing the petitioner’s appeal on merits, and hence did not decided whether the first demand notice dated 9th December, 1968 was time barred or not. The appellate authority came to the finding that the fabric manufactured by the petitioner was not commercially or technically known as a water repellent fabric and as such the question of charging such fabric at the rates applicable to water-repellent fabric did not arise. The appellate authority agreed with the appellant’s contention that the dyeing process in dyeing process but that would not categories the petitioner’s fabrics as cotton fabrics processed in any other manner not otherwise specified. The appellate authority further held that in order to so categories the petitioner’s fabrics, the process should be such as is known to the market like wash-n-wear, crease-resistant, etc., and hence was convinced that the cotton fabrics, which formed the subject-matter of the appeal, were correctly classified as dyed fabrics and not as water-repellant fabrics or cotton fabrics, which formed the subject-matter of the appeal, were correctly classified as dyed fabrics and not as water- repellent fabrics or cotton fabrics processed in any manner not otherwise specified. In conclusion, the appellate authority held that without going into the limitation aspect of the notice of demand dated 9th December, 1968, the cotton fabrics of medium- B variety forming the subject-matter of the appeal shall be assessed to duty at the rate applicable to dyed fabrics and not at the rate applicable to fabrics processed in any manner not otherwise specified.
6. Accordingly, on 3rd December, 1973, the petitioner applied for refund of the excess duty paid, viz., Rs. 5,46,850/-. However, notwithstanding the appellate order dated 24th October, 1973, another demand notice dated 1st October, 1974 was issued to the petitioner by the Inspector, Central Excise, for Rs. 55,829.20 pertaining to the clearance effected by the petitioner between February 1974 and 29th June, 1974. By his letter dated 9th October, 1974 addressed to the petitioner, the superintendent, Central Excise, stated that the refund papers were being returned to the petitioner as the matter and been referred to the Central board for review. On 19th October, 1974, a review notice under section 36(2) of the Central Excise and Salt Act, was issued proposing to review the appellate order dated 24th October, 1973 and asking the petitioner-company to show cause. The ground given in the review notice for the proposed review was that it appeared to the Central Government that –
“the product has been subjected to waxing and aluminium acetate treatment which cannot be said to be incidental to usual dyeing process, and hence the impugned goods would merit classification as `processed in any other manner…….’ falling under category D of the relevant notification.”
7. This review notice was extensively replied to by te petitioner on 11th November, 1974. Thereafter, a personal hearing was given on 22nd January, 1975. On 10th December, 1975, the revisional authority passed its order, reversing the appellate order and restoring the order passed on 20th June, 1969 by the Assistant Collector of Central Excise. The revisional authority did not decide whether the first demand notice dated 9th December, 1968 was time-barred, because that question had not been decided by the Appellate collector. hence the present petition was filed for an appropriate writ to set aside the revisional order and for the refund of the sum of Rs. 5,46,850/- paid by the petitioner under protest.
8. The narrow question that arises for determination in this petition is whether the process of working into the cloth, cold wax emulsion and cold aluminium acetate is a part of the general dyeing process so as to fall within classification (b) of the Notifications, viz. “bleached or/and dyed by not printed”, as urged by the petitioner or whether it is some special process not being a part of the general dyeing process and hence amounts to the cloth being “processed in any other manner” so as to fall within the classification (d) or (f) of the relevant Notification, as urged by the respondent.
9. In order to appreciate these rival contentions of the parties, it would be appropriate to briefly set out the manner in which the processing in respect of this cloth is done by the petitioner – company. It can be itemised as under :-
1. The grey cloth is stitched end to end.
2. Wetted out in warm water.
3. Scoured at boil.
4. Hot wash and cold wash.
5. dyed at a boil with Sulphur Black dyestuff.
6. Oxidised in air.
7. Hot washed, soaped, hot washed cold washed.
8. Dried.
9. Worked in cold was emulsion.
10. Worked in cold aluminium acetate.
11. Dried on drying cylinder.
12. Stentered.
13. Calendered.
10. It is in respect of the processes itemised at Serial Nos. 9 and 10 above that the controversy between the parties revolves. According to the petitioner, the working of cold wax emulsion and cold aluminium acetate into the cloth is not any special process but is a part and parcel of the general process of manufacturing this cloth in order to give body and suppleness to the cloth. According to the petitioner, as the fabric is a cheap and coarse one, and used for external purposes, cold was emulsion helps to give it body and suppleness and cold aluminium acetate acts as a precaution against possible mildew and fading out of the shade. Thus according to the petitioner, the cold wax emulsion and cold aluminium acetate treatment is not only necessary but is related to the dyed fabric, and falls within the general process of dyeing. Further according to the petitioner, many ingredients used in textiles for one purpose may give some side effects and other proportion to the treated cloth. For instance, resin treatment in small amounts can act as a softener and in larger quantities as a crease-proofing agent. Besides, resin treatment also imparts water repellency to the fabric. Regarding the use of aluminium acetates, according to the petitioner, metallic salts like aluminium acetate have been used to improve the resistance of cotton drill type fabrics against mild attack, apart from the fact that in India, it is the cheapest method for such treatment.
11. In support of the petitioner’s case, the number of authorities and passages from various standard text books and various reports and opinions were placed by the petitioner before the appellate and revisional authorities. Neither the appellate authority nor the revisional authority had at any time disputed the correctness of the material placed at its disposal by the petitioner-company. This has particular importance in the light of the impugned revisional order.
12. Pausing here for a moment, it may be recapitualated that the only ground given in the show cause notice for the proposed review was that it appeared to the Central Government that the petitioner’s product was subject to waxing and aluminium acetate treatment which could not be said to be incidental to usual dyeing process and hence merited the classification “processed in any other manner”. In the light thereof, it would be pertinent to analyse the material placed by the petitioner-company before the revisional authority to refute what appeared to the Central Government, viz., that the working of cold wax emulsion and cold aluminium acetate into the cloth, was not incidental to the usual dyeing process.
13. There is on record a Note issued by the Bombay Textile Research Association, on the complete processing for the dyeing of industrial cloth (sum shades and awnings) with sulphur black dye with fairly good standards for fastness to washing and light and reasonable suppleness of handle. The same process listed in this Note in followed by the petitioner. Processes 1 to 4 in this Note pertain to (1) the preparatory treatment for dyeing, (2) dyeing, (3) oxidation, and (4) soaping. The 5th process is headed “After treatments” and states that it is necessary to give sulphur black dyed material the following after-treatments :-
(i) Softening or oiling : Sulphur black dyed fabrics generally impart a harsh handle to the fabric and have a tendency to develop bronziness. To overcome these inherent draw-backs, a softening treatment with an emulsion of oil or wax should be given. This also improves the shade of the black.
(ii) Treatment with Metallic Salts :
a. Aluminium and chromium salts from insoluble metallic lakes dyes, whereby their fastness characteristics are improved. Aluminium acetate in requisite quantities may be used for this purpose.
(The underlining is mine.)
In this Note, it is further stated as under :-
“The foregoing after-treatments are considered to be a part of the sulphur black dyeing operation inasmuch as the omission of any one or more of these after-treatments can adversely affect the characteristics of fastness to washing, light resistance to tendering effect, and suppleness of handle.”
(The underlining is mine.)
The Note concludes with the manner in which the finishing process is to be done ending with stretching and calendering.
14. From this Note of the Bombay Textile Research Association, an independent body whose impartiality and rectitude have rightly not been challenged either before me or the revisional authority, there emerges in the challenged either before me or the revisional authority, there emerges in the forefront that te working of the cold wax emulsion and cold aluminium acetate into the cloth is not only advisable but is a part and parcel of the regular processing of material and something inherent in its manufacture, without either of which the ultimate product would not have the characteristic of fastness to washing, light resistance to tendering effect, and suppleness in handling. This Note of the Bombay Textile Research Association had been placed before the revisional authority, the correctness of which had not been challenged at any time, and rightly so.
15. In addition, was also placed before the revisional authority the opinion of Dr. S. V. Patwardhan, B.Sc. (Hon.), M.Sc. Ph,D. (Bom.) A.M.I. (Plant) E., Textile Chemist and Consultant for Dyeing, Bleaching, Finishing and Printing, setting out in brief the stage-wise Sulphur Black Dyeing Process of Cotton Fabrics for industrial cloth. Item 1 to 7 pertain to stitching, wetting, boiling, washing, dyeing with sulphur black dyestuff, oxidising and soaping. Item 8 reads as under :-
“The cloth is then dried but because of the presence of Poly- Sulphides in dyes and because of Alkaline action of Sodium Sulphide in the Dyebath, the fabric gets hardened up. Dyeing Process at this stage is not completed and it is therefore necessary that the fabric must be passed from a cold bath of Wax Emulsion to give the original suppleness of the Cotton Fabrics. it is therefore, also necessary to pass the same cloth through the solution of Metallic Salt consisting of alum sulphate and chrome alum along with Sodium Acetate, which by te inter- reaction, develops a solution of alum-acetate which will, therefore, help to improve the fastness to light as well as washing and will also therefore, protect against possible tendering of the cloth which otherwise would have happened because of the evolution of acidic gas (sulphurcus acid resulting in formation of Sulphuric acid coming out of sulphur dye as stated above) which has a definite tendency of tendering cloth on storage.”
(The underlining is mine.)
Dr. Patwardhan’s opinion ends by stating that after the processes set out in Items 1 to 8 are completed, it is then that dyeing of the fabric with sulphur black can be said to be completed and it is thereafter that the cloth can be taken up for stretching and calendering. That complete the entire process. Item 8 of Dr. Patwardhan’s report brings to the forefront that even after the first seven stages have been gone through, the dyeing process is still not complete and cannot be called completed without going through the stage detailed in Item 8 above which must necessarily be resorted to, for the reasons stated therein. Dr. Patwardhan’s opinion, therefore, brings to the forefront that if the process stated in Item 8 is not gone through, dyeing process would not only be incomplete but the resultant material would also be incomplete and next to unless. It would not be even a finished product. Dr. Patwardhan’s report reveals in no uncertain terms that the working of the cold wax emulsion and cold aluminium acetate into the cloth is not some special or emulsion and cold aluminium acetate into the cloth is not some special or extraordinary process but one which must ordinarily and necessarily be resorted to without which the dyeing process cannot be said to be complete, and hence is a part and parcel of the general process of dyeing.
The correctness of Dr. Patwardhan’s report was never challenged before the revisional authority, and no doubt rightly so.
16. Also placed before the revisional authority was the opinion and report given by Chika Ltd., wherein the same manufacturing process has been stated. The relevant excerpts of Chika’s report are as under :-
`After soaping a thorough washing is given. The material is treated with Turky Red Oil or a wax emulsion to cover the bronziness and make the dyeing appear jet black. This treatment also helps to impart a supple hand since sulphur colour dyeings tend to influence the material towards a harsher handle. In order to improve the wet fastness of dyeing further treatment with copper sulphate or aluminium sulphate or chrome alum are generally given. Sodium Acetate has to be incorporated along with this metallic salts as a buffer and to protect against tendering in storage. The goods are then dried.”
(The underlining is mine.)
This opinion and report of Chika Ltd. is virtually the same as Dr. Patwardhan’s opinion. This opinion and report of Chika Ltd. also bring to the forefront (a) the purpose for which wax emulsion is worked into the cloth, viz. to cover the bronziness and to make the dyeing appear black and to make the cloth supple and (b) the purpose for which the aluminium sulphate treatment is given, viz, to improve the fastness of the dye to washing. This report also reveals that these two processes are not any special or extraordinary processes, but are a part of the general process of dyeing, without which the finished product would not be of the requisite standard and quality. The correctness of there report of Chika Ltd. was also not disputed before te revisional authority, and rightly so, for it has never even been the suggestion of the department that Chika Ltd. made or was interested in making an incorrect report.
17. Also was placed before the revisional authority the opinion and report of Hickson & Dadajee Ltd. which is on a par with the other reports and opinions referred to earlier. After stating that the product must be given a wash and a light soaping to remove superfluous colour, it is stated as under :-
“Dry the fabric and treat with T.R.O. or a wax emulsion to cover the bronziness and to give a jet black appearance. This treatment will also give a supply hand since dyeing with sulphur black is harsher. Further, we recommend that a treatment with copper sulphate or aluminium sulphate or chrome alum, to improve the wet fastness of the dyeing, as they form lakes with the dye. It is necessary to incorporate Sodium Acetate along with these metallic salts to act as a buffer and as a protection against tendering during storage. The goods are then dried.”
(The underlining is mine.)
The report ends with the manner in which the process must be concluded, namely, with stretching and calendering.
18. Hickson & Dadajee’s report, which is similar to the other reports, also brings to the forefront that the waxing and acetating processes are part and parcel of the general dyeing process. From this report, is also manifest that unless wax emulsion and aluminium sulphate are worked into the cloth in the course of the dyeing process, the resultant product with be bronzi and without the requisite jet black appearance, without the requisite suppleness and unprotected against tendering. The correctness of the opinion and report of Hickson & Dadajee Ltd. was also not challenged before the revisional authority, and rightly so, for it was not even the department’s case that Hickson& Dadajee had any reason to make an incorrect report.
19. Also was placed before the revisional authority the report and opinion of Hoechst Dyes & Chemicals Ltd., wherein after describing the intitial manufacturing process, it is stated that :-
“Black dyeings should be buffer to prevent tendering of the fibre during storing in a humid and warm atmosphere or during dying under unfavourable conditions.”
“The goods are treated in the last rinsing both with
10 g/1 Metal acetate or
5 g/1 Soda ash
at 30-40 (85 – 100’F) for a short period of time and are finished without rinsing.”
“For improving the handle of dyed cheeses, the following buffer formula has been well approved :
3 g/1 Metal acetate
2 g/1 Soda ash
2-3 g/1 Fibramoll F (Softening agent)
Finally drying without rinsing.”
“It is advisable to add certain quantities of buffer substance to the sizing and appretizing liquors.”
This opinion and report also brings to the forefront that the working of wax emulsion and aluminium sulphate into the cloth is a part and parcel of the general manufacturing process. Te correctness of this report was also not challenged by te department, and rightly so, for it was not even the department’s case that Hoechst Dyes & Chemicals Ltd. had any reason to make an incorrect report.
20. Also placed before the revisional authority was the report of I.C.I. (India) Ltd., wherein after setting out the various stages of manufacture, namely, preparation of the material, dissolution of the dyestuff, and the dyeing procedure, is stated the following :-
“Certain after-treatments are necessary to avoid bronziness, to improve fastness to washing and to counter-act the harsh feel obtained during dyeing.”
“In order to remove traces of bronziness and to enhance the appearance of goods dyed with Sulphur Blacks, a treatment is generally given with ammonia and Turkey Red Oil. Washing and light fastness of sulphur dyeing can be improved by an after- treatment of the dyed goods with metal salts of copper, chromium nickel and aluminium.”
“The dyed material invariably has a harsher feel as the shade dyed is fairly heavy. This is therefore treated with softness of Waxol P.A. type (Wax Emulsion).”
From this report also emerges that the two processes used by the petitioner-company as a part and parcel of the general manufacturing process. I.C.I.’s report and opinion was also not challenged by the departmental, and rightly so, for it was not even the department’s case that I.C.I. had any reason to make an incorrect report.
21. Thus from these reports, unchallenged before the revisional authority, emerges in bold relief that the working of the cold wax emulsion and cold aluminium acetate into the cloth is not a special or extraordinary process but is a part and parcel of the general process by which this cloth is manufactured. The process of manufacture does not come to a halt when the material in its crude form is realised but only when the material in its complete form is realised but only when the material in its complete form is produced which must therefore necessarily include any after-treatment required in the course and process of its manufacture. These reports also lend verisimilitude to the petitioner’s version that these two aspects in the general process of manufacture are essential for the reasons stated in these reports without which the resultant product would be a fiasco and unmarketable. Once again it may be emphasised that the reports and opinions of Dr. Patwardhan, Chika Ltd., Hickson & Dadajee Ltd., Hoechst Dyes & chemicals and I.C.I. were all before the revisional authority and brought to its pointed attention. The correctness of these reports was not challenged by the department, and rightly so, for as stated earlier it was not even the department’s case that these reports were incorrect or for that matter even inaccurate.
22. In spite thereof, it is not without its own significance that in the revisional order these reports and opinions given by Dr. Patwardhan, Chika Ltd., Hickson & Dadajee Ltd., Hoechst Dyes & chemicals and I.C.I. have not even been referred to, nor is there anything from which it can be gathered that there had been any application of mind on the part of the revisional authority to any of these reports and opinions. If the revisional authority had applied its mind to the same and had thereafter not accepted them, it would have stated so in the order giving at least some indication why it did not accept them. Nothing of the kind has been done. It cannot also be said, nor was it urged before the revisional authority or even before me, that these reports and opinions are irrelevant, which they definitely are not. They go to the root of the matter and lend corroboration to the petitioner’s case. Yet the revisional authority, for reasons best known to itself, has chosen simply to ignore them and maintain a strange silence about them, presumably on the footing that what is incovenient is best ignored. Despite the uncontroverted Note on processing of the Bombay Textile Research Association and the reports and opinions of Dr. Patwardhan, Chika Ltd., Hickson & Dadajee Ltd., Hoechst Dyes & chemicals and I.C.I., the revisional authority chose to reject the petitioner’s submissions by adopting a strange line of reasoning as under :-
“Use of aluminium acetate is not necessary for after-treatment in dyeing of fabrics with sulphur dyes. H.C. Speal and E. W. K. Schwarz refer to improvement of washfastness of direct dyeings on rayon by finishing impregnation with necessary metallic Salt like aluminium acetate, Dr. Desirens does not refer to aluminium acetate at all. There is specific reference to its use in other books. On the other hand from the books “Encyclopaedia of Textiles” and “Textile Encyclopaedia” and other technical books it appear that “tent” and “Awnings” fabrics are made water repellant by was and aluminium acetate treatment. In the circumstances the Government of India cannot accept the submissions made by the party. By their nature of processing and usage of such fabrics which fall in the category of water repellant fabrics should be treated as `processed in any other manner’ and duty should be charged accordingly. When the Government of India is concerned with the nature of processing, the question of commercial knowledge of the fabric as water repellent or otherwise is not important.”
23. The so-called reason given by the revisional authority for holding that the use of the aluminium acetate is not necessary as an after treatment in the dyeing of fabrics with sulphur dyes, namely, because (i) S. P. Speel and E. W. K. Schwarz refer to improvement of washfastness by the employment of metallic salts like aluminium acetate and (ii) Dr. Desirens does not refer to aluminium acetate at all, is a strange reason. The conclusion thus drawn by the revisional authority is directly contrary to the uncontroverted reports and opinions of leading experts and consultants like Dr. Patwardhan, and others referred to earlier and for that matter the authors S. P. Speel and E. W. K. Schwarz themselves. The preponderance of opinion discloses the beneficial effect of working into the cloth cold wax emulsion and aluminium acetate. it is also imperative to do so. That, however, cannot militate from the fact that the working of wax emulsion and aluminium acetate is a part and parcel of the entire manufacturing process, without which the end-product would be useless and unmarketable. No manufacturer can be expected to deliberately produce an article which would be inferior in quality, durability and the like, if he can remove such defects by a device within the integral part of manufacture. Thus because the working of aluminium acetate in the cloth results in an improvement in the cloth, which would otherwise be useless and unmarketable, is no justification for holding that the use of aluminium acetate is not necessary. As disclosed by the reports and opinion and the Note of the Bombay Textile Research Association, its use is imperative and is a part and parcel of the general manufacturing process. The second reasoning given by the revisional authority, namely that Dr. Desirens does not refer to the aluminium acetate, also would not justify the finding that use of aluminium is not necessary in the teeth of overwhelming and unchallenged number of opinions to the contrary, which disclose in ample measure that its use as a part of the general manufacturing process is not only important but is also imperative, if the end- product is to be of any consequence and not worthless. Significantly enough, the revisional authority concedes that there is specific reference to its use in other books, yet strangely enough, has chosen to ignore those references. This is yet another illustration of the revisional authority proceedings on the footing that what is inconvenient is best ignored. To make assurance doubly sure that there was no typographical error, I enquired from both the learned Counsel who stated that the sentence reproduced by me from the above other, does appear in the revisional order, viz., that “there is specific reference to its use is other books”. It is curicus that the revisional authority should content itself by making this bald statements and yet not even make a passing reference as to what use has been referred to in other books. The reference to the Encyclopaedia of Textiles and Textile Encyclopaedia and “other technical books”, disclosing that tent and awning fabrics are made water repellent by wax and aluminium acetate treatment, can in no way militate from the contents of the uncontroverted reports and expert opinions of Dr. Patwardhan and others, ignored by the revisional authority and from the fact that by this general process of manufacture, the product happens to acquire a water repellent (not water-proof) quality is merely incidental. The finding of the revisional authority that by the nature of processing and usage of such fabrics they fall in the category of water repellant fabrics, is entirely misconceived. That the petitioner’s cloth does not fall within the category of water- repellant fabrics, is borne out by the report of the Chief chemist for whose opinion the matter was referred by the department. This is want the chief chemist has to say in his Report :-
“It is however, true and is described in technical books that (i) Water repellant fabrics are usually fabrics for apparel (for wearing) and (ii) as stated by the party the treatment of wax emulsion and aluminium acetate may also be for improving body and suppleness of the fabric and for improving the sales appeal.”
24. It is not in dispute that this particular product manufactured by the petitioner is not appeal and it was throughout the stand of the petitioner that the use of wax emulsion and aluminium acetate was for improving body and suppleness of the fabric. In the teeth of the finding of the Chief Chemist himself, it is different to understand on what bizarre reasoning the revisional authority could come to the categorical conclusion that by the nature of processing the petitioner’s fabric falls within the category of water repellent fabric. This conclusion has been arrived by the revisional authority contrary to the opinion expressed by the Chief Chemist himself. Further the revisional authority has failed to appreciate that in none of the entries in the Notification is there any reference to usage of category of the fabrics, say like water repellent fabrics. They are classified merely by the process by which they are manufactured. Neither expressly nor by implication can the concept of usage or a category can be imported into the plain reading of the entire in the Notifications. Thus the inclusion by the revisional authority of the facet of usage and a special category, namely, water repellent, is something extraneous to the entries themselves.
25. In the revisional order, undue emphasis has been placed on the fact that the petitioner’s product has a water repellent quality. That concept was not relevant for the purpose of the controversy between the parties and was thoroughly an unnecessary factor, needlessly dilated upon by the revisional authority to no purpose except thereby to hold willy-nilly that thereby the cloth should be treated as “processed in any other manner” What the revisional authority ignored or failed to appreciate was that while the water repellent quality of the petitioner’s fabric happened to be incidental to the process of manufacture, the use of was emulsion and aluminium acetate was for improving body and suppleness of the fabric and for improving the sales appeal. Mr. Setalvad is, therefore, correct when he says that the revisional authority has taken an extraneous consideration and has based its finding only on that extraneous and irrelevant consideration, namely, that the fabric manufactured by the petitioner was water repellent and hence should be treated as “processed in any other manner”.
26. Mr. Manjrekar, the learned counsel appearing on behalf of the respondents, strenuously urged that the working of the wax emulsion and aluminium acetate taken together have a certain significance, namely, that they are water repellent process and hence the product having been manufacture under a water repellent process, falls within the phraseology “processed in any other manner”. Mr. Manjrekar further urged that this twin process is not a part and parcel of the general dyeing process.
27. Taking Mr. Manjrekar’s second submission first, it is directly contrary to the uncontroverted reports and opinions of Dr. Patwardhan, Chika Ltd., Hickson & Dadajee Ltd., Hoechst Dyes & chemicals and I.C.I., to which no reference has even been made in the revisional order, as stated earlier. Mr. Manjrekar’s first submission cannot be accepted in view of the opinion given by the Chief chemist himself, namely, that as stated by the party (viz. the present petitioner), the treatment of wax emulsion and aluminium acetate may also be for meeting the body and suppleness of the fabric and for meeting the sales appeal. This opinion of the Chief Chemist demolishes Mr. Manjrekar’s contention which has nothing to attract itself except the assertion with which it was made.
28. Mr. Manjrekar next urged that as the petitioner’s cloth is used for tents and awnings and hence have special purpose, that is the reason why the after-treatment is given by the working of cold wax emulsion and cold aluminium acetate. in view of the opinion expressed by the Chief Chemist, this contention is in the nature of conjecture, not borne out by the record. Mr. Manjrekar relied on a letter from E. H. Daruwalla, Director, Department of Chemical Technology, to the petitioner-company, were it is stated that –
“………when the dyeings are `to be used for specific purposes, an after-treatment is given to these dyeings to meet the requirements for such end uses. For instance, if the dyeing is meant for out-door exposures and the dye originally used ‘ is not very fast to light, an after-treatment of the dyeing with suitable compounds becomes necessary to improve the light- fastness. Same reasoning holds good with regard to other types of after-treatment viz. for improving resistance to mildew and micro organisms, fastness to washing and soaping, stability during storage, etc.”
29. This opinion of E. H. Daruwalla can be of no assistance to the respondent. Merely because an improvement is made in the body and suppleness of the fabric, would not render the cloth an “processed in any other manner” as long as the method or process by which the improvement is made, is a part of the general process of manufacture, which it is in this case, as has been predominantly brought in the forefront by the numerous opinions and reports not even considered by the revisional authority.
30. Mr. Manjrekar next urged that even though the reports and opinions of Dr. Patwardhan, Chika Ltd., Hickson & Dadajee Ltd., Hoechst Dyes & chemicals and I.C.I. have not been referred to in the revisional order, the revisional authority had in fact considered them. In support of this contention, Mr. Manjrekar invited my attention to several passages in the revisional order. It is unnecessary to advert to any of those passengers for the simple reason that these is nothing in those passages to substantiate Mr. Manjrekar’s contention which at best is in the nature of an ipse dixit. However, assuming for the sake of argument, that they had been considered by the revisional authority, in that event, surely, it was for the revisional opinion which were not only relevant but the correctness whereof also had at no time been disputed by the department itself. Thus, looked as from any angle the fact that these reports and opinions were totally ignored by te revisional authority, goes a long way in disclosing not only that the revisional order was passed on a single extraneous circumstance, viz., the water- repellent quality incidentally acquired by the fabric, but also that there has been a total failure of application of mind on the part of the revisional authority.
31. Mr. Manjrekar next urged that Dr. Patwardhan, Chika Ltd., Hickson & Dadajee Ltd., Hoechst Dyes & chemicals and I.C.I., should have filed affidavits and that they had not cited any authorities in support of their respective reports. These contentions must be advanced to be rejected, in view of the fact that these reports and opinions of experts like Dr. Patwardhan, and others had never been disputed by the department. Mr. Setalvad is right when he says that even if at the personal hearing given to the petitioner, it had been indicated that affidavits of these parties was required, the same would have been furnished. In any event, if such was the ground for non- acceptance of these reports by the revisional authority, surely, it should have stated so in its order, which it conceivably could not, as these reports and opinions were never challenged.
32. Mr. Manjrekar relied on the decision of the Supreme Court in Zora Singh v. J. M. Tandon, , where it was held that the Court should relied on by the Tribunal are extraneous. This decision can be of no assistance to the respondent, inasmuch as that decision does not go as far as to hold that even if the impugned order is based entirely on extraneous reasons, interference is uncalled for. In the matter before me, the only ground on which the revisional order is based is an extraneous ground, viz. the ground of water-repellency and ignoring the fact that it was incidentally acquired during the general process of manufacture.
Mr. Manjrekar also relied on the decision in V. V. Iyer v. Jasjit Singh, , where it was held that the correctness of the conclusions reached by the Customs authorities in adopting one reasonable view as against another while interpreting an entry under a taxation law cannot be disturbed. This is yet another decision which can possibly be of no assistance to the respondent, inasmuch as in the matter before me, it can hardly be said that in the teeth of the uncontroverted reports and opinions, and by completely ignoring the same, the conclusion arrived at by the revisional authority can be said to be reasonable. In the light of the discussion earlier, it is not difficult to come to the conclusion that the view taken by the revisional authority, based on an extraneous circumstances, and by ignoring the uncontroverted reports and opinions of Dr. Patwardhan and others, is a view which no reasonable person could take and discloses utter non-application of mind, if not sheer perversity.
33. In the result, the entry applicable in the cas of te petitioner is entry (b) in either of the Notifications and not entry (d) in the first Notification or entry (f) in the second Notification.
34. An alternative contention was urged on behalf of the petitioner, viz., that in any event, the first demand notice dated 9th December, 1968 is time-barred. This contention now does not survive. Since, however, it was urged, I may as well deal with it and get it out of the way. The first demand notice dated 9th December, 1968 was issued under Rule 10A and not under Rule 10. Rule 10 pertains to recovery of duties or charges short levied or erroneously refunded and provides for payment to be made with 3 months from the date on which the duty or charge was paid or adjusted. Rule 10A pertains to the residuary powers for recovery of sums due to Government and prescribes no period for recovery. The residuary Rule 10A can only be invoked if Rule 10 does not apply. In this case, assessment having been made, it is Rule 10 that would be applicable and not Rule 10A which is applicable in cases where no assessment has been made. Therefore, Mr. Setalvad is correct when he says that the demand notice could not have been issued under Rule 10A but only under Rule 10, with the result that the entire claim contained in the first demand notice, except the last sum of Rs. 1,505/-, would be time-barred.
35. In the result, the order passed by the appellate authority is sustained and the impugned revisional order is set aside. The petition is allowed in terms of prayers (a) and (b). Regarding the petitioner’s refund application dated 3rd December, 1973, for Rs. 5,46,850/-, Mr. Setalvad states that this amount has been paid under protest. Mr. Manjrekar states that the authority will verify whether this amount of Rs. 5,46,850/- was paid under protest and, if so, will, after verifying the correctness of the amount, refund to the petitioner the amount refundable within three months from today. There will, therefore, be an order that after verifying whether the amount of Rs. 5,46,850/- was paid under protest, and after verifying the correctness of the amount, the authority do refund to the petitioner-company within three months from today the amount refundable on the petitioner’s refund application dated 3rd December, 1973.
36. The respondent shall pay to the petitioner the costs of this petition. Rule is made absolute accordingly.
