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Judgment
S.H. Kapadia, J.—The short point for determination in this Petition is whether bare copper wire of more than 14 gauge and bare aluminium wire finer than 10 guage fall under T.I. 33-B in Central Excise Tariff, 1978 (as it then stood).
The above point for determination arises in the following circumstances.
(a) The Petitioner-Company manufactures bare copper wire finer than 14 gauge and bare aluminium wire finer than 10 guage (hereinafter referred to, for the sake of brievity, as "the said products"). At this stage it may be clarified that the expression ''bare'' is to be read in contradistinction to insulated copper wire or aluminium wire, as the case may be.
(b) In April, 1962, T.I. 33-B was inserted in the Central Excise Tariff and it reads as under:
33-B. Electric wires and cables, all sorts, not otherwise specified -
(i) Insulated wires and cables of copper aluminium or other metals and alloys, whether sheathed or unsheathed, the conductor of any core of which, not being one specially designed as a pilot core, has a sectional area not exceeding 1.5 square millimeter in the case of copper, or not exceeding 2.5 square millimeters in the case of aluminium or of not more than equivalent conductivity as copper in the case of other metals and alloys.
(ii) All others.
(b) On 4th July, 1962, Bombay Central Excise Collectorate issued a Trade Notice by which it was clarified that bare copper wire finer than 14 guage are hardly ever used as electric conductors without insulation and, therefore, no excise duty should be recovered under T.I. 33-B.
(c) By another Trade Notice dt. 7th September, 1963, it was further clarified that bare aluminium wire, finer than 10 guage was outside the purview of T.I. 33-B.
(d) Accordingly, in July, 1973, the Petitioners herein filed their Classification List under which the above products were shown as non-excisable under Item 33-B.
(e) Similarly, in December, 1974, fresh Classification List came to be filed and approved indicating that the above products were non-excisable under Item 33-B. Similarly, in May, 1975, fresh Classification List came to be filed and approved on the above basis. In the circumstances, the Petitioners cleared the goods without payment of duty in respect of the above two products.
(f) On 1st March, 1975, T.I. No. 68 (being the residuary item belonging to non-specified category) came to be inserted in the Central Excise Tariff. Consequently, dispute arose regarding Classification of the said products as to whether the said products fall under T.I. 33-B or whether they fall under T.I. 68, as a residuary item. According to the Respondents, the products came under T.I. 68, whereas according to the Petitioners the said products came within the purview of T.I. 33-B, of the Central Excise Tariff, as it then stood.
(g) On 31st October, 1977, Show Cause Notice was issued demanding excise duty for the period 14th February, 1976 to 19th August, 197 (illegible) in respect of the said products on the basis that the said products came under T.I. 68 and not under T.I. 33-B as contended by the Petitioners.
(h) However, on 14th February, 1978, a Trade Notice came to be issued stating that the said products were covered under T.I. 33-B and not under T.I. 68. In view of the said Trade Notice dt. 14th February, 1978, proceedings relating to classification of the products, referred to hereinabove on the basis that the T.I. 68 applied, came to be dropped. On 14th February, 1978, by a Trade Notice No. 24/78, the products came to be classified under T.I. 33-B. By a Show Cause Notice dt. 20th November, 1978, demand of excise duty amounting to Rs. 16,64,972.21 came to be raised on the Petitioners in respect of the period 1st March, 1973 upto 26th February, 1978, in respect of the said products under T.I. 33-B. This Show Cause Notice proceeded on the basis that the products were classifiable under T.I. 33-B and as the Petitioners have failed to pay excise duty for the period from 1st March, 1973 to 26th February, 1978 under T.I. 33-B, the Petitioners were liable to further proceedings.
(i) By letter dt. 5th February, 1978, the Petitioners gave a reply to the above Show Cause Notice pointing out that although the said products were covered by T.I. 33-B in view of the Trade Notice dt. 4th July, 1962, and 7th September, 1963, they were not bound to pay excise duty under T.I. 33-B as the said Trade Notices clearly clarified that bare copper wires of more than 14 guage and bare aluminium wires finer than 10 guage were not used as electric wires/conductors without insulation and in the circumstances, it was decided that duty will not be recovered under the said T.I. 33-B. In view of the said Trade Notice, the Petitioners claimed that the Show Cause Notice was liable to be set aside.
(j) However, by Order dt. 11th February, 1983, the Asstt. Collector of Central Excise, came to the conclusion that the Show Cause Notice dt. 20th November, 1978, raising a demand for the period 1st March, 1973 to 26th February, 1978, was correctly raised upon the Petitioners inasmuch as according to the Asstt. Collector of Central Excise, the Petitioners were guilty of suppression of material facts and in the circumstances, the demand was correctly raised. This Order dt. 11th February, 1983, further proceeds to state that the above Show Cause Notice dt. 31st October, 1977, by which demand of excise duty was raised on the Petitioner for the period 14th February, 1976 to 19th August, 1976 in respect of the said products falling under Item 68 cannot be proceeded with inasmuch as the said products came under T.I. 33-B and not under T.I. 68. This Order dt. 11th February, 1983, therefore, indicates that even according to the Deptt., the demand raised for the period 14th February, 1976 to 19th August, 1976, was wrongly raised on the Petitioner as the products came under T.I. 33-B and not under T.I. 68.
(k) However, the Petitioners herein preferred Writ Petition No. 625 of 1983, challenging the confirmation of the Order of the Show Cause Notice dt. 20th November, 1978, vide impugned order of the Asstt. Collector of Central Excise dt. 11th February, 1983, principally on the ground that in view of the above facts and particularly in view of the fact that the Deptt. was not clear about the applicability of T.I. 33-B as also T.I. 68, the Petitioners could not be held guilty of suppression of material facts. The Petitioner also submitted that in view of the fact that the Deptt. had approved the Classification Lists of 1973,1974 and 1975, the Petitioners were not guilty of suppression of material facts and accordingly, the impugned Order dated 11th February, 1983, came to be challenged.
(l) By judgment and Order passed by this Court in Writ Petition No. 625 of 1993 decided on 2nd April, 1993, this Court came to the conclusion that in view of the facilitating stand of the Deptt. from time to time, Show Cause Notice dt. 20th November, 1978 and the impugned Order dt. 11th February, 1983, could not have been issued under the Central Excise Rule No. 10, as it then stood, as there was no question of suppression of material facts on the part of the Petitioner and in the circumstances, this Court came to the conclusion that the Proviso to Rule 10 of the Central Excise Rules did not apply. By the said judgment it was, however, clarified by this Court that the question with regard to refund of the duty paid by the Petitioners for the period 1st August, 1976 to 31st August, 1978, was expressly kept open and it was required to be decided in the present Writ Petition. It may be stated at this stage that in the present Petition, the Petitioners have sought to challenge the Order passed by the Asstt. Collector of Central Excise rejecting the Petitioners refund claims for the abovementioned period vide Order dt. 29th April, 1983, (which is the subject matter of the present Writ Petition).
(m) Accordingly, to complete the chronology of events, it may be pointed out that the Petitioners had made refund claims seeking refund of the duty paid by them under protest under T.I. 68 for the period 1st August, 1976 to 31st August, 1978, amounting to Rs. 3,81,087.93. The said refund claim was made by the Petitioner on 10th October, 1979.
(n) On 17th November, 1980, Section 11B came into force and accordingly, the Petitioners also preferred fresh refund claims in accordance with Section 11B of (he Central Excise Act. The Petitioners thereafter called upon Respondent No. 2 to decide their refund claims in accordance with law.
(o) By Order dt. 9th November, 1982, Respondent No. 2 rejected the refund claims on the ground that the said claims were time barred.
(p) On 7th February, 1982, the Petitioners herein preferred Writ Petition No. 346 of 1983, seeking to challenge Order dt. 9th November, 1982, by which the Petitioners claim for refund came to be rejected as time barred.
(q) By Order dt. 20th February, 1983, the said Writ Petition No. 346 of 1983 came to be allowed at the stage of admission and Order dt. 9th November, 1982, came to be quashed and the second Respondent herein was directed to pass a fresh Order in accordance with law and on merits within four weeks.
(r) Accordingly, by Order dt. 29th April, 1983, the second Respondent herein on merits rejected the refund claims filed by the Petitioners and consequent thereupon, present Petition was filed on 8th June, 1983.
(s) By impugned order dt. 29th April, 1983, Respondent No. 2, came to the conclusion that it was true that the issue of classification was settled in respect of the said products in the year 1978-79, when it was held that the said products came under T.I. 33-B and not under T.I. 68, but the said change was only prospective in nature and in the circumstances, it was held that for the period prior to 1978 in respect of the said products the excise duty was leviable under T.I. 68. It was further held that bare aluminium wire and bare copper wire were classifiable under T.I. 33-B only after 14th February, 1978 and 14th June, 1979, respectively and that prior thereto the said products were classifiable under T.I. 68. On the basis of the said reasoning, the Asstt. Collector, Central Excise, rejected the refund claims filed by the Petitioners.
(t) At this stage, it may be pointed out that by Tariff Advice No. 7/83 issued by the Board of Central Excise on 30th April, 1983, the Board came to the conclusion, after considering the position prevailing from 1962, that the earlier Tariff Advices No. 41/77 dt. 30th November, 1977 and No. 14/79 dt. 7th April, 1979 by which the above products were classified under T.I. 33-B, were wrongly classified and that the said products were classifiable under T.I. 68. In other words, by the Tariff Advice No. 7/83 dt. 30th April, 1983, the Board came to the conclusion that the said products were classifiable under T.I. 68 right from 1st March, 1975.
In the circumstances, as stated hereinabove, the short point which requires consideration is whether the Petitioners were entitled to refund of Rs. 3,81,087.93 of excise duty paid during the period 1st August, 1976 to 31st August, 1978, under protest and on the basis that T.I. 33-B of the Central Excise was applicable and not T.I. 68.
Mr. Sethna, Ld. Counsel appearing on behalf of the Petitioners submitted that the said products squarely came within the admit of T.I. 33-B and not T.I. 68. He further submitted that by Trade Notice dt. 4th July, 1962, issued by the Central Excise Collectorate, the position was clarified to the effect that bare copper wires of more than 14 guage are hardly ever used as electric conductors without insulation and, therefore, no excise duty should be recovered under T.I. 33-B. It was also further pointed out that the Trade Notice dt. 7th September, 1963, which referred to bare aluminium wire also made the position clear to the effect that bare aluminium wire finer than 10 guage fell outside the purview of T.I. 33-B. It was on the basis of the above two Trade Notices that the Petitioners filed Classification Lists in 1973,1974 and 1975 which were also approved. Mr. Parikh further pointed out that even after T.I. 68 came to be introduced in the Central Excise Tariff with effect from March 1, 1975, the Deptt. withdrew the Show Cause Notice dt. 31st October, 1977, by which demands were purported to be raised on the Petitioners for the period 14th February, 1976 to 19th August, 1976, on the footing that in view of the Trade Notice dt. 14th February, 1978, the said products fell under T.I. 33-B and not under T.I. 68. Mr. Parikh further submitted that even the Order dt. 11th February, 1983, passed by Respondent No. 2 herein by which Show Cause Notice dt. 20th November, 1978, raised a demand of excise duty from 1st March, 1973 to 26th February, 1978 proceeded on the basis that T.I. 33-B was applicable and not T.I. 68. Mr. Parikh further submitted that even the Trade Notice dt. 14th February, 1978, in respect of bare aluminium wire and Trade Notice dt. 14th June, 1979, in respect of bare copper wire shows that the said products were classifiable under T.I. 33-B and not under Tariff 68. In other words, the Ld. Counsel for the Petitioners submitted that the events right from 1962, the Trade Notices as also the stand of the Deptt. was that T.I. 33-B applied and in the circumstances, the residuary Item 68 will not apply to the facts of the present case. Mr. Parikh further submitted that the Trade Notices referred to hereinabove dt. 4th July, 1962, and 7th September, 1963, read with Classification Lists which were approved during the period 1973,1974 and 1975 clearly show that T.I. 33-B was applicable but in respect of the above products, the Deptt. took the view by placing reliance on the Trade Notice dt. 4th July, 1962 and 7th September, 1963, that the said products, although covered by T.I. 33-B, are hardly ever used as electric conductors without insulation and, therefore, no excise duty should be recovered under T.I. 33-B. It was submitted that the said Trade Notice clearly indicate that the said products were covered by T.I. 33-B. In the circumstances, the Ld. Counsel submitted that Respondent No. 2 erred in rejecting the refund claims preferred by the Petitioners, on the basis that T.I. 68 alone was applicable and not T.I. 33-B.
Mr. Sethna, the Ld. Counsel appearing on behalf of the-Deptt., however, submitted that prior to 1975, the above products did not fall under T.I. 33-B. He further submitted that a bare reading of the Trade Notice dt. 7th September, 1963, clarified that the said products were outside the purview of T.I. 33-B and, therefore, what was clarified was that the said products were non-excisable. Mr. Sethan further submitted that in the circumstances, if the said Trade Notice is correctly read, it indicates that what was purported to be clarified was that the said products were non-excisable and that they did not fall within the purview of T.I. 33-B. According to Mr. Sethna, once it is held that the said products did not fall within the purview of T.I. 33-B then after 1st March, 1975, when residuary Item 68 came to be introduced, the said products would squarely fall under Item 68 and in the circumstances; the said products became excisable from 1st March, 1975 under T.I. 68. Mr. Sethna, in this connection, also relied upon the Trade Advice dt. 30th April, 1983, and submitted that the entire controversy has now been set as rest by the said Tariff Advice. He further submitted that the Board of Central Excise has now come to the conclusion finally that the said products were classifiable under T.I. 68 and not 33-B and the said Advice overruled the earlier Tariff Advice issued by the Board dt. 20th November, 1977 and 7th April, 1979. Accordingly, it was submitted that right from 1st March, 1975, the said products were classifiable under T.I. 68. Mr. Sethna the Ld. Counsel for the Deptt. contended that prior to 1975, the said products were non-excisable and they fall outside the purview of the T.I. 33-B. However, it was contended that in view of the Trade Advice dt. 30th April, 1983, the products became excisable from 1st March, 1975 under T.I. 68. Mr. Sethna, however, conceded that by way of Trade Advice, products cannot be classified under T.I. In the circumstances, we have also examined the true scope of T.I. 33-B.
As indicated hereinabove, the first vital question which we are required to examine is the scope of the Trade Notice dt. 4th July, 1962 and 7th September, 1963. A bare reading of the Trade Notice dt. 4th July, 1962, shows that it has been issued by the Excise Collectorate in respect of bare copper wire of more than 14 guage whereas Trade Notice dt. 7th September, 1963, issues classification in respect of bare aluminium wire of more than 10 guage. Further reading both the Trade Notices, the position which emerges is that under T.I. 33-B, the description deals with electric wires and cables of all sorts. Item 33-B, as it then stood, consists of two sub-clauses. Sub-Clauses (i) of Item 33-B deals with insulated wires and cables of copper whereas Sub-clause (ii) deals with all other types of wires. There is an explanation also added to the said Item 33-B which lays down that the expression "electric wires and cables of all sorts" used in Item 33-B shall not include square or rectangular conductors whether insulated or not. A bare reading of Item 33-B of the Tariff entry alongwith the Trade Notice dt. 4th July, 1962 and 7th September, 1963, clearly indicates that what was contemplated by the clarification was that bare copper wire of more than 10 (illegible) guage and bare aluminium wire of more than 10 guage were covered under Item 33-B, but the Collectorate came to the conclusion that bare copper wires and bare aluminium wires of specified gauges were hardly ever used in the trade as electric conductors without insulation and it was in these circumstances, that no duty was directed to be recovered under T.I. 33-B. Reading both the Trade Notices together, the intention was clear that although the Item was excisable under T.I. 33-B, the Collectorate came to the conclusion that the said products were hardly ever used as conductors without insulation and, therefore, no excise duty is liable to be recovered. The said Trade Notice does not contemplate any exemption. What it contemplates is that although T.I. is attracted, the duty should not be recovered as in trade the said products were hardly ever used as electric conductors without insulation. Much has been argued with regard to the second Trade Notice dt. 7th September, 1963, in which by way of clarification it has been mentioned that bare aluminium wires of more than 10 guages were outside the purview of T.I. 33-B. On the basis of the above clarification in Trade Notice dt. 7th September, 1963, Mr. Sethna, the Ld. Counsel for the Deptt. contended that what was clarified was that the said products were not excisable and, therefore it was clear that according to the Deptt., T.I. 33-B was not applicable. We do not find any merit in the said contention. As stated hereinabove, Trade Notices dt. 4th July, 1962, and 7th September, 1963 must be read together. Further, as stated hereinabove, Trade Notice dt 4th July, 1962, expressly deals with bare copper wires whereas Trade Notice dt. 7th September, 1963, deals with bare aluminium wires and, therefore, if both the Trade Notices are read together it is clear that what was contemplated was that although T.I. 33-B was applicable, duty should not be recovered as the said products of a specified guage only were hardly ever used as electric conductors in the trade and, therefore, duty should not be recovered under T.I. 33-B. This position is also borne out by the subsequent stand of the Deptt. As stated, hereinabove, the Classification Lists dt. July, 1973, December, 1974 and May, 1975 which were filed by the Petitioners, by placing reliance on the above two Trade Notices dt. 4th July, 1962 and 7th September, 1963, came to be approved by the Deptt. expressly on the footing that the above products were not used as electric conductors without insulation. Similarly, as stated hereinabove, the Show Cause Notice dt. 31st October, 1977, by which excise duty was sought to be demanded for the period 14th February, 1976 to 19th August, 1976, came to be withdrawn on the basis that the said Show Cause Notice was issued wrongly under T.I. 68 and what was applicable was T.I. 33-B (vide Order dt. 11th February, 1982). In view of the above facts and the Trade Notice referred to hereinabove, it is clear that even according to the Respondents, the said products fall under T.I. 33-B and not under T.I. 68. It may also be relevant to note that by the above Trade Notice No. 24/78 dt. 4th February, 1978, as also by Trade Notice dt. 14th June, 1979, it was clarified by the Collectorate that what was applicable was T.I. 33-B. These two Trade Notices also proceed on the basis that T.I. 68* In the circumstances, the above facts clearly show that right from 1962 constantly the said products were classifiable and in fact they were classified under T.I. 33-B and not T.I. 68
Apart from the above, we may also point out that even a bare reading of T.I. 33-B indicates that it refers to electric wires and cables, all sorts, not otherwise specified. It deals with two parts, the first deals with insulated electric wires and cables and the second part deals with all other types of electric wires and cables. At this stage it may also be relevant to note that the above mentioned Trade Advice dt. 30th April, 1983, by which the Board accepted the opinion of D.G.T.D. specifies that bare aluminium and copper wires are used in electrical industry as insulated cables and wires, over-head conductors and for earthing. The said Trade Advice dt. 30th April, 1983, specifically lays down the following types of applications in respect of copper wire 14 SWG and aluminium wire 10 SWG and finer as follows:
(a) As a single wire for electrical application provided it is insulated by various materials like PVC, rubber, nylon etc.
(b) Bare conductor for overhead transmission provided it is a stranded conductor (It consists of more than one wire of the same size).
(c) In earthing application as per code of practice the round copper or aluminium conductors are used provided they are stranded. Only bare strips are used in single for earthing.
The above three applications of bare copper and aluminium wires clearly show that they are capable of being used as conductors for overhead transmission and also for earthing. Once these two applications are taken into account, it is clear that T.I. 33-B would squarely apply to the products in question. In the circumstances, we fail to appreciate the contention of the Ld. Counsel for the Deptt. that the said products are classifiable under T.I. 68. If is well settled principle of interpretation as laid down by catena of decisions that T.I. 68 is a residuary item. Once T.I. 33-B Applies, as in the present case, then T.I. 68 has no application. In the circumstances, even on interpretation and bare reading of T.I. 33-B, it is clear that in the present case the T.I. which is applicable in T.I. 33-B and not T.I. 68.
In view of what is stated hereinabove, the second Respondent has erred in coming to the conclusion that the petitioners were not entitled to claim refund in respect of duty paid by them for the period 1st August, 1976 to 31st August, 1978. Respondent No. 2 has not considered the above facts and particularly, the true scope of the Trade Notice dt. 4th July, 1962, 7th September, 1963 and 14th February, 1978. The second Respondent has also not considered the various Show Cause Notices and Orders passed by the Deptt. from time to time which clearly indicates that T.I. 33-B would alone apply to the facts of the present case.
In the circumstances, the impugned order passed by the Respondent No. 2 dt. 18th April, 1983, is liable to be set aside. The Petitioners are eligible for refund of duty on the above two products for the period 1st August, 1976 to 31st August, 1978, on the basis that T.I. 33-B applies. The said refund shall be payable to the Petitioners, if otherwise admissible in accordance with law. Accordingly, Respondent No. 2 is directed to decide the said question of admissibility of claim within 12 weeks from today. In the event of his coming to the conclusion that the claim of the petitioner is otherwise admissible, then Respondent No. 2 is directed to refund the said amount forthwith. Consequently, the Bank Guarantee furnished by the Petitioners at the time of admission, of the present matter will continue for a period of 15 weeks from today.
In the light of what is stated hereinabove, the writ Petition is disposed of with no order as to costs.