ORDER
1. The question that arises for consideration in these writ petitions is whether the goods described as tyre cord fabric of high tenacity yarn of polyamides or polyester. In Heading No. 59.02 in Chapter 59. Section XI of Central Excise Tariff Act, 1985, refer to the processed fabric. Section XI of the Act is titled Textiles and Textile Articles. The chapter heading of Chapter 59, is 'Impregnated, coated, covered or laminated, textile fabrics : Textile Articles of a kind suitable for industrial use'.
2. 'High Tenacity Yarn' is defined in Note 4 of the notes to Sec. XI as 'For the purposes of this Section, 'High tenacity yarn' means yarn having a tenacity, expressed in cN/Tex (Centrinetions per tex) greater than the following :
Single yarn of nylon or other polyamides, or ofpolyesters 60cN/texMultiple (folded) or cabled yarn or nylon orother polymides or of polyesters 55cN/texSingle multiple (folded) or cable yarn ofviscose rayon. 27cN/tex
3. Tyre cord fabric is also regarded as a rubberised fabric, as is evident from Heading No. 59.05 in Chapter 59 Section XI. That heading reads thus : 'Rubberised Textile fabrics, other than those of heading 59.02'.
4. Note 3 in Chapter 59 defines 'rubberised textile fabric' as -
(a) Textile fabrics impregnated, coated, covered or laminated with rubber -
(i) weighing not more than 1,500 gm2; or
(ii) weighing more than 1,500 gm2 and containing more than 50 percent by weight of textile material;
(b) Fabrics made from yarn, strip or the like impregnated, coated, covered or sheathed with rubber, of heading No. 56.04 :
(c) Fabrics composed of parallel textile yarns, agglomerated with rubber irrespective of their weight per square metre; and
(d) Plates, sheets or strip of cellular rubber combined with textile fabric, where the textile fabric is more than mere reinforcement, other than quilted textile products.
5. Thus, the Act treats tyre cord fabric made of high tenacity yarn as a textile fabric which is rubberised and is suitable for industrial use; such fabric having been impregnated, coated, covered or laminated, with rubber.
6. Goods of the description specified in Heading 59.02 have been exempted from the whole of the amount of duty leviable thereon (Basic duty of Rs. 10/- per kg.) by Notification No. 5/87-C.E., dated 15-1-1987. Exemption from additional duty of excise has also been granted for 'processed' tyre cord fabrics falling under Heading 59.02 provided such fabrics had been manufactured from unprocessed tyre cord fabric on which the additional duty had been paid by Notification 250/77-C.E., dated 23-7-1977 as amended by Notification 79/86-C.E., dated 10-2-1986.
7. The petitioner who is a manufacturer of tyre cord fabric of high tenacity yarns of polyester rayon and nylon, is aggrieved by the impugned order of the first respondent in W.P. 7793/92 passed on 2-4-1992 and that of the first respondent in W.P. 7588/93 passed on 26-6-1992 classifying processed tyre cord warp sheet of other than high tenacity yarn, under Heading 59.05 and the demand made for payment of duty on such fabrics.
8. The petitioner contends that it is only unprocessed tyre cord fabric that is the subject matter of Heading 59.02 and on the petitioner paying the excise duty if any levied at that stage, the petitioner is not liable to pay any duty on the processed fabric.
9. The high tenacity yarn required by the petitioner for the manufacture of this fabric is imported either by it or by tyre manufacturers. The single yarn so imported is converted into multiple yarn resulting in reduction in tenacity. The warp sheets or fabric is made of the multiple yarn. This fabric cannot be used as re-inforcement material in the manufacture of tyres without further processing. It is the case of the petitioner that it undertakes such processing at the request of tyre manufacturers, on job work basis according to the specifications given by the tyre manufacturers. The processing so done is by dipping the fabric in solution of which one of the main ingredients is latex. The petitioner has stated that it supplies tyre cord fabric of high tenacity yarn to all the leading tyre manufacturers in the country.
10. The dispute between the petitioner and the respondents regarding the scope of Tariff Heading 59.02 arose as a result of an inspection carried out by the officers of the respondent department when they found on examination of the register 'summary of tyre cord cases' maintained by the petitioner in its Central Testing Laboratory; that the tenacity of the yarn after processing of the fabric in some cases had fallen below the specifications laid down in Note 4 Sec. XI of the Act. The authorities by a show cause notice dated 17-12-1990 asked the petitioner to show cause as to why tyre cord fabric of other than high tenacity yarn should not be classified under Tariff Heading 5905.20 and why the differential duty of Rs. 36,48,983.01 should not be demanded from 1-1-1987 to 7-10-1990. By another notice dated 3-4-1991, petitioner was called upon to show cause when it should not be called upon to pay Rs. 99,573.90 for such goods cleared during the period 8-10-1990 to 20-3-1991. It is not in dispute that the demands so made are only in respect of processed tyre cord fabric made of yarn, whose tenacity, as found by the tests conducted by the petitioner after the processing, was less than that prescribed.
11. After considering the reply given by the petitioner, as also the materials produced before the authorities, the first respondent, Collector of Central Excise, by his order dated 2-4-1992 held that petitioner is liable to pay a sum of Rs. 36,48,983.01 as duty for the period from 1-7-1987 to 7-10-1990. The Collector also imposed a penalty of Rs. 1,00,000/-. Writ Petition No. 7793/92 is filed against that order. For the subsequent period 8-10-1990 to 29-2-1992, the Assistant Collector by his order dated 26-6-1992 has made a demand for payment of duty of Rs. 1,41,703/-. Writ Petition 7588/93 has been filed against that order. As the basis on which the impugned orders were made, as also the grounds urged in these petitions are common, these two writ petitions are disposed off by this common order.
12. Mr. Govind Swaminathan, learned senior counsel for the petitioner urged that the impugned orders of the Collector are patently without jurisdiction in as much as the authorities have proceeded to demand duty in respect of a product which is not exigible to excise duty at all under any of the heading in the Act and the authorities have acted perversely in holding that the Entry 59.02 applies to processed tyre cord fabric though the description of the goods given in that entry does not refer to the processed tyre cord fabric.
13. Mr. Jayachandran, learned counsel for the Revenue raised a preliminary objection as to the maintainability of these petitions. He submitted that the petitions have to be dismissed in limine no in view of the fact that the petitioner has, adequate and efficacious alternative remedy. It was urged that the matter relates to one of proper classification of the goods in respect of which the authorities constituted under the Act, are possessed of sufficient expertise that the special Bench of the CEGAT would be considering appeals regarding proper classification of goods and even after determination so made by the CEGAT the petitioner would have further remedy by way of appeal to the Supreme Court under Section 351 of the Central Excise and Salt Act.
14. Mr. Govind Swaminathan, learned senior counsel for the petitioner in answer to the preliminary objection urged that the scope of this Court's powers under Article 226 is not whittled down in any manner by reason of the provision for statutory appeals and it is not only permissible but necessary for this Court to decide the issues raised in these petitions wherein the principal issue is the true scope of the Tariff heading. If the authorities are found to have acted perversely in including within the scope of the Tariff headings goods which do not ex facie fall within the scope of the entry then notwithstanding the availability of the alternative remedy, this Court should decide the question on merits. It was further urged that the scope of the entry is a question of law which is more appropriately determined by this Court than by the appellate authority under the Act.
15. In support of this submission, Mr. Govind Swaminathan, relied on the following decisions.
16. In the case of A. V. Venkateswaran Collector of Customs Bombay v. Ramchand Sobhraj Wadhwani and Another - : 1983ECR2151D(SC) a Constitution Bench of the Supreme Court held that :
'The wide proposition that the existence of an alternative remedy is a bar to the entertainment of a petition under Art. 226 of the Constitution unless (1) there was complete lack of jurisdiction in the officer or authority to take the action impugned, or (2) where the order prejudicial to the Writ petitioner has been passed in violation of the principles of natural justice and could, therefore be treated, as void or non-est and that in all other cases, Courts should not entertain petitions under Art. 226, or in any event not grant any relief to such petitioners cannot be accepted. The two exceptions to the normal rule as to the effect of the existence of an adequate alternative remedy are by no means exhaustive, and even beyond them a discretion vests in the High Court to entertain the petition and grant the petitioner relief notwithstanding the existence of an alternative remedy. The broad lines of the general principles on which the Court should act having been clearly laid down, their application to the facts of each particular case must be necessarily be dependent on a variety of individual facts which must govern the proper excise of the discretion of the Court, and in a matter which is thus pre-eminently one of discretion it is not possible or even if it were if would not be desirable to lay down inflexible rules which should be applied with rigidity in every case which comes up before the Court.'
That was a case relating to interpretation of a tariff entry. The Supreme Court at para 13 of that Judgment, held that considering the facts of that case, the High Court had not exercised its discretion improperly in entertaining the Writ application or granting the relief prayed for.
17. In the case of L. Hirday Narain v. Income Tax Officer, Bareilly - : [1970]78ITR26(SC) as case arising under the Income Tax Act, the Supreme Court observed :
'We are unable to hold that because a revision application could have been moved for an order correcting the order of the Income Tax Officer under Section 35, but was not moved, the High Court would be justified in dismissing as not maintainable the petition, which was entertained and was heard on merits.'
18. In the case of Dunlop India Ltd. & Madras Rubber Factory Ltd. v. Union of India and others - : 1983(13)ELT1566(SC) , the Supreme Court held that the Court would not ordinarily determine under which a tariff item of a particular article falls and that question is left to the authorities entrusted with the subjects but where the very basis of the reason for including the article under a residuary head in order to charge higher duty is foreign to a proper determination of this kind, the Court will be leath to say that it will not interfere. That case had come before the Court by way of appeal against the order of the Central Government.
19. Learned counsel also relied on a decision of a Division Bench of this Court in the case of English Electric Co. of India Ltd. v. Superintendent Central Excise and Others - 1979 (4) E.L.T. (J 36) wherein this Court held that
'The scope of an entry in the first schedule to the Central Excises and Salt Act, 1944 is always a question of law and whether it applies to a given article is also a mixed question of law and fact, and such a question, therefore, falls within the powers of the High Court under Art. 226 of the Constitution.'
20. In the case of Assistant Collector of Central Excise, Customs House, Pondicherry and Another v. New Horizon Sugar Mills (P) Ltd., Pondicherry - [1980 (6) E.L.T. 10 (Mad.)] : : 1980(6)ELT10(Mad) a Division Bench of this Court held that if the writ petition does not involve any investigation into controverted questions of fact but merely involves an interpretation of a statutory notification of the Government of India there is no bar for granting relief under Art. 226 of the Constitution.
21. In the case of Union of India and Others v. TSR & Co. - [1985 (22) E.L.T. 701 (Mad.)] : : 1985(22)ELT701(Mad) another Division Bench of this Court held that if the classification of a product is found to be arbitrary and unreasonable so as to make it perverse, the High Court will be justified in interfering with that classification under Art. 226 of the Constitution.
22. In the case of Tufflite Plastics Pvt. Ltd. Coimbatore v. Union of India and Another - 1978 (2) ELT (J 509) it was held that if a classification is erroneous the Court can interfere notwithstanding the fact that the Department has wide discretion with regard to the classification of items. In the case of Yarn and Cloth Processing Centre Erode v. The Assistant Collector of Central Excise, Erode and Another - 1979 (4) ELT (J 175), it was held that if the writ petition has been pending for a period of two years, it is not proper for the High Court to sustain the technical objection of exhausting the alternative remedy.
23. In the case of M. R. F. Limited v. Union of India and Others - [1985 (22) E.L.T. 5 (Bom.)] : : 1985(22)ELT5(Bom) the Bombay High Court held that when an alternative remedy exists and the High Court entertains a writ petition and hears it on merits inspite of such alternative remedy having not been availed of, the High Court would be loath to decline to exercise the extraordinary jurisdiction under Article 226 of the Constitution.
24. Learned counsel for the petitioner also referred to a decision of the Calcutta High Court in the case of Collector of Central Excise, Calcutta v. Madura Coats Limited - [1982 (10) E.L.T. 129 (Cal.) : : 1982(10)ELT129(Cal) = 1982 ECR 3520 Cal wherein a Division Bench of that Court held that unless an alternative remedy can give full and effective relief to the aggrieved party, it will not stand in the way of his moving this Court under Article 226 of the Constitution and that the provision for refund cannot be regarded as an alternative remedy. The Supreme Court declined to grant special leave to appeal against that judgment.
25. Mr. Jayachandran learned counsel for the Revenue relied on the following decision in support of his submission that writ jurisdiction cannot be invoked by the petitioner in matters relating to proper classification of goods for the purposes of levy of excise duty.
26. In the case of Stores Supply (I) Agency v. Asst. Collector of Customs - 1988 (38) ELT 538 Cala learned single judge of the High Court at Calcutta held that there being no apparent mistake committed by the Customs authorities nor there being any allegation of any perverse finding by the Customs authorities, the Court would be reluctant to interfere with such determination under Article 226 of the Constitution. The Court also held that if there are two constructions which an entry can reasonable bear and one of them which was in favour of revenue was adopted. The Court has no jurisdiction to interfere merely because the other interpretation favourable to the subject appeals to the Court as the better one.
27. In the case of Madras Coats Ltd. v. Collector of Central Excise Madurai - 1994 (71) ELT 347 (SC), the Supreme Court directed the Tribunal to entertain an appeal by the appellant before the Court if such appeal is filed within a period of two weeks from the date of the Court's order and not to dismiss the same on the ground of limitation and to treat pendency of the proceedings in the High Court as well as in the Supreme Court, as sufficient cause for condoning the delay.
28. In the case of Collector of Customs, Madras v. Madras Electro Castings (P) Ltd. - [1994 (71) E.L.T. 646 (Mad.)] : : 1994(71)ELT646(Mad) a Division Bench of this Court held that the Appellate Tribunal constituted under Customs, Excise and Gold (Control) Act is competent to pass interim orders, that power being inherent in the appellate power. The Court further held that the writ jurisdiction is not exercisable merely for grant of interim relief when the merits of the case are not going to be decided by the Court. The Court also held that it would not be just and proper for this Court to entertain the writ petition because the order passed was appealable to the appellate Tribunal which will go into the questions of law and facts and can also set aside or affirm or annual the order or remand back for fresh consideration. Further, the order of the appellate Tribunal can also be challenged before the Supreme Court. The Court held that the validity of the order of the Collector cannot appropriately be adjudicated ignoring the appeal provision.
29. In the case of Indian Steel Rolling Mills Ltd. v. Union of India - [1994 (71) E.L.T. 350 (Mad.)] : : 1994(71)ELT350(Mad) a Division Bench of this Court reiterated that the remedy of appeal to the Appellate Tribunal is an adequate alternative remedy. The Court permitted the appellant to prefer an appeal to the appellate Tribunal directing the Tribunal to condone the delay.
30. Learned counsel for the Revenue also urged that the question raised in these petitions is one of fact and therefore this Court ought not to decide the petition on merits but should direct the petitioner to avail of the statutory remedy provided under the Act by way of appeal. Learned counsel for the Revenue relied on the decision of the Supreme Court in the case of Asian Paints India Limited v. Collector of Central Excise - : 1988(35)ELT3(SC) wherein the Supreme Court held that it is well settled that the expressions used in the tariff items should be given their commercial meaning and where definition of a word was not been given, it must be construed in its proper sense and not according to scientific or technical meaning. The Court in that decision also held that when the Appellate Tribunal records a certain finding of fact with regard to the classification of goods, and such finding is based on relevant and valid materials and there is no misdirection by the Tribunal there is no ground for interference with the order under Section 35L of the Act.
31. The law is clear that this Court's power is not circumscribed by the availability of an adequate alternate remedy. This however does not mean that the choice of the litigant as to forum will determine the exercise of this Court's power. The jurisdiction under Article 226 is indeed extra-ordinary in all cases and more so in cases where alternate remedies are available; such jurisdiction can only be invoked in exceptional cases. This Court will not normally interfere if adequate alternate remedies are available. The mere fact that Rule has been issued does not create a right in the petitioner to have the matter adjudicated by this Court. The matter is entirely one of sound discretion of this court to be exercised with due regard to the facts of the case before the Court.
32. The main issue that arises in this petition is that concerning the scope of the Entry 59.02. As pointed out by the learned counsel for the petitioner, this entry does not refer to either processed or unprocessed tyre cord fabric but merely describes the goods as tyre cord fabric of high tenacity yarn.
33. The basic facts namely that the petitioner manufactures unprocessed tyre cord fabric of high tenacity yarn; that it also processes the same, though such processing is at the request of and to the specifications of its customers who are tyre manufacturers; that only some of the batches of the processed tyre cord fabric were found on testing to contain yarn whose tenacity at the time of testing was less than that specified in Note 4 to Section XI of the Tariff Act; that the petitioner follows the self removal procedure; and that the petitioner's assessments for duty for the relevant period are still only provisional, are not in dispute.
34. Though the petitioner has averred that the processing done by it forms an integral part of tyre manufacture. On the case pleaded by the petitioner, it is clear that the processing is not part of a continuous process of tyre manufacture, but it is a process which can be carried out at an entirely different location and in the factory of the petitioner. The process involved is merely that of dipping the fabric in a solution which results in the fabric being impregnated with the same. That the solution in which the fabric is dippied contains latex and that after such dipping the fabric is rubberised is not disputed.
35. The question now arised, as to whether the Tariff Heading 59.02 is confined to unprocessed tyre cord fabric of high tenacity yarn of the specifications set out in Note 4 of Section XI of the Act, being a mixed question of law and fact, and the relevant facts not being in dispute, I do not consider it necessary to direct the petitioner to pursue the alternate remedy by way of statutory appeal. It will be advantageous to the petitioner as also to the Department to have the scope of the entry authoritatively determined in these proceedings.
36. It is submitted by the learned counsel for the respondent that the Special Bench of CEGAT has the expertise and can go into all relevant questions of fact while determining the issues of proper classification and an appeal to the Supreme Court would lie from that decision. If any of the basic facts were in dispute here, I would have directed the petitioner to pursue the statutory remedies.
37. The preliminary objection is therefore rejected.
38. The Tariff Heading 59.02 is found in Section XI of the Central Excise Tariff Act, 1985 which is captioned 'Textiles and Textiles Articles'. The heading of Chapter 59 is impregnated, coated or laminated textile fabrics; Textile Articles of a kind suitable for industrial use.
39. The legislative intention therefore is to regard tyre cord fabric as a textile article. This is evident from the inclusion of these goods in Section XI. Tyre cord fabric being made of yarn has been treated as a textile article. Having regard to its industrial use after such fabric is impregnated, coated or laminated, tyre cord fabric has been included in Chapter 59.
40. The tyre cord fabric in order to be used for the manufacture of tyres must necessarily undergo the process of rubberising. Section 59.05 captioned 'rubberised textile fabrics' other than those of 59.02 would indicate that the tyre cord fabric mentioned in 59.02 is also regarded as rubberised textile fabric and if such tyre cord fabric is made of yarn whose tenacity is less than that specified, such tyre cord fabric would fall within the scope of Heading 59.05. The fact that the word 'textile' is not used in 59.02 is of no consequence as the heading of Section XI in textiles and textile articles and all the goods enumerated in various chapters in this Section are textile or textile articles.
41. That the tyre cord fabric is textile fabric cannot admit of any doubt also in the light of the decision of the Supreme Court in the case of Delhi Cloth & General Mills Co. Ltd. v. State of Rajasthan and Others - : 1980(6)ELT383(SC) . The Court therein examined in depth the question as to whether the tyre cord fabric can properly be regarded as fabric at all and after such examination, arrived at the following conclusion at para 12 of the Judgment. 'On a comprehensive consideration of the materials before us, there is no escape from the conclusion that by and large tyre cord fabric is regarded as a textile fabric.'
42. The tyre cord fabric being thus textile fabric, the further question arises as to whether the tyre cord fabric of high tenacity yarn should be regarded as rubberized tyre cord fabric or processed tyre cord fabric. The petitioner who is said to be a well established manufacturer of textiles as also tyre cord fabric, has contended that the description of the several items given in Chapter 59 have been given keeping in mind the common use of the product and the tyre cord referred to in 59.02 refers only to the tyre cord fabric which is used in the manufacture of tyres. It is not in dispute that the tyre cord fabric must necessarily be dipped in a solution in which latex as major ingredient, before the tyre cord fabric is put to further use in the process of manufacture of tyre and that even after such dipping the product is known as tyre cord fabric only. Tyre cord fabric would form the core of the tyre that is ultimately manufactured. The object of mentioning high tenacity yarn in Heading 59.02 is, as rightly averred by the petitioner is to ensure greater safety for the use of the tyres, as higher tensile strength ensures greater safety for the user. It has been asserted by the petitioner that the manufacturer of tyres import the high tenacity yarn with a tensile strength higher than those specified under note 4 of Section XI of the Act, as they would like to market a high quality product in their own interest. Where the tensile strength of the yarn after processing is found to be below the specification given in note 4 the product would have to be regarded as sub standard product.
43. The object of specifying the tenacity of the yarn in the tyre cord fabric is to ensure that the fabric has yarn of the specified tenacity when the tyre cord fabric is put to use as part of the tyre that is manufactured. That object would be defeated it the tenacity is less than what is specified when the fabric is ready for and is put to use.
44. From a combined reading of Tariff Headings 59.02 and 59.05 which are interlinked in as much as rubberised goods not covered by 59.02 is covered by 59.05, also it is apparent that the tyre cord fabric of high tenacity yarn referred to in 59.02 is rubberised or processed tyre cord fabric and not unprocessed tyre cord fabric of high tenacity yarn. The petitioner does not dispute the fact that the product is described as tyre cord fabric only even after rubberising is done, and that such processing does not result in a new product.
45. The rate of duty for the goods covered by the description in Tariff Heading 59.02 is lesser than the specified in 59.05, obviously with a view to encourage the use of tyre cord fabric of high tenacity yarn in the manufacture of tyres.
46. The exemption from basic duty granted for tyre cord fabric of high tenacity yarn has apparently been granted also with a view to encourage tyre manufacturers to use tyre cord fabric of high tenacity yearn thereby ensuring higher degree of safety for the user of the vehicles. This object is wholly defeated if the tenacity of the yarn in the fabric used in the tyre after availing the benefit of such exemption is less that specified in Section Note 4 to Section XI of the Act.
47. The fact that in the notification exempting tyre cord fabric of high tenacity yarn from additional excise duty a distinction is made between processed and unprocessed fabric does not advance the case of the petitioner. The very fact that it was felt necessary to grant exemption for processed fabric would indicate that such fabric was exigible to duty. The object of that notification is only to ensure that same goods are not subjected to duty twice.
48. The object of subjecting the processed fabric to a test in the petitioner's laboratory obviously is to ensure that the textile strength of the yarn in the fabric is more than the prescribed minimum. While the major part of the products satisfied these specifications, it is only in some Batches it was found that the strength was below the minimum prescribed. It is no doubt true that the petitioner which is said to be reputed manufacturer of this fabric, would not have intended to manufacture a sub standard product. According to the petitioner the low tensile strength in some batches is due to factors beyond its control, such as interruption in power supply during processing. The petitioner cannot however on this ground claim that for purposes of levy of duty the tensile strength at the unprocessed stage alone should be taken into account.
49. That some tyre manufacturers regard this tariff heading as relating to unprocessed fabric is not of any significance in determining the scope of the tariff heading. Such claims are obviously self serving and are meant to avail duty exemption, even while they use a fabric of lesser tensile strength.
50. The next question that arises for consideration is whether the tyre cord fabric made of yarn whose tensile strength is less than that specified under note 4 of Section XI can be classified under Tariff Heading 59.05, as has been done by the Collector of Excise. Once it is held that the tyre cord fabric is also rubberised textile fabric when it is processed, such processing being an essential pre-requisite for using the fabric in the manufacture of tyre, it must follow that the tyre cord fabric which does not fall within Tariff Heading 59.02 must fall within Tariff Heading 59.05. The finding recorded by the respondent that the processed tyre cord fabric made by the petitioner of yarn whose tensile strength after the process of rubberising is less than that specified in note 4 of Section XI has to be subjected to duty under Tariff Heading 59.05, has therefore to be upheld.
51. Learned counsel for the petitioner raised the question of limitation when the matter was argued though that plea has not been raised in the petition. As the question of limitation is a question of law the petitioner was permitted to raise this plea.
52. The impugned orders cover the period from 1-7-1987 to 7-10-1990 and the demands admittedly raised after the period of six months. The respondents rely upon the proviso to Section 11A of the Central Excises and Salt Act, while the petitioner relies on Section 11A(1) of the said Act. It is not in dispute that the assessment for this period has not yet become final and still remains provisional. It is also not in dispute that the petitioner has opted for the self removal procedure under the relevant Rules. For the petitioner, it is submitted that the petitioner has filed a classification list and cleared the goods by availing of the benefit of the exemption notification and such clearance being within the knowledge of the respondents, the respondents are procluded from claiming the benefit of longer period of limitation provided under the proviso to Section 11A as there was no wilful default on the part of the petitioner.
53. Learned counsel for the petitioner relied upon the Judgment of the Supreme Court in the case of Rainbow Industries (P) Ltd. v. Collector of Central Excise Vadodara - 1994 (76) ELT 3 SC wherein the Court held that once the Department accepted the price list, acted upon it, and the goods were cleared with the knowledge of the Department, then in absence of any amendment in law or judicial pronouncement the reclassification should be effective from the date the Department issued the show cause notice.
54. In the instant case, however, besides the fact that the assessment had not become final and had only remained provisional. and the petitioner had opted for self removal procedure, the petitioner had not at any time disclosed to the respondents that it was also removing goods of lesser tensile strength. The test results were not disclosed to the respondents at the time of removal and respondents had no knowledge that some of the goods removed had lesser tensile strength until that fact was discovered at the time of inspection of the Register. Admittedly, bulk of the goods cleared did have the yarn of the prescribed tensile strength. The petitioner cannot therefore contend that clearance of goods with lesser tensile strength was with the knowledge on the part of the respondents that some of the goods cleared were made of yarn with lesser tensile strength. What was removed from the petitioner's factory was admittedly the processed fabric. The removal of the fabric with lesser tensile strength without disclosing that fact can only be regarded as removal of the goods by supressing relevant facts, with intention to evade duty.
55. Learned counsel for the Revenue relied on the decision of the Supreme Court in the case of Tamil Nadu Housing Board v. Collector of Central Excise Madras - : 1994ECR7(SC) wherein the Court held that the proviso to Section 11A(1) of the Act is in the nature of an exception to the principal clause and therefore, its exercise is hedged on the one hand with existence of such situations as have been visualised, by the proviso by using such strong, expression as fraud, collusion etc. and on the other hand, it should have been with intention to evade payment of duty. The proviso, must therefore be construed strictly. It was further held that once the Department is able to being on record material to show that the appellant was guilty of any of those situations which are visualised by the Section, the burden shifts and then applicability of the proviso has to be construed liberally.
56. Learned counsel for the Revenue also referred to a Judgment of a learned single Judge of this Court in the case of Limenaph Chemicals v. Union of India - [1993 (68) E.L.T. 77 (Mad.)] : : 1993(68)ELT77(Mad) wherein this Court held on the facts of that case that there was a deliberate misstatement of the product and the entitlement of the same to exemption under the notification of 1970; that once it is made out that there was a misstatement of facts, as regards the eligibility of the product for exemption, it follows that the proviso to Section 11A of the Act would apply. It was further held that the fact that the Department was aware of the manufacture by the petitioner and that samples have been taken by the Department on more than one occasions, would not alter the situation and that what is required for the proviso is a misstatement of fact on the part of the person concerned and not the knowledge of the Department about the manufacture of the particular product.
57. The proviso to Section 11A is attracted to the facts of this case and the impugned demands which were raised within the period specified in the proviso, are not barred by limitation.
58. It is not necessary to advert to any other aspect as these petitions cannot be treated as appeals against the orders of the respondents.
59. In the result, these writ petitions fail and are dismissed.