Case Law Details

Case Name : CTM Technical Textiles Ltd Vs Union of India (Gujarat High Court)
Appeal Number : Special Civil Application No. 8332 of 2020
Date of Judgement/Order : 24/12/2020
Related Assessment Year :
Courts : All High Courts (6285) Gujarat High Court (630)

CTM Technical Textiles Ltd Vs Union of India (Gujarat High Court)

Both the goods in question are being manufactured by the writ-applicants by weaving; it being warp knitting in case of the Agro Shade Net and weaving by warp and weft in case of the Geo Grid fabrics. Both these commodities are in the nature of fabrics, and the respondents have also accepted the fact that the Agro Shade Net are fabrics manufactured on the Raschel knitting machine, whereas the Geo Grid fabrics are woven fabrics manufactured on the weaving machines.

The judgment in Raj Pack Well Ltd. (supra) relied upon on behalf of the respondents has nothing to do with the HDPE fab­ric, but it relates to the HDPE strips/tapes/sacks. The question whether fabric woven out of strips or tapes are textile products or not, was not involved in this judgment. The contention raised by the writ-applicants is that the woven fabric would be ‘textile’ irrespective of the method of weaving through any technique and the materials used for weaving may also be anything like cotton, silk, rayon, nylon or any other description or made out of any other material; but when any such material is woven into fabric, what comes into existence is a “textile”.

A specific and categorical submission was raised by the writ-applicants before the authorities that similarly situated manufacturers located elsewhere in the State as well as in the country have classified similar products as textiles, and the Cen­tral Excise officers have not initiated any proceedings against them on the basis that the goods are articles of plastics charge­able to excise duty. In the representations made before the Chief Commissioner, the Ministry of Finance and the Principal Chief Commissioner as well as the jurisdictional Commissioner, the writ-applicant has submitted as under :-

“It may be noted sir that more than 100 manufacturers in the country are treating this product as a Textile material and following HSN code under chapter 60. We understand that we are the only company who have the Show cause Notice pending.”

In the result, this writ-application is partly allowed. The impugned Order in Original passed by the respondent no.2 dated 30.6.2020 is hereby quashed and set-aside. The matter is remitted to the respondent no.2 for fresh consideration of all the issues discussed in this judgment. The respondent no.2 shall give an adequate opportunity of hearing to the writ-applicants and decide the matter afresh in accordance with law, more particularly, keeping in mind the observations made by this Court.

We also direct the Union of India to re-look into the CBEC Circular/ Order No.8/92 dated 24.9.1992 and the Ahmedabad Collectorate Trade Notice No.78/94 dated 9.5.1994 respectively in light of the observations made by this Court and take an appropriate decision in that regard. It will be in the fitness of things if the Union of India first apply its mind to the CBEC Circular/Order No.8/92 dated 24.9.1992 and the Ahmedabad Collectorate Trade Notice No.78/94 dated 9.5.1994 and take an appropriate decision in accordance with law so as to enable the respondent no.2 to arrive at an appropriate conclusion in the fresh round of hearing. This time we make it explicitly clear that the issue of discrimination raised by the writ-applicants shall be specifically dealt with by the respondent no.2 in an appropriate manner in accordance with law.

FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT

Draft amendment is allowed. The same shall be carried out forthwith.

1. By this writ-application under Article 226 of the Constitution of India, the writ-applicants have prayed for the following reliefs :

“(A) That Your Lordships may be pleased to issue a Writ of Prohibition or any other appropriate writ, order or direction completely and permanently prohibiting the Respondents, their servants and agents from taking any action against the Petitioner pursuant to Order No.8/92 dated 24.09.1992 and Order No.28/4/94-CX dated 01.03.1994 issued by the CBEC and also pursuant to Trade Notice No.78/94 dated 09.05.1994 issued by the Ahmedabad Collectorate, and permanently and completely prohibiting Respondent no.2, his servants and agents from taking any action against the Petitioner pursuant to Notices F.No.V.39/15-128/Dem/OA/ 15-16 dated 18.12.2015 (Annexure-“E”), F. No. V.39/15-10/ Dem/OA/2017-18 dated 21.06.2017 and F.No.V.39/15-44/ Dem/OA/17-18 dated 7.5.2018 (Annexure-“F”);

(B) That Your Lordships may be pleased to issue a Writ of Certiorari or a Writ of Mandamus or any other appropriate writ, order or direction quashing and setting aside Order No.8/92 dated 24.09.1992 and Order No.28/4/94-CX dated 01.03.1994 issued by the CBEC and Trade Notice No.78/94 dated 09.05.1994, and also Notices F.No.V.39/15-128/Dem/OA/15-16 dated 18.12.2015 (Annexure-“E”), F.No.V.39/15-10/Dem/OA/2017-18 dated 21.06.2017 and F.No.V.39/15-44/Dem/OA/17-18 dated 7.5.2018 (Annexure-“F”);

(BB) That Your Lordships may be pleased to issue a Writ of Certiorari or any other appropriate writ, order or direction quashing and setting aside O/O No. AHM-EXCUS-003-COM-009 to 011-20-21 dated 30.6.2020 (Annexure-“J-4”) passed by the 2nd Respondent herein with all consequential reliefs and benefits;

(BBB)Pending hearing and final disposal of the present petition, Your Lordships may be pleased to stay implementation and execution of O/O No. AHM-EXCUS-003-COM-009 to 011-20-21 dated 30.6.2020 (Annexure-“J-4”), thereby restraining the 2nd Respondent herein, his servants and agents from taking any action against the Petitioners pursuant to O/O No. AHM-EXCUS-003-COM-009 to 011-20-21 dated 30.6.2020.

(C) Pending hearing and final disposal of the present petition, Your Lordships may be pleased to restrain the 2nd Respondent herein from taking any action against the Petitioner including adjudication of Notices F.No.V.39/15-128/Dem/OA/15-16 dated 18.12.2015 (Annexure-“E”), F.No.V.39/15-10/Dem/OA/2017-18 dated 21.06.2017 and F.No.V.39/15-44/Dem/OA/17-18 dated 7.5.2018 (Annexure-“F”);

(D) An ex-parte ad-interim relief in terms of Para 15(C) above may kindly be granted;

(E) Any other further relief that may be deemed fit in the facts and circumstances of the case may also please be granted.”

Case of the writ-applicants :

2. The writ-applicant no.1 is a company, inter alia, engaged in the business of manufacture of goods like Agro Shade Net, Geo Grid, etc. The writ-applicant no.2 is one of the Directors and share-holders of the writ-applicant no.1 Company.

3. According to the writ-applicants, both the products referred to above are fabrics. The writ-applicants have given a fair idea in their writ-application as regards the manufacturing process. The same reads thus :

“(i) Agro Shade Net :

First HDPE granules are mixed with the relevant master batch, it is then processed into the Mono layer plant to make film, i.e. HDPE Film. The Film is then feed into the slitter / for cutting to make the tape yarn of required with length i.e. HDPE Strip which is then directly feed into the Raschel knitting machine. For final product and the final fabric is ready i.e. Agro Shade Net. The fabric is inspected and checked and packed for sales.

Agro Shade Nets are generally used for covering and protecting plants from heat and other natural elements.

(ii) Geo Grid :

Polyester yarns of bobbins are purchased; and such bobbins containing polyester yarns are placed on Creel machine where yarns are woven into a fabric. The woven fabrics so produced on Creel machines are coated and such coated woven fabrics are packed for sale and delivery in the market.

Geo Grid fabrics are normally used in road construction activity, for providing stability and long life to the construction material used for roads.

The writ-applicants have classified the Agro Shade Net as textile fabrics under the Heading No.6005 of the Central Excise Tariffs which, inter alia, covers “Wrap Knit Fabrics…” The other products i.e. Geo Grid fabrics are classified by the writ-applicants under the Heading No.5911 of the Tariffs as the “Textile Products and Articles, for technical uses…”

4. It is the case of the writ-applicants that both the products manufactured fall within the Heading Nos.6005 and 5911 respectively and are fully exempt from the payment of the excise duties. In such circumstances, it is the case of the writ-applicants that they have not discharged any excise duty for such goods right from the inception of manufacture, i.e. from around September 2007.

5. It appears from the materials on record that the Revenue Officers collected samples of both the products from the factory premises of the writ-applicants for the purpose of analysis and opinion of the Departmental Chemical Examiner. The Chemical Examiner, in his report, opined that the Agro Shade Net bearing Sample No.RCL/31 was a “green coloured knitted fabric”. The department also took into consideration the manufacturing process of the Agro Shade Net and confirmed that the HDPE (High Density Polyethylene) granules were converted into the HDPE films from which the HDPE strips were produced and the HDPE strips were directly fed into the knitting machine. For the Geo Grid (also called Geo Textiles), the department, upon considering the manufacturing process, found that the polyester yarn was woven on the weaving machine.

6. It is the case of the writ-applicants that both the products are woven fabrics and the fabrics of plastic were textile products justifying its classification under the heading of the above quoted Tariffs. It is being asserted by the writ-applicants that all other manufacturers in the State as well as in other States have been classifying such products as textile fabrics under the classification of Heading 6005 and Heading 5911 respectively past several years and no manufacturer has been paying excise duty on such textile products.

7. It appears that after the samples were drawn and upon receipt of the report of the Chemical Examiner, proceedings came to be initiated by the Commissioner of Central Excise, Ahmedabad, for demanding excise duty on both the products on the premise that they are not textile articles but are articles of plastics falling within the classification of Sub-Heading 39269099 as “other articles of plastics”. It appears that while not disputing the manufacturing process and the report of the Chemical Examiner, the stance of the Revenue is that both the products referred to above were manufactured from the strips of plastic and plastic cannot be said to be a textile material. It is also the case of the Revenue that the Central Board of Excise and Customs has issued Order No.8/92 dated 24.9.1992 and the Ahmedabad Collectorate issued a Trade Notice No.78/94 dated 9.5.1994 directing the field formation to classify the HDPE/PP products woven from the HDPE strips and tapes under Chapter 39 of the Central Excise Tariffs, which covers the articles of plastic.

8. It is pointed out by the writ-applicant that in the proceedings of the show-cause notice, the CBEC Order No.8/92 has been specifically quoted and the classification of the goods manufactured by the writ-applicant is proposed under the Heading 392690 on the basis of the above referred CBEC order.

9. It further appears from the materials on record that after issuing the show-cause notice dated 18.12.2015 for demanding excise duties for last five years, two further show-cause notices came to be issued dated 21.6.2017 and 7.5.2018 respectively for the subsequent period.

10. The writ-applicant filed its reply to the impugned show-cause notices referred to above and also preferred various representations addressed to the Principal Chief Commissioner of Customs including the Ministry of Finance, The Principal Chief Commissioner of Ahmedabad Zone and the jurisdictional Commissioner. In all the above referred representations, the writ-applicant furnished the list of several manufacturers of Gujarat with their respective addresses and also the details of manufacturers of the Agro Net and Geo Grid fabrics in the other States.

11. The representations along with necessary details and information were preferred to redress the grievance that the proceedings were initiated only against the writ-applicant and no one else similarly situated like the writ-applicant.

12. It is the case of the writ-applicant that the specimen invoice of the other manufacturers was also submitted to show that similar goods were sold under the exemption.

13. The materials on record further indicate that while adjudication of the show-cause notices was going on, the present writ-application came to be filed questioning the legality and validity of the CBEC orders as well as the Ahmedabad Collectorate Trade Notice and also the demand of the excise duties under the impugned show-cause notices.

14. On 21.7.2020, this Court, for the first time, passed the following order:

“1. We have heard Mr.Paresh Dave, the learned counsel assisted by Mr.A.S.Tripathi, the learned counsel appearing for the writ applicants.

2. Let notice be issued to the respondents returnable on  24.8.2020.

3. Mr.Dave, the learned counsel submitted that the proceedings of the impugned show cause notices may be stayed. We are not inclined to stay the proceedings of the impugned show cause notices at this point of time. We may only say that the writ applicants shall co-operate with the proceedings. However, the authority concerned shall not take any final decision without the permission of this Court.

4. Mr.Kshitij Amin, the learned Standing Counsel appearing for the Union has been furnished with one copy of the paper book. Mr.Amin waives service of notice for and on behalf of the respondent no.1. So far as the respondent no.2 is concerned, it was open for the learned counsel appearing for the writ applicants to serve the notice by emal in addition to the normal service.”

15. Although this Court passed a specific order dated 21.7.2020 referred to above, yet the case of the Revenue is that the Order in Original had already been passed on 30.6.2020, and the same was delivered and pasted at the factory premises of the writ-applicant on 22.7.2020, i.e. one day after this Court passed the order dated 21.7.2020 referred to above. The operative part of the impugned Order in Original reads thus:

“In view of the above, I pass the following order in respect of Show Cause Notice bearing No.V.39/15-44/DEM/OA/17-18 dated 07.05.18 :-

(i) I classify the excisable goods viz. Warp Knitted Fabrics (Agro Share Net) and Geo Grids under Chapter Heading 39269099 of the first schedule to the Central Excise Tariffs Act, 1985;

(ii) I confirm the demand of Central Excise duty amounting to Rs.3,65,69,096/- (Three Crores Sixty Five Lakhs Sixty Nine Thousand and Ninety Six only) not paid/ short paid, for the period April, 16 to June, 17 under provisions of Section 11-A of the Central Excise Act, 1944 read with Section 142 and 174 of the Central Goods and Services Tax Act, 2017 and order it to be recovered from the Service Provider;

(iii) I also order them to pay interest at the prescribed rate as per provisions of Section 11AA of the Central Excise Act, 1944, as amended from time to time, read with Section 142 and 174 of the Central Goods and Services Tax Act, 2017 on the service tax demanded at (ii) above;

(iv) I impose penalty of Rs.3,65,69,096/- (Three Crores Sixty Five Lakhs Sixty Nine Thousand and Ninety Six only) (hundred percent of confirmed service tax) on the Service Provider for the period April, 16 to June, 17 in terms of the provisions of Section 11AC of the Central Excise Act, 1944 read with Section 142 and 174 of the Central Goods and Services Tax Act, 2017. Provided that if the service tax confirmed and interest is paid within 30 days of receipt of this order, penalty payable shall be 25% of the service tax so determined. However, the benefit of reduced penalty shall be available only if the amount of reduced penalty is also paid within such period.

(v) I order them to pay interest of Rs.11,707/- in terms of the provisions of Rule 8(3) of the Central Excise Rules, 2002 read with Section 11AA of the Central Excise Act, 1944 on the delayed payment as discussed above;

(vi) I impose penalty of Rs.4,533/- in terms of the provisions of Rule 8(3A) of the Central Excise Rules, 2002 on them for the delay in payment of central excise duty beyond 30 days, as discussed above;

(vii) I impose penalty of Rs.1,01,200/- in terms of the provisions of Rule 12(6) of the Central Excise Rules, 2002 for delay of filing the prescribed return in terms of Rule 12(1) of the Central Excise Rules, 2002, as discussed above.”

16. Being dissatisfied with the final Order in Original passed by the authority concerned, the writ-applicants are here before this Court with the present writ-application.

SUBMISSIONS ON BEHALF OF THE WRIT-APPLICANTS:

17. Mr.Paresh Dave, the learned counsel assisted by Mr.A.S.Tripathi, the learned advocate appearing for the writ-applicants, has a serious grievance to redress first as regards the procedure adopted by the authority concerned in passing the impugned Order in Original.

18. Mr.Dave invited the attention of this Court to the specific pleadings by way of draft amendment as regards the highhanded manner in which the Order in Original came to be passed. We quote the relevant pleadings thus :

“10.3 The petitioners submit that personal hearing of the present case was scheduled before the 2nd Respondent herein on 19.6.2020 when the Petitioner’s Advocate appeared before the 2nd Respondent and requested him for some time because he had been appointed to represent the case by the petitioner very recently, upon changing the Advocate who was handling the case till then. The 2nd Respondent accepted the request and allowed tie of one week, and issued a hearing notice for the next hearing scheduled on 26.6.2020.

Thereafter, upon going through the case papers, the Petitioner’s newly appointed Advocate felt that a Writ Petition before this Hon’ble Court was the only efficacious remedy available to the Petitioners, and therefore a substantive Writ Petition was prepared, which came to be filed by the Petitioners through their Advocate on 25.6.2020. Thereafter, the Petitioner’s Advocate personally appeared before the 2nd Respondent on 26.6.2020 and submitted an application dated 25th June, 2020 thereby informing the 2nd Respondent about the Writ Petition having been filed before this Hon’ble Court on 25.6.2020 for challenging all the show cause notices. The Petitioner’s Advocate also requested the 2nd Respondent to keep the adjudication in abeyance for two weeks, because hearing of the petition before this Hon’ble Court was likely to take some time.

The Petitioners have kept the 2nd Respondent informed about all the developments like closure of the High Court for 3 days that were taking place with regard to listing of the Writ Petition by personally speaking to him; and the fact that the petition was allowed to be circulated for hearing on 21.7.2020 was also conveyed to the 2nd Respondent herein on behalf of the Petitioners. This Hon’ble Court heard the petition (i.e. the present petition) on 21.7.2020 and made an order restraining the 2nd Respondent from taking any final decision in the case. On advance copy of the petition, the Standing Counsels for the Respondents was also present and heard on 21.7.2020. The Petitioners informed the office of the 2nd Respondent telephonically immediately after this Hon’ble Court made the order on 21.7.2020, and informed the concerned Officers that the authority concerned was restrained from taking any final decision without the permission of the Hon’ble High Court.

But on the next day i.e. 22.7.2020, the 2nd Respondent herein sent a group of Revenue Officers to the factory of the Petitioner. These officers proposed to paste on the gate of the factory a copy of one Order in Original No.AHM-EXCUS-003-COM-009 to 011-20-21 bearing the date of 30.6.2020. A Watchman, namely, Shri Ramabhai Boghabhai was present, and therefore the Watchman accepted a copy of the above referred adjudication order after speaking to the 2nd Respondent herein on phone. The officers draw a panchnama and gave a copy of the panchnama made on 22.7.2020 to the Watchman. It is recorded in this panchnama that the officers had visited the factory premises on 21.7.2020 also, but the Petitioners have no information of the officer’s visit to the Petitioner’s factory on 21.7.2020.”

19. In the aforesaid context, Mr.Dave would submit that the respondent no.2 herein could be said to have not acted fairly. He would argue that the order has been passed in violation of the principles of natural justice. Mr.Dave would argue that this Court had restrained the adjudicating authority from taking any final decision without the permission of the court vide order dated 21.7.2020 and the learned Additional Standing Counsel for the Union of India had also appeared on that day and the order passed by this Court was also communicated to the office of the respondent no.2, still it is sought to be shown that the order was passed way back on 30.6.2020.

20. Mr.Dave would argue that while the proceedings were in progress at the stage of the show-cause notice, a fervent request was made to keep the adjudication in abeyance as the writ-applicants had already approached this Court by way of the present writ-application, questioning the legality and validity of the very jurisdiction of the authority concerned to issue the impugned show-cause notices. However, according to Mr.Dave, no heed was paid to such request and the respondent no.2 proceeded to pass the final Order in Original without giving any opportunity of hearing to the writ-applicants.

21. Mr.Dave would argue that there is a clear violation of the statutory provisions of Section 37C of the Central Excise Act in serving the impugned order in original, and in such circumstances, the service of the order of the impugned order itself deserves to be declared as illegal.

22. By referring to Section 37C of the Central Excise Act, Mr.Dave would argue that any decision or order has to be served by tendering it or sending it by registered post acknowledgement due or by speed post with the proof of delivery or by courier approved by the Board to the person concerned from whom it was intended or his authorized agent. If it is not possible to serve the order in the prescribed procedure as referred to above, then by affixing a copy thereof at some conspicuous part of the factory or warehouse or any other place of business or usual place of residence of the person.

23. Mr.Dave would argue that in the case on hand straightway the method of service referred to above in clause (b) of Section 37C (1) of the Act has been resorted to. Mr.Dave vehemently argued that the scheme of Section 37C has been interpreted by various High Courts, and in this context, he has referred to and relied upon on the following judgments:

(i) State of Punjab v/s. Amar Singh Harika, AIR 1966 SC 1313;

(ii) Saral Wire Craft Pvt. Ltd. v/s. Commissioner of Customs, Central Excise & Service Tax, 2015 (322) ELT 192 (SC);

(iii) Soham Realtors Pole Star v/s. Commissioner of Central Excise, Customs & Service Tax, Nagpur-II, 2018 (12) GSTL 288 (BOM.);

(iv) Prem Nath Khanna v/s. Collector of Central Excise, 1987 (29) ELT 9 (ALL); and

(v) New Drug & Chemical Company v/s. UOI, 2015 (325) ELT 313 (BOM).

24. After canvassing the submissions as regards the alleged arbitrary procedure adopted by the respondent no.2, Mr.Dave thereafter proceeded to make his submissions on the merits of his case.

25. Mr.Dave would argue that the order issued by the CBEC and the Trade Notice by the Ahmedabad Collectorate could be termed as illegal and without any justification because the woven fabrics cannot be considered to be goods of plastic only on the ground that those were woven from the HDPE strips and tapes which are plastic materials. It is argued that plastic is a well-known textile material and various varieties of yarn, strip, etc. which are woven on various textile machines are made of plastic materials like terelene, polyester, nylon, acrylic, texturized yarns, silicon yarns, etc. All such plastics and resins like the polyester, nylon, acrylic, etc. are classified under the Chapter 39 as plastic materials; but when they are processed and yarns or tapes or strips are produced therefrom, and fabrics are woven from such plastic materials, the finished goods are identified and known as fabrics being textile goods.

26. It is argued by Mr.Dave that just because the initial raw-material for the Agro Shade Net and Geo Grid fabrics is the HDPE strips of less than 5 mm width, the final products i.e. Agro Shade Net and Geo Grid cannot be considered to be articles of plastic. It is argued that the order issued by the Board and the Trade Notice by the Ahmedabad Collectorate are without considering the fact that various varieties of plastic yarns, tapes, etc. were used for producing fabrics, and in such circumstances, the goods in question cannot be classified as “other articles of plastics” only because they were woven from the plastic strips and yarns.

27. Mr.Dave submitted that the term “textile” has not been defined under the Central Excise Tariffs but the same has been considered by the Apex Court in the case of M/s.Porritts and Spencer (Asia) Limited, reported in 1983 (13) ELT 1607 (SC). In the said judgment, it has been laid down in paragraph 6 that when yarn, whether cotton, silk, woollen, rayon, nylon or of any other description or made out of any other material, is woven into fabric, what comes out is a textile. It has been further held in the said case that whatever be the mode of weaving employed, the woven fabric would be “textile”. It is further held that the use to which it may be put is also immaterial and does not bear on its character as a textile.

28. Having regard to the above, Mr.Dave would argue that the raw-material used for making a fabric is immaterial and what is relevant is the method of bringing a final fabric into existence. He would submit that regardless of the raw-material, when any material is woven into a fabric, such fabric would be “textile”. It is vehemently argued that the order issued by the Board and the Trade Notice of the Ahmedabad Collectorate is based only on the nature of the initial raw-material used for the fabrics and, therefore, are contrary to the general understanding of “textiles” and “fabrics” in common parlance and also contrary to the law laid down by the Apex Court referred to above. In such circumstances, according to Mr.Dave, the impugned order and the Trade Notice being illegal, are liable to be quashed.

29. Mr.Dave further argued that the manufacturing process of both the products as recorded by the Commissioner of Central Excise, Ahmedabad, in the impugned show-cause notices would clearly indicate that the Agro Shade Net is a knitted fabric and was produced on the Raschel Knitting Machine; whereas, the Geo Grid fabrics were woven fabrics produced out of weaving of polyester yarn. Both the products, according to Mr.Dave, indisputably are “woven fabrics”. In other words, those were produced by weaving of plastic strips of less than 5 mm width, which was in the nature of yarns of plastic. According to Mr.Dave, both the products were rightly classifiable as the warp knit fabrics under the Heading 6005 (for Agro Shade Net) and the Heading 5911 as textile products and articles for technical uses (for Geo Grid fabrics).

30. Mr.Dave vehemently argued that the case on hand is one of outright discrimination. It is argued by Mr.Dave that several manufacturers in the State of Gujarat and various similarly situated manufacturers in other States across the country have classified the very same goods as textile goods under the Heading Nos.6005 and 5911 respectively, but no proceedings have been initiated against any of them for demanding the excise duties under Chapter 39 as “other articles of plastics”.

31. To fortify this submission of discrimination, Mr.Dave has placed strong reliance on two decisions of this High Court; (i) M/s.Darshan Boardlams Ltd. v/s. Union of India, 2013 (287) ELT 401 (GUJ.) and (ii) Rallis Engine Ltd., 2004 (62) RLT 607 (GUJ.). According to Mr.Dave, the dictum of law as laid in both the above quoted judgments of this Court is that the central excise being a central levy, must be collected uniformly throughout the country. If, similarly situated manufacturers are not subjected to demand of excise duty, then the proceedings initiated against the manufacturers in the State of Gujarat could be termed as illegal and without jurisdiction.

32. In such circumstances referred to above, Mr.Dave prays that there being merit in his writ-application, the same be allowed and the impugned Order in Original along with the impugned show-cause notices be quashed and set-aside.

SUBMISSIONS ON BEHALF OF THE RESPONDENTS :

33. Mr.Parth Bhatt, the learned Additional Standing Counsel for the Union of India, has vehemently opposed this writ-application. Mr.Bhatt has raised a preliminary objection with regard to the maintainability of this writ-application on the ground that the Order in Original is appealable. According to him, there is a statutory appeal provided against such order before the appellate tribunal under Section 35B of the Central Excise Act.

34. According to Mr.Bhatt, as there is an alternative remedy of appeal available to the writ-applicant, this Court may not exercise its writ jurisdiction under Article 226 of the Constitution of India.

35. Mr.Bhatt would submit that without prejudice to his preliminary contention as regards the maintainability of this writ-application on the ground of availability of alternative remedy, even otherwise on merits the writ-applicants have no case. He would argue that the Agro Shade Net and Geo Grid fabrics could be termed as articles of plastics because both the products were made of the HDPE strips of less than 5 mm width. Both the products are woven fabrics and are not made out of textile material, but they were woven from the HDPE strips and the HDPE strips could be said to be plastic material.

36. According to Mr.Bhatt, having regard to the various Notes of Chapters 59, 60 and 39 respectively of the Central Excise Tariffs, the goods in question which were produced by weaving/knitting of the HDPE strips cannot be regarded as textile. Mr.Bhatt seeks to rely upon the Circular No.54/12/9-CX-1, containing Order No.8/92 dated 24.9.1992, whereby the CBEC directed all the Collectors to issue appropriate trade notice for intimation of the trade and inform all the Assessing Officers that the HDPE strips and tapes of a width not exceeding 5 mm shall be classified henceforth under the Sub-Heading 3920.32 and the sacks made therefrom under the Sub-Heading 3923.90 of the Tariffs. Mr.Bhatt pointed out that the Ahmedabad Collector issued a Trade Notice and observed that the HDPE/PP products made from the HDPE/PP strips and tapes of a width not exceeding 5 mm shall be classified henceforth under Chapter 39 of the Central Excise Tariffs.

37. Mr.Bhatt seeks to rely on a judgment of the Madhya Pradesh High Court in the case of Raj Pack Well Ltd., 1990 (50) ELT 201 (MP) to fortify his submission that the HDPE strips/tapes/sacks are goods made of plastic and not of synthetic textile materials and as such are classifiable under Chapter 39 of the Central Excise Tariffs.

38. In such circumstances referred to above, Mr.Bhatt prays that there being no merit in this writ-application, the same be rejected.

39. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the following questions fall for the consideration of this Court :

1. Whether this Court should decline to entertain this writ-application on the ground that the writ-applicants have an alternative remedy of preferring an appeal against the Order in Original passed by the respondent no.2 before the appellate tribunal under Section 35B of the Central Excise Act ?

2. If the answer to the first question referred to above is in the negative, then whether the impugned Order in Original passed by the respondent no.2 dated 30.6.2020 is sustainable in law ?

3. Whether Sections 35 and 35B respectively of the Central Excise Act provide for any appeal against any circular or order or trade notice issued by the Board or the Collectorate ?

4. Whether the impugned Order in Original could be said to have been vitiated on account of non-compliance of the mandatory provisions of Section 37C of the Central Excise Act, 1944 ?

40. A Coordinate Bench of this Court, in the case of M/s.Darshan Boardlams Ltd. (supra), to which one of us (J.B.Pardiwala, J.) was a party and also the author of the judgment, had, by and large, the occasion to deal with identical submissions as raised in the present case. In Darshan Boardlams Ltd. (supra) also a preliminary objection was raised as regards the maintainability of the writ-application on the ground of alternative efficacious remedy available to the writ-applicant in the form of an appeal under Section 35B of the Act before the appellate tribunal. While negativing such preliminary objection with regard to the maintainability of the writ-application, this Court held as under :

“64. Before entering into the merits of the main issue, we propose to deal with the preliminary contention of Mr.Oza, learned senior counsel appearing for the Revenue as regards the maintainability of this petition on the ground of alternative efficacious remedy available to the petitioner in the form of an appeal under Section 35G of the Act before the Appellate Tribunal.

65. It is true that power of the High Court to issue prerogative writs under Article 226 of the Constitution of India is plenary in nature and cannot be curtailed by other provision of the Constitution of India or a Statute but the High Courts have imposed upon themselves certain restrictions on the exercise of such power. One of such restrictions is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction under Article 226 of the Constitution of India. But again, this rule of exclusion of writ jurisdiction on account of availability of an alternative remedy does not operate as an absolute bar to entertain a writ petition but is a rule of discretion to be exercised depending on the facts of each case. On this aspect, the following observations by the Constitution Bench of the Supreme Court in A.V. Venkateswaran, Collector of Customs v. Ramchand Sobhraj Wadhwani and another, reported in AIR 1961 SC, which still holds the field, are quite apposite :

“The passages in the judgment of this Court we have extracted would indicate (1) that the two exceptions which the learned Solicitor General formulated to the normal rule as to the effect of the existence of an adequate alternative remedy were by no means exhaustive, and (2) that even beyond them a discretion vested in the High Court to have entertained the petition and granted the petitioner relief notwithstanding the existence of an alternative remedy. We need only add that 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 necessarily be dependent on a variety of individual facts which must govern the proper exercise of the discretion of the Court, and that in a matter which is thus pre-eminently one of the discretion, it is not possible or even if it were, it would not be desirable to lay down inflexible rules which should be applied with rigidity in every case which comes up before the Court.”

66. In Harbanslal Sahnia and another v/s. Indian Oil Corporation Limited and others, reported in (2003)2 SCC 107, enumerating the contingencies in which the High Court could exercise its writ jurisdiction in spite of availability of the alternative remedy, the Supreme Court observed thus :

“…that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies; (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice or, (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged.”

67. We are of the view that on the facts of the present case, the preliminary contention or objection as raised by the Revenue deserves to be rejected as it cannot be said that exercise of writ jurisdiction in the present case is unwarranted. As rightly pointed out by the learned counsel appearing for the petitioner that the controversy in the instant case centers around the issue, that if the goods in question are chargeable to nil duty in other States of the country and if such a decision has been accepted by the department, then whether the petitioner who is a businessman carrying on business within the State of Gujarat could be asked to pay duty @ 8% ad valorem on the same goods.

68. We find substance and merit in the contention of Mr.Dave that in this country of stiff competition it would be virtually very difficult for the petitioner to survive in the business. Companies manufacturing pre-laminated plain particle board made of Bagasse in other States of the country have not to pay any duty, whereas for the same product the petitioner in this particular State is being asked to pay duty of 8% ad valorem. It is for this reason that we are of the view that this writ petition seeks enforcement of fundamental right to carry on trade or business without any discrimination of any nature. The present petition is not the one in which the controversy centers around the issues which are primarily questions of fact.

69. In Union of India v/s. T.R.Varma, reported in AIR 1957 SC 882, the Supreme Court held that it is well-settled that when an alternative and equally efficacious remedy is open to litigant, he should be required to pursue that remedy and not invoke the special jurisdiction of the High Court to issue a prerogative writ. The Bench proceeded further to observe that it will be a sound exercise of discretion to refuse to interfere in a petition under Article 226 of the Constitution of India unless there are good grounds to do otherwise.

70. We hold that there are good grounds in the present case so as to entertain this petition despite the fact that there is a remedy of appeal available under Section 35G of the Act.

71. We shall now look into the case-law relied upon by both the sides on the issue of alternative remedy and under what circumstances High Court may exercise jurisdiction under Article 226 of the Constitution of India despite there being an alternative remedy of appeal available to the petitioner.

V. We shall now look into the case-laws relied upon by the Petitioner :

72. In Whirlpool Corporation (supra), the Supreme Court held :

“15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order of proceedings are wholly without jurisdiction or the vires of an Act is challenged…. ”

73. In Ambica Meta Yarn Manufacturing Company (supra), a Division Bench of this High Court made the following observations:

“…The High Court will not therefore ordinarily interfere in exercise of the power under Article 227. ‘Not ordinarily’ of course does not mean ‘never’. In some cases the High Court might consider it expedient in the interest of justice to do so. For instance, in two types of cases the High Court might interfere (unless the Revenue is prepared to stay the recovery during the pendency of proceedings before the appellate or revisional authority), viz :

(1) Where the excise authorities of other States are accepting the interpretation canvassed by the assessee. In such cases the assessee will not be able to withstand the competition in the market and the industry in the State will suffer serious handicap and may even get mauled:

(2) In a case where a product is forbeing assessed under one entry several years in the past and the department has accepted the position for all these years but abruptly changes its stance without there being any legislative change.”

“Only in such rare cases the Court might possibly entertain a petition made without recourse to the machinery provided by the Act.”

VI. We shall now look into the case-law relied upon by the Revenue on the point of alternative remedy :

74. In Union of India v/s. Guwahati Carbon Limited (supra), the Supreme Court, in the facts of the case, made the following observations:

“We reiterate that the High Court, under Article 226 of the Constitution of India, has vast powers as this Court has under Article 32 of the Constitution of India, but such powers can only be exercised in those cases where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are replaced, or when an order has been passed in total violation of the principles of natural justice.”

“In our opinion, the assessee ought not to have filed a writ petition before the High Court questioning the correctness or otherwise of the orders passed by the Tribunal. The Excise Law is a complete code in order to seek redress in excise matters and hence may not be appropriate for the writ court to entertain a petition under Article 226 of the Constitution. Therefore, the learned Single Judge was justified in observing that since the assessee has a remedy in the form of a right of appeal under the statute, that remedy must be exhausted first, the order passed by the learned Single Judge, in our opinion, ought not to have been interfered with by the Division Bench of the High Court in the appeal filed by the respondent/assessee.”

75. In the aforesaid decision of the Supreme Court, the Bench, in the peculiar facts of the case, took the view that the Excise Law is a complete code in order to seek redress in excise matters and, hence, may not be appropriate for a writ court to entertain a petition under Article 226 of the Constitution of India.

76. We have noticed that in the said case, the adjudicating authority had passed an order holding that the assessee had inflated the assessable value of their product by mis-declaring the actual place of removal and further included the element of transportation cost to the assessable value of the goods cleared for delivery from the place of removal i.e. factory premises to the buyer’s premises. The said case was not the one wherein it could be said that the assessee was enforcing a fundamental right. This judgment of the Supreme Court would not help the Revenue in making good the contention that in view of the alternative remedy petition deserves to be rejected.

77. In Sadhana Lodh (supra), a three-Judge Bench, in paragraphs 7 and 8 of the judgment, made the following observations as under :

“7. The supervisory jurisdiction conferred on the High Courts under Article 227 of the Constitution is confined only to see whether an inferior Court or Tribunal has proceeded within its parameters and not to correct an error apparent on the face of the record, much less of an error of law. In exercising the supervisory power under Article 227 of the Constitution, the High Court does not act as an Appellate Court or the Tribunal. It is also not permissible to a High Court on a petition filed under Article 227 of the Constitution to review or re-weigh the evidence upon which the inferior Court or Tribunal purports to have passed the order or to correct errors of law in the decision.

8. For the aforesaid reasons, we are of the view that since the insurer has a remedy by filing an appeal before the High Court, the High Court ought not to have entertained the petition under Article 226/227 of the Constitution and for that reason, the judgment and order under challenge deserves to be set aside. We, accordingly, set aside the judgment and order under appeal. The appeal is allowed. There shall be no order as to costs. However, it would be open to the insurer to file an appeal if it is permissible under the law.”

78. In the aforesaid decision of the Supreme Court, the contention before the Bench was that under Section 173 of the Motor Vehicles Act, 1988 a remedy by way of appeal to the High Court was available to the insurer against an award given by the tribunal and, therefore, the filing of a petition under Article 227 of the Constitution of India was misconceived. While accepting the contention of the appellant, the Bench observed that under Section 173 of the Motor Vehicles Act the insurer has a right to file an appeal before the High Court on limited grounds available under Section 149(2) of the Act, and where the law provides remedy by filing an appeal on limited grounds, the grounds of challenge cannot be enlarged by filing a petition under Article 226/227 of the Constitution of India on the premises that the insurer has limited grounds available for challenging the award given by the Tribunal. It is under such set of circumstances that the Supreme Court took the view that a petition could not have been preferred under Article 227 of the Constitution of India. There was no issue of enforcement of any fundamental right in the said matter.

79. In Bijoy Kumar Dugar (supra), the Supreme Court reiterated the same principle of law as the one referred in Sadhana Lodh’s case. Therefore, this decision would also not help the Revenue in any manner.

80. In Union of India v/s. Mangal Textile Mills (supra), a three-Judge Bench made the following observations :

“We are of the opinion that on the facts of the present case, exercise of writ jurisdiction by the High Court was unwarranted. As rightly pointed out by learned counsel appearing on behalf of the Revenue, the controversy in the instant case centered around valuation of plant and machinery as also inclusion or non-inclusion of certain machines, in use or not or in working condition or not, which are primarily questions of fact.”

81. In the aforesaid decision of the Supreme Court as it is apparent from paragraph 10 itself that the Bench took the view on the facts of the case so far as entertaining a writ petition was concerned. In the aforesaid decision, the controversy centered around valuation of plant and machinery as also inclusion or non-inclusion of certain machines, in use or not or in working condition or not, which are primarily questions of fact as observed by the Supreme Court.

82. In Alembic Glass Industries Limited (supra), the Supreme Court, while dismissing SLP preferred by the assessee against the judgment of this High Court in a writ petition, made the following observations :

“This special leave petition is filed against the judgment of the Delhi High Court dismissing the writ petition. The writ petition was filed against the show cause notice issued by the Central Excise department to the petitioner. The High Court has dismissed the writ petition mainly on the ground that it does not wish to entertain the writ petition against the show cause notice. We cannot say that the High Court was not right in doing so. The High Court took note of the fact that the adjudication order has already been passed in the matter, against which the petitioner had a right of appeal which he did, in fact, avail of. The petitioner shall pursue the remedy of appeal before the Tribunal. The special leave petition is accordingly dismissed. No costs.”

83. This judgment would also not help the Revenue as in the facts of the case the Supreme Court took the view that petitioner should pursue the remedy of appeal before the Tribunal. As a matter of fact, no facts have been discussed in the judgment, more particularly, as to what was the actual issue involved.

84. In Union of India v/s. Zalcon Electronics (supra), the Supreme Court in a very short order made the following observations :

“In our view, writ petition was not maintainable before the High Court. The facts required detailed adjudication. Adjudication was done by the competent authority. Assessee did not carry the matter in appeal to the Commissioner. Assessee straightway proceeded with the writ petition which was allowed by the High Court. In the facts of this case, the approach of the High Court was wrong. The High Court should not have interfered with the order. It should have directed the assessee to exhaust the statutory remedy.”

85. It appears that the facts in the said case required some detailed adjudication and in the facts of the case, the Supreme Court held that the approach of the High Court was wrong.

86. In Maritime Collector (supra), a Division Bench of Madras High Court made the following observations :

“Insofar as the rebate claim for Rs.49,330.51, being the subject matter of the order in C.No. V/55/18/89-E-C dated 11.7.1991, as against the said order, under Section 35 of Central Excise Act, appeal lies to the Commissioner of Central Excise (Appeals). When there is a statutory remedy of Appeal, resort must be had to that statutory remedy. In the main Writ Petition, the Respondent has averred that the authorities concerned have already taken a view rejecting the rebate claim on the duty paid on the yarn, and therefore, no useful purpose would be served by preferring appeal before the same authorities. The contention of the Respondent is untenable. When an efficacious statutory remedy by way of appeal is available, the Respondent ought to have exhausted the remedy.”

87. In the said case before the Division Bench of the Madras High Court, the issue was with regard to rebate claimed on the duty paid on the yarn. Under such circumstances and considering the nature of issue involved, the Bench took the view that the issue ought to have exhausted the alternative remedy.

88. Bearing in mind the aforesaid principles of law as explained by the Supreme Court and other High Courts on the question of entertaining a writ petition under Article 226 of the Constitution of India in a case where an alternative remedy by way of an appeal is available, we hold that the present case is one where there are good grounds to overrule the preliminary objection of the Revenue in this regard and proceed to decide the main issue in question by entertaining the petition.”

41. Following the very same principles as explained by this Court in the case of Darshan Boardlams Ltd (supra) quoted above, we are of the view that we should not decline to entertain this writ-application on the ground that the writ-applicants have a remedy of preferring an appeal before the appellate tribunal under Section 35B of the Act. We are saying so keeping in mind the following :

(1) The manner in which the Order in Original came to be passed by the respondent no.2.

(2) Prima facie, it appears that no opportunity of hearing was given to the writ-applicants before passing the Order in Original.

(3) A specific contention was raised by the writ-applicants as regards the discriminatory treatment. Although the authority concerned has noted the same in the impugned order, yet has not bothered to deal with the same in any manner.

(4) Even otherwise, Sections 35 and 35B of the Central Excise Act do not provide for any appeal against any circular or order or trade notice issued by the Board or the Collectorate. In this regard, we may refer to a Full Bench decision of this Court in the case of Ahmedabad Cotton Manufacturing Company Limited, AIR 1977 GUJ 113 (FB), wherein this Court has taken the view that a writ petition is the only remedy against the trade notice. In other words, as the statute does not provide any appeal against the trade notice, a citizen who seeks to challenge a circular or a trade notice can invoke the writ jurisdiction of the High Court under Article 226 of the Constitution of India.

42. We shall now deal with the question as regards non-compliance of the mandatory provisions of Section 37C of the Central Excise Act, 1944. This issue has something to do with the mode and method of service of the Order in Original. We have, in the earlier part of our judgment, given more than a fair idea as to in what manner the Order in Original was served upon the writ-applicants. We quote Section 37C of the Act as under :

“37C. Service of decisions, orders, summons, etc. – (1) Any decision or order passed or any summons or notices issued under this Act or the rules made thereunder, shall be served, –

(a) by tendering the decision, order, summons or notice, or sending it by registered post with acknowledgment due, to the person for whom it is intended or his authorized agent, if any;

(b) if the decision, order, summons or notice cannot be served in the manner provided in clause (a), by affixing a copy thereof to some conspicuous part of the factory or warehouse or other place of business or usual place of residence of the person for whom such decision, order, summons or notice, as the case may be, is intended;

(c) if the decision, order, summons or notice cannot be served in the manner provided in clauses (a) and (b), by affixing a copy thereof on the notice board of the officer or authority who or which passed such decision or order or issued such summons or notice.”

43. Sub-section (a) of Section 37C (supra) states that any decision, order, summons or notice may either be sent by registered post with acknowledgement due to the person for whom it is intended or his authorized agent. If this mode of service is unsuccessful then service can be effected by affixation. It is not the case of the department that it simultaneously also dispatched the order to the writ-applicants by registered post with acknowledgment due.

44. In the aforesaid context, we may refer to and rely upon a decision of the Supreme Court in the case of Saral Wire Craft Pvt. Ltd. (supra), more particularly, the observations made in paragraphs 9 and 10 therein, which read thus :

“9. It is an anathema in law to decide a matter without due notice to the concerned party. Every effort must be taken to meaningfully and realistically serve the affected party so as not merely to ensure that he has knowledge thereof but also to enable him to initiate any permissible action. The appellant justifiably submits that it was statutorily impermissible for the respondents to serve the adjudication order on a “kitchen boy”, who is not even a middle level officer and certainly not an authorized agent of the appellant. The version of the appellant that it learnt of the passing of the adjudication order dated 30-3-2012 only when, in the course of the recovery proceedings, the Department’s officials had visited its unit, is certainly believable. The fact that, firstly, the order had not been passed in the presence of the appellant, so as to render its subsequent service a formality, and secondly, that the order came to be passed after an inordinate period of eight months should not have been ignored. This fact should not have been lost sight of by the authorities below as it has inevitably led to a miscarriage of justice. The Inspector of the Department should have meticulously followed and obeyed the mandate of the statute and tendered the Adjudication Order either on the party on whom it was intended or on its authorized agent and on one else. It is not the respondents’ case that Shri Sanjay was the authorized agent. Even before them, despite several opportunities given, the respondents have failed to file their response to the Special Leave Petitions so as to controvert the asseveration of the appellant that Shri Sanjay on whom the decision was tendered was a mere daily wager ‘kitchen boy’ and that the appellant had no knowledge of the passing of the adjudication order. They are also informed that the recoveries envisaged in the Adjudication Order have already been effected.

10. It is in these circumstances that they are of the clear conclusion that a miscarriage of justice has taken place, in that the Authorities/Courts below have failed to notice the specific language of Section 37C(a) of the Act which requires that an order must be tendered on the concerned person or his authorized agent, in other words, on no other person, to ensure efficaciousness. They must immediately recall the decision in Taylor v. Taylor – (1875) 1 Ch. D 426, rendered venerable by virtue of its jural acceptance and applicable for over a century. It was approved by the Privy Council in Nazir Ahmad v. King Emperor – (1935-36) 63 IA 372 and was subsequently applied in Rao Shiv Bahadur Singh v. State of Vindhya Pradesh – AIR 1954 SC 322, State of U.P v. Singhara Singh – AIR 1964 SC 358, Babu Verghese v. Bar Council of Kerala – (1999) 3 SCC 422 and more recently in Hussein Ghadially v. State of Gujarat – (2014) 8 SCC 425. As observed by this Court in Babu Verghese, “it is the basic principle of law long settled that if the manner of doing a particular act is prescribed under any statute, the act must be done in that manner or not at all.” The Inspector who ostensibly served the copy of the order should have known the requirements of the statute and therefore, should have insisted on an acknowledgement either by the appellant or by its authorized agent. The Inspector had a statutory function to fulfill, not a mere perfunctory one. The appeals are accordingly allowed and the impugned orders are set aside. In the facts obtaining before them, the computation of the period would commence at least from the date on which the appellant asserts knowledge of its existence, i.e., on 26-7-2012. So computed, the appeal filed before the Commissioner (Appeals) on 22-8-2012 would be within the prescribed period of 60 days and should, therefore, have been entertained on merits. It is ordered accordingly. The appellant shall appear before the Commissioner (Appeals) on the forenoon of 3-8-2015. The appeal shall then be taken up and heard on its merits. There shall be no order as to costs.”

45. Having regard to what has been observed by the Supreme Court as quoted above, it cannot be said in the facts of the present case that there was a valid service of the Order in Original, i.e. in accordance with Section 37C of the Act, 1944. This would also vitiate the impugned Order in Original.

46. Thus, when the statute provides for a particular procedure, the authority has to follow the same and cannot be permitted to act in contravention of the same. It has been hitherto uncontroverted legal position that where a statute is required to do something in a certain way, the thing must be done in that way or not at all. The other methods or mode of performance are impliedly and necessarily forbidden. The aforesaid settled legal position is based on a legal maxim “expressio unius est exclusio atlerius”, meaning thereby that if a statute provides for a thing to be done in a particular way, then it has to be done in that manner and in no other manner and following other course is not permissible.

47. In view of the aforesaid discussion, we are convinced that we should quash and set-aside the impugned Order in Original passed by the respondent no.2 dated 30.6.2020 and remit the entire matter to the respondent no.2 for fresh consideration after giving an adequate opportunity of hearing to the writ-applicants and also keeping in mind the prima facie observations made by this Court in this judgment. We also intend to direct the Union of India to re-examine the CBEC Circular/Order No.8/92 dated 24.9.1992 and also the Ahmedabad Collectorate Trade Notice No.78/94 dated 9.5.1994 in light of the findings recorded by this Court in this judgment.

48. The writ-applicants have prayed to quash and set-aside the CBEC Circular/Order No.8/92 dated 24.9.1992 and also the Ahmedabad Collectorate Trade Notice No.78/94 dated 9.5.1994, as relying on the same, the goods manufactured by the writ-applicants are being classified as the articles of plastics under the Heading 3926 of the Central Excise Tariffs. The challenge to the CBEC Circular/Order and also the Trade Notice referred to above is substantially on the ground that the excise duty is being demanded from the writ-applicant based on such order and trade notice, whereas identical goods are being accepted as textile products in case of several other manufacturers and no duty is being charged. We do not intend to go into the issue as regards the legality and validity of the CBEC Circular/Order dated 24.9.1992 and the Ahmedabad Collectorate Trade Notice No.78/94 dated 9.5.1994 because we have something else in our mind. We intend to remit the entire matter to the respondent no.2 for fresh consideration in accordance with law, more particularly, the prima facie findings which we may record in the present order.

49. Prima facie, it appears from the materials on record that both the products involved in this case are “fabric” and both are produced by a weaving method.

50. The Agro Shade Net is knitted on the Raschel Knitting ma­chine. Knitting is a method of constructing fabric (Fair Child Dic­tionary – page 146) and it is an alternative method for making fabric (the Standard Hand Book of Textiles – page 154). Fabric is a cloth i.e. woven, knitted, braided, knitted, felted or pleated with any textile fiber, or is a pointed web.

51. The Chemical Examiner of the Department has tested and analyzed a sample of the Agro Shade Net, and for sample No.RCL/31 it is opined by him that the same is a green colored knitted fabric. The Geo Grid fabrics are woven fabrics, and the polyester yarn is used for weaving of this type of fabric. The manufacturing process of both the products is recorded in the show cause notice and also in the order passed subsequently.

52. Thus, prima facie it appears that both the products are woven fabrics, and they are brought into existence by weaving method.

53. The raw materials used for both the products is High Den­sity Polyethylene (HDPE) strips which is a plastic material. But, plastic is used for producing textile fabrics. Polyester fabrics, terelene fabrics, nylon fabrics, etc. are well known varieties of fabrics, and the raw material for all such fabrics is plastic.

54. The term “textile” is derived from the Latin “texere” which means “to weave”, and it means any woven fabric. The Apex Court has observed as under at para 6 of judgment in Porritts & Spencer (Asia) Ltd. (supra) :

“There can, therefore, be no doubt that the word ‘textiles’ in Item 30 of Schedule ‘B’ must be interpreted according to its popular sense, meaning “that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it”. There we are in complete agreement with the Judges who held in favour of the Revenue and against the assessee. But the question is : What result does the application of this test yield ? Are ‘dryer felts’ not ‘textiles’ within the ordinary accepted meaning of that word ? The word ‘textiles’ is derived from the Latin ‘texere’ which means ‘to weave’ and it means any woven fabric. When yarn, whether cotton, silk, woollen, rayon, nylon or of any other description or made out of any other material is woven into a fabric, what comes into being is a ‘textile’ and it is known as such. It may be cotton textile, silk textile, woollen textile, rayon textile, nylon textile or any other kind of textile. The method of weaving adopted may be the warp and woof pattern as is generally the case in most of the textiles, or it may be any other process or technique. There is such phenomenal advance in science and technology, so wondrous is the variety of fabrics manufactured from materials hitherto unknown or unthought of and so many are the new techniques invented for making fabric out of yarn that it would be most unwise to confine the weaving process to the warp and woof pattern. Whatever be the mode of weaving employed, woven fabric would be ‘textiles’. What is necessary is no more than weaving of yarn and weaving would mean binding or putting together by some process so as to form a fabric. Moreover a textile need not be of any particular size or strength or weight. It may be in small pieces or in big rolls; it may be weak or strong, light or heavy, bleached or dyed, according to the requirement of the purchaser. The use to which it may be put is also immaterial and does not bear on its character as a textile. It may be used for making wearing apparel, or it may be used as a covering or bedsheet or it may be used as tapestry or upholstery or as duster for cleaning or as towel for drying the body. A textile may have diverse uses and it is not the use which determines its character as textile. It is, therefore, no argument against the assessee that ‘dryer felts’ are used only as absorbents of moisture in the process of manufacture in a paper manufacturing unit. That cannot militate against ‘dryer felts’ falling within the category of ‘textiles’, if otherwise they satisfy the description of ‘textiles’.”

55. What is held by the Supreme Court is an answer to what the respondents have argued in this case about what is ‘textile’, and whether woven fabric of any material is a textile product or not.

56. Prima facie, it appears that the understanding of the word ‘textiles’ in common parlance has not been considered by the Board as well as by the Ahmedabad Collector while issuing the impugned Order and the Trade Notice respectively. Instead of considering the method of weaving as a relevant factor, the na­ture of the raw material seems to have been taken into consider­ation while issuing such Order and Trade Notice. The Board’s Circular and the Collector’s Trade Notice prima facie appear to be contrary to the law laid down by the Apex Court about what is ‘textiles’, and cannot be relied upon for classifying woven fabric.

57. Both the goods in question are being manufactured by the writ-applicants by weaving; it being warp knitting in case of the Agro Shade Net and weaving by warp and weft in case of the Geo Grid fabrics. Both these commodities are in the nature of fabrics, and the respondents have also accepted the fact that the Agro Shade Net are fabrics manufactured on the Raschel knitting machine, whereas the Geo Grid fabrics are woven fabrics manufactured on the weaving machines.

58. The judgment in Raj Pack Well Ltd. (supra) relied upon on behalf of the respondents has nothing to do with the HDPE fab­ric, but it relates to the HDPE strips/tapes/sacks. The question whether fabric woven out of strips or tapes are textile products or not, was not involved in this judgment. The contention raised by the writ-applicants is that the woven fabric would be ‘textile’ irrespective of the method of weaving through any technique and the materials used for weaving may also be anything like cotton, silk, rayon, nylon or any other description or made out of any other material; but when any such material is woven into fabric, what comes into existence is a “textile”.

59. A specific and categorical submission was raised by the writ-applicants before the authorities that similarly situated manufacturers located elsewhere in the State as well as in the country have classified similar products as textiles, and the Cen­tral Excise officers have not initiated any proceedings against them on the basis that the goods are articles of plastics charge­able to excise duty. In the representations made before the Chief Commissioner, the Ministry of Finance and the Principal Chief Commissioner as well as the jurisdictional Commissioner, the writ-applicant has submitted as under :-

“It may be noted sir that more than 100 manufacturers in the country are treating this product as a Textile material and following HSN code under chapter 60. We understand that we are the only company who have the Show cause Notice pending.”

60. A list of several manufacturers was also submitted before such authorities.

61. In the order passed by the jurisdictional Commissioner during the pendency of this writ-application also, this submis­sion has been recorded that there are more than 100 manufac­turers in the country and all of those have been treating this product as technical textile material, and a reference has also been made to the evidence like the invoices of other manufactur­ers. However, no finding has been recorded worth the name in the impugned order about this specific plea of discrimination raised by the writ-applicant. The specific pleading in this writ-application that verification had been caused by the respondents in respect of many manufacturers whose details have been fur­nished by the writ-applicant has not been disputed, and no ma­terial has been brought on record by the respondents to indicate that such submission of the writ-applicant is incorrect.

62. In the context of the specific plea of discrimination referred to above, we may refer to the decision of this Court in the case of M/s.Darshan Boardlams Ltd. (supra), more particularly, the following observations :

“103. We have also noticed that the clarifications in the present case were followed by the Central Excise Officers in charge of the Commissionerate in Uttar Pradesh, Maharashtra, Andhra Pradesh, etc. The communications were issued by the Board to the Chief Commissioner of Patna, Chief Commissioner of Hyderabad and Chief Commissioner of Pune.

104. Under such circumstances, when other Central Excise authorities of equal and higher rank have followed and acted as per the clarifications, the Commissioner, Surat, could not have taken a contrary view on the assumption that the clarifications were only letters and not orders under Section 37B. Therefore, in our view, the action on the part of the respondents in denying the benefit of Notification No.6/2006 being contrary to the Board’s circulars can be termed as without jurisdiction.

105. Mr.Dave is quite justified in submitting that the Central Excise is a central levy and, therefore, such a levy has to be collected uniformly from all similarly situated manufacturers located all throughout the country. If Excise authority of a particular Commissionerate or State refuses to allow benefit of exemption to manufacturers located in that Commissionerate or State but other manufacturers located elsewhere are allowed such exemption, then the same would be in violation of Article 14 of the Constitution of India and also of Article 19(1)(g) of the Constitution of India. We may, at this stage, profitably quote judgment delivered by this High Court in the case of Ralli Engine Ltd. (supra), reported in 2004 (62) RLT 607 (Guj.)

“The petition contains challenge to the discriminatory treatment being given by the Commissionerates in three different States, i.e., Gujarat, Maharashtra and Tamil Nadu in respect of the same product. The petitioner-Company is a manufacturer of agricultural knapsack sprayer engine which is used as a part/component in mechanical appliances for spraying pesticides in fields and farms. The product is being classified under Heading No.84.24 in Maharashtra (manufacturer-High Power Engineering Company Private Limited, Satara) and in Tamil Nadu (manufacturer-Greaves Limited, Chennai) whereas in Gujarat it is classified under Heading No.84.07 in the petitioners’ case by the Assistant Commissioner of Central Excise at Valsad under the Commissionerate of Central Excise, Valsad.”

106. We may also quote and rely upon the final judgment between the same parties rendered by a Division Bench of this Court, reported in 2006 (72) RLT 721 (Guj.)

“In the aforesaid set of facts and circumstances which remain uncontroverted, the petitioner succeeds on the limited ground of discrimination and it is not necessary for the Court to enter into any discussion on merits of the issue of classification.”

107. We have also noticed that in Special Civil Application No.3540 of 2008, this Court protected the petitioners by passing an interim order dated 28th February 2008 on the ground that the same products in other States were subjected to nil rate of duty which the petitioner had been pointing out to the department since 2006.”

63. In the result, this writ-application is partly allowed. The impugned Order in Original passed by the respondent no.2 dated 30.6.2020 is hereby quashed and set-aside. The matter is remitted to the respondent no.2 for fresh consideration of all the issues discussed in this judgment. The respondent no.2 shall give an adequate opportunity of hearing to the writ-applicants and decide the matter afresh in accordance with law, more particularly, keeping in mind the observations made by this Court.

64. We also direct the Union of India to re-look into the CBEC Circular/ Order No.8/92 dated 24.9.1992 and the Ahmedabad Collectorate Trade Notice No.78/94 dated 9.5.1994 respectively in light of the observations made by this Court and take an appropriate decision in that regard. It will be in the fitness of things if the Union of India first apply its mind to the CBEC Circular/Order No.8/92 dated 24.9.1992 and the Ahmedabad Collectorate Trade Notice No.78/94 dated 9.5.1994 and take an appropriate decision in accordance with law so as to enable the respondent no.2 to arrive at an appropriate conclusion in the fresh round of hearing. This time we make it explicitly clear that the issue of discrimination raised by the writ-applicants shall be specifically dealt with by the respondent no.2 in an appropriate manner in accordance with law.

65. Let this entire exercise be undertaken at the earliest and be completed within a period of six months from the date of receipt of the writ of this order.

It is needless to clarify that any proceedings initiated towards the recovery of the dues on the strength of the impugned Order in Original passed by the respondent no.2 shall also stand terminated.

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