l Appeal Nos
2436 37 of 1987 etc
From the Judgment and Order dated 241983 of the Cus toms Excise and Gold Control Appellate Tribunal New Delhi in Appeal No ED TSB6476 D and EDSBT A No 6176 D in Order Nos
D 169 and 170 of 1983
VC Mahajan A Subba Rao and CV Subba Rao for the Appellant
Soli J Sorabjee PH Parekh MK Pandit and JP Pathak for the Respondent
The Judgment of the Court was delivered by RANGANATHAN J
These are three appeals by the Collector of Central Excise
Two of them relate to Ahmedabad and one to Bombay
The Ahmedabad appeals are in the case of Ms Ashoka Mills Ltd and the Bombay appeal is in the case of Ms Mafatlal Fine Spinning and Manufacturing Co Ltd These appeals raise a very interesting question
88 The assessee respondents are companies manufacturing yarn and cotton fabrics the manufacture of yarn being a step in the process of
the manufacture of cotton fabrics
Cotton fabrics which expression included all fabrics con taining more than 40 by weight of cotton were subject to excise duty on an ad valorem basis under item 19 of the tariff in the First Schedule to the Central Excises  Salt Act 1944 hereinafter referred to as the Act 
Yarn all sorts not elsewhere specified   became liable to duty under item 18E of the First Schedule under the Finance Act 1972 wef 17372
The consequence was that from 17372 the yarn which was being produced by the appellants became liable to duty under item 18E while the fabric manu factured by them was dutiable under item 19
The Central Government decided to give two categories of assessees the benefit of the provisions of Rules 96 V  W of the Central Excise Rules i assessees manufacturing woollen yarn and ii assessees manufacturing cotton yarn or yarn falling under item 18E and using the same wholly or partly in the manufacture of fabrics in their own factory
These rules appeared in Chapter V of the Rules as Section E VI headed Cotton yarn woollen yarn yarn falling under tariff item 18E Special Procedure
This Section in the rules was inserted by notification No 11061 dated 20461 and omitted by notification No 14677 dated 18677
They read thus 96 V Application to avail of special proce dure  1 Where a manufacturer who manufactures cotton yarn yarn falling under item 18E of the First Schedule to the Central Excises  Salt Act 1944 1 of 1944 or woollen yarn and in the case of cotton yarn of yarn falling under item 18E of the First Schedule to the Central Excises  Salt Act 1944 1 to 1944 uses the whole or part of the yarn manufac tured by him in the manufacture of cotton fabrics in his own factory makes in the proper form an application to the Collector in this behalf the special provisions contained in this section shall on such application being granted by the Collector apply to such manufacturer in substitution of the provisions contained elsewhere than in this section for the period in respect of which the application has been so granted
2 Such application shall be made so as to cover a period of not less than six consecutive calendar months but may 89 be granted for a shorter period in the discre tion of the Collector
3 If at any time during such period the manufacturer does not want to avail himself of the special provisions contained in this section he shall give a notice in writing to the proper officer of his intention at least one week in advance and if he fails to give such notice he shall be precluded from avail ing himself of such provisions for a period of 6 months from the date of such failure
96 W Discharge of liability for duty on payment of certain Sum 1 Having regard to the average production of cotton fabrics from one kilogram of cotton yarn or yarn falling under item 18E of the First Schedule to the Central Excises  Salt Act 1944 1 to 1944 or the average prevail ing prices of woollen yarn the Central Govern ment may by notification in the Official Gazette fix from time to time a rate per square metre of the cotton fabrics produced or per kilogram of the woollen yarn produced as the case may be subject to such conditions and limitations as it may think fit to impose and if a manufacturer whose application has been granted under rule 96V pays a sum calcu lated according to such rate in the manner hereinafter laid down such payment shall be a full discharge of his liability for the duty leviable on the quantity of cotton yarn of yarn falling under item 18E of the First Schedule to the Central Excises  Salt Act 1944 1 of 1944 manufactured by him and used in the manufacture of fabrics in his factory or the quantity of woollen yarn produced by him 1
Provided that if there is an alteration in the rates of duty andor in the limit of exemption the sum payable shall be recalcu lated on the basis of the revised rates andor exemption limit from the date of alteration and liability for duty leviable on the quanti ty of cotton yarn or yarn falling under item 18E of the First Schedule to the Central Excises  Salt Act 1944 1 to 1944 used in the manufacture of cotton fabrics or woollen yarn produced shall not be discharged unless differential duty is paid
90 a in the case of such cotton yarn or yarn falling under item 18E of the First Schedule to the Central Excises  Salt Act 1944 1 of 1944 as on the date of clearance of the aforesaid cotton fabrics and b in the case of woollen yarn as on the date of clearance of such woollen yarn from the factory of the manufacturer should however the amount of duty so recalculated be less than the sum paid the balance shall be refunded to the manufacturer
2 The rate specified under sub rule 1 shall be separately and distinctly notified and shall be separately and distinctly ap plied in respect of i cotton yarn and ii woollen yarn
3 The sum payable under sub rule 1 in respect of cotton yarn shall be paid by the manufacturer along with the duty on fabrics in the manner prescribed in rule 52
Provided that where cotton fabrics are allowed to be removed in bond under rule 96 D from one factory to another hereinafter referred to as the processing factory for processing and the cotton fabrics also processed are cleared from the processing factory the duty payable under sub rule 1 shall be paid by the licencee of the processing factory
A notification as envisaged by Rule 96V was issued being notification No 6272 on 17372
It reads as follows In pursuance of rule 96 W of the Central Excise Rules 1944 the Central Government hereby directs that the rate of duty in re spect of yarn containing partly more than 40 per cent by weight of cotton and partly any other fibre or fibres the wool or silk con tent being less than 40 by weight of such yarn where such yarn contains wool or silk and falling under Item No 18E of the First Schedule to the and of the description specified in column 2 of the Table hereto annexed shall be the rate specified in the corresponding entry in column 3 of the said Table
91 THE TABLE section No Description of yarn Rate 1 2 3 Paise per square metre of the fabric made
Yarn used in making super 2000 fine fabrics
Yarn used in making fine fabrics
1200 3
Yarn used in making medium 600 fabrics
Yarn used in making 440 medium fabrics
Yarn used in making coarse fabrics
220 6
Yarn used in the manufacture 440 of cotton fabrics generally described as Malimo type fabrics or fabrics in which warp and weft yarns are connected and fastened together by chain stiches baned against each other
Yarn used in making embriodery The duty for the in the place in steps or in time being leviable motifs
on yarn contained in the base fabrics if not already paid
Yarn used in making fabrics do impregnated or coated with preparation of cellulose derivations or of other artificial plastic materials
Provided that if the manufacturer elects to avail himself of the special provisions con tained in rule 96 W aforesaid the procedure set out in that rule in this behalf shall uniformly apply to all the yarn of the de scription specified in the above table and used by him in the production of cotton fab rics in his factory
92 Explanation For the purpose of this notification i base fabrics shall have the same meaning as assigned to it in tariff item No 19 of the first schedule to the Central Excises  Salt Act 1944 1 to 1944 ii the average count of yarn in a fabric shall be deemed to be the count of all yarn contained in such fabric
 Rules 96 V  W it will be noticed deal with two items cotton yarn or yarn falling under item 18E of the First Schedule and woollen yarn
Normally under the Schedule to the Act woollen yarn was being charged to excise duty on an ad valorem basis while cotton and other yarn was being assessed on weight basis
The rules cited above and the notification referred to however provided an alternative on the application of the assessee
On a notification being issued and the assessee s option being exercised duty on woollen yarn became payable on the basis of weight at the rates prevalent at the time of clearance of the yarn from the factory
If the rates had gone up in the meantime the assessee had to pay the differential duty and if the rates had gone down the assessee would be entitled to a refund
Thus the assessee was given the option of paying the duty on the woollen yarn on weight basis at the rates prevalent on the date of their clearance
We are not concerned with this here
So far as cotton and other yarn is concerned the duty in cases governed by a notification and application under this Section would be levied not on the weight of the yarn manufactured but on the extent of fabric manufactured from such yarn
Naturally this duty could be calculated only after the fabric had been manufactured on the basis of the area of cloth or fabric manufactured
This would create a doubt whether the duty on yarn under the scheme is payable on the production of yarn or on the date of clearance of the fabrics
Sub section 3 of section 96 W clears this doubt
It provides that the duty would be paid along with the duty payable on the fabrics under rule 52
This clearly shows that it is not the incidence of liability that is shifted but only the collection of the duty
The purpose of the rules and notifications may be briefly set out thus
As already mentioned both yarn and fabrics are individual items exigible to duty
Two levies on the yarn as well as on the cotton fabrics on different bases may not only impose an undue burden on 93 the manufacturer but may also unnecessarily complicate the process of collection of duty at two stages
The Act there fore envisages what has been described as a scheme of compounded levy
Under this scheme the excise duty on the yarn is collected only as and when the manufactured goods namely cotton fabrics are cleared from the factory and no duty is collected at the stage of the production or manufac ture of yarn
The duty paid as per this notification is treated as a full discharge of the assessee s liability for the duty leviable on the yarn used by the assessee for manufacture of fabrics in its factory
To sum up briefly rules 96 V and 96 W together with the notification issued thereunder are concerned only with the issue of the excise duty leviable in respect of yarn and what they seek to achieve are a the alteration of the basis of duty from a rate calculated on the weight of yarn produced to a calculation on the basis of the area of fabric manufactured therefrom b the postponement of the collection of the duty till the point of clearance of the fabrics and c the levy of the duty at rates prevalent not on the date of production of the yarn but on the date of clearance of the fabric
If the notification of 1731972 had continued in force there would have been no difficulty in its application
However on 2471972 the Government issued Notification No 169 of 1972 the result of which was that the special procedure referred to above was made inapplicable to the type of yarn manufactured used for weaving and cleared by the appellants
The short question in these appeals is as to the effect of this omission in respect of yarn produced after 17372 and cleared for captive consumption before 24772 but lying in various departments at various stages of manufacture or in the form of cotton fabrics not yet cleared as on 24772
The Department has taken the view that in respect of the yarn manufactured between 17372 and 23772 the assessee is liable to pay the normal duty pay able on yarn under Item 18E so long as the fabrics manufac tured out of such yarn remained uncleared from the factory as on 24772
On the other hand the assessee s contention is that excise duty on yarn is attracted as soon as it is produced and cleared for captive consumption though kept in abeyance and collected so long as the notification was in force till the corresponding fabrics were cleared
The assessee is not liable to pay any higher duty in respect thereof unless one could bring it within the terms of the proviso to the notification
The short contention is that 94 the proviso applies only in a case where the notification under section 96 W continues to be in force and there is a change in rates under the scheme of compounded levy intro duced by the notification but not where the difference in rates is one between those prevailing on the date of produc tion of yarn under the scheme and the date of clearance of the goods after the abandonment of the scheme
The Customs Excise  Gold Control Appellate Tribunal CEGAT accepted the contention of the assessee following its earlier decision dated 241983 in Ms Raipur Manufac turing Co vs Collector of Central Excise Ahmedabad It held that the yarn cleared for captive consumption during the period from 173
1972 to 237
1972 in terms of the special procedure was entitled to the bene fit of the rates fixed under Notification No 6272 CE dated 1731972 and that no further duty was payable on that quantity of the yarn
A consequential refund to the appel lants was directed
We notice that this order of the Tribu nal was followed by another Bench of the Tribunal in its order dated 2071983 and this decision had been reported much earlier as Crown Spinning  Manufacturing Co Ltd vs Collector The Collector Central Excise has preferred these appeals
We have come to the conclusion that the view taken by the Tribunal has to be upheld Yarn  is an excisable com modity and it is common ground before us that normally and but for the special procedure and notification duty thereon is leviable at the point of production and clearance for captive consumption
On that view the duty attaches itself at the point of production and clearance of the yarn
The notification does not alter this position
it does not shift the incidence of duty from yarn to the woven fabric
It still talks only of the liability of the yarn to duty and proceeds to provide only for its postponed collection
If we are right on this the duty on such yarn produced between 17372 and 24772 has to be determined in accordance with the rates specified in the notification though such rates may have to be calculated in terms of the area of the fabric cleared on or after 2471972
The duty cannot be determined at the rates specified for yarn under item 18E as applicable on the dates of clearance of the fabric manufactured by using the yarn
To hold otherwise would really mean holding that the incidence of duty on the yarn under the notifica tion arises only on the date of clearance of the manufac tured fabric
This in our view is not the effect of the notification
The proviso to Rule 96 W does not help the revenue
It only 95 contemplates cases where there is a change in the rates prescribed under the notification between the date of pro duction of the yarn and the date of clearance of the fabric
In such a case an assessee may well contend but for the proviso that the duty having attached itself on the date of production of the yarn it has to be calculated only at the rates then prevalent and should not be recalculated at the rates prevalent on the dates of clearance of the fabrics
The proviso precludes such an argument
It would be entirely superfluous and redundant if as contended for by the reve nue the liability to pay duty on the yarn itself arises only on the date of clearance of the fabrics
It is intended to provide specifically that it is the intention of the Government that in such a case the rates prevalent on the date of clearance of the fabric should govern
The word recalculated  used in the proviso also supports such a conclusion
This word would be inappropriate if the notifi cation envisaged the levy of duty at the point of clearance of the fabrics as contended for by the Revenue for in that event there would be only one calculation as at that point of time and no question of recalculation would arise
In other words the notification grants a concession but only subject to change in these concessional rates that may occur until the fabrics made out of the yarn are cleared
We do not think that the words of the proviso can be extended to cover a case where the notification itself has ceased to apply by the date of clearance of the fabric
To apply the proviso to such a case would result in its ap plicability to a totally different situation
It would involve a comparison of unlikes
It would mean the substitu tion of one set of rates prescribed in connection with a special procedure on the basis of the area of cloth by another set of rates applicable to yarn in the normal course which is to be worked out on the basis of weight
This involves a mix up of two totally different schemes of levy of duty on yarn
We do not think it is correct to place this construction on these provisions
In our opinion the normal rates de hors the notification will apply only in respect of yarn produced on or after 24772 and not to yarn produced between 17372 and 23772
The assessees having paid at the normal rates in respect of the latter period were right ly held entitled to seek a refund
We may also point out that the best that can be said for the department is that the system of compounded levy ceased only on 2471972
This means that the normal rules will become applicable
But the normal duty on yarn effective from 24772 cannot be retrospectively applied to the yarn which had been authorisedly removed from the spindles for captive consumption prior to that date
The fact that 96 the clearance of the fabrics made of such yarn was after
24772 would be irrelevant in computing such normal duty for yam
There is no principle or statutory language that compels an assessee to be deprived of the concessional rate that has been made available to it under a special proce dure in respect of the yam produced by it and utilised for captive consumption
For these reasons we agree with the view taken by the Tribunal and dismiss these appeals
We however make no order as to costs


Summary:
The High Court in an appeal against a decision of the Forest Tribunal under the provisions of the Kerala Forests Vesting  Assignment Act 1971 held that 92 acres of forest land were to be given back to the appellants
Accord ingly the Forest Department returned certain lands
Later on they realised that the lands constituted thick forests and had valuable trees thereon and refused the timber trans it permits applied for by the appellants
Aggrieved against the decision the appellants ap proached the High Court by way of a Writ Petition
The High Court held that the appellants were not entitled to any relief with regard to rosewood and other trees cut from the lands that did not form part of the land ordered to be restored to them
The High Court directed the Forest Depart ment to consider the application of the appellants and pass appropriate orders after giving an opportunity to the appel lants to put forward their contentions
This appeal by special leave is against the said order of the High Court
Allowing the appeal in part HELD 11 The appellants are entitled to return of 92 acres of land and not 80 acres
This is on the ground that the direction of the High Court in the first appeal became final and in terms of such direction 92 acres were to go back to the appellants
Government had no authority to alter the decision by an administrative order as has been done in this case
41D 12 There is no dispute that 5631 acres have been restored to the appellants
By the affidavit of 24th June 1989 2369 acres have been 38 offered to be restored from three survey numbers indicated therein
With the restoration of 2369 acres the appellants would have got back 80 acres of land
There would still be 12 acres to be returned to the appellants
The respondents shall have a direction to trace these 12 acres in the local ity and make over vacant possession to the appellants there of within four months
41E 13 In case 2369 acres or any part thereof as indicated in the affidavit Cannot be delivered possession and the balance 12 acres are not identified and possession thereof cannot be delivered the appellants shall be entitled to compensation in respect of the shortfall out of 3569 acres in all which remain to be delivered and compensation for such shortfall shall be determined as if it were acquisition under the provisions of the Land Acquisition Act the date of the preliminary notification being deemed to be the date of judgment of the Division Bench in MFA 40178
The direc tions indicated above shall be worked out by the respondents within a total period of six months
41F G 2
The High Court called upon the respondents to consid er the appellants  plea for timber transit permits in re spect of trees cut from certain other lands
There is no material on record as to whether that has been complied with
In case the respondents have not done the same yet they are directed to comply with the order of the High Court within three months
41H 42A