SCA/4540/1981 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No.4540 of 1981 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA Sd/- HONOURABLE MR.JUSTICE Z.K.SAIYED Sd/- ===================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? NO 2 To be referred to the Reporter or not ? NO 3 Whether their Lordships wish to see the fair copy of the judgment ? NO 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5 Whether it is to be circulated to the civil judge ? NO ===================================================== NEW GUJARAT SYNTHETICE LIMITED KNOWN AS NEW GUJARAT COTTON MILS LTD.-Petitioner(s) Versus UNION OF INDIA (NOTICE SERVED TO THE JOINT SECRETARY & 2 - Respondent(s) ===================================================== Appearance : MR JS YADAV, ADVOCATE for Official Liquidator of the petitioner-Company MR HRIDAY BUCH, ADDL.CENTRAL GOVT. STANDING COUNSEL FOR THE Respondents ===================================================== CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MR.JUSTICE Z.K.SAIYED Date : 21/04/2008 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA) (1) This petition had been preferred challenging orders dated 22.09.1981, 22.09.1981 and SCA/4540/1981 2/4 JUDGMENT 14.10.1981 respectively raising demands to the tune of Rs.52,808.43, Rs.25,406.82 and Rs.835.38, respectively being Annexure-F, Annexure-G and Annexure-H. (2) The petitioner, a Limited Company, is manufacturing cotton fabrics and for the said purpose also manufacturing yarn in the same mill premises. It is the say of the petitioner that the petitioner had opted for compounded levy and accordingly duty on cotton yarn manufactured by the petitioner was being paid by the petitioner at the time of clearance of the cotton fabrics manufactured by the petitioner out of cotton yarn. (3) As against that, according to the respondent authority, the petitioner was permitted under Rule 96W of the Central Excise Rules, 1944 to pay duty on yarn manufactured at the time of payment of duty on cotton fabrics. But despite the petitioner having recovered the duty on yarn in addition to the contract price / wholesale price declared in the price list of cotton SCA/4540/1981 3/4 JUDGMENT fabrics there was short payment of excise duty on the fabrics so cleared for the period 16.03.1976 to 31.12.1976, 01.01.1977 to 30.04.1977 and 01.05.1977 to 07.05.1977. After issuing show cause notices to the petitioner and considering the replies tendered by the petitioner, the three orders were made by the respondent authority raising the demands in question. (4) Though at relevant point of time a dispute between the parties could have existed as to whether the self removal for captive consumption was liable to duty or not the position is no longer res integra. In the case of M/s. J.K. Cotton Spinning and Weaving Mills Ltd. Vs. Union of India & Ors., AIR 1988 SC 191, the Apex Court in no uncertain terms held that if a commodity which is manufactured in such place or premises and is used for the manufacture of another commodity, then it will be a case of removal for the purpose of payment of excise duty. Thus, consumption of excisable goods may be within SCA/4540/1981 4/4 JUDGMENT such place or outside such place. (5) In light of the aforesaid settled legal position the petitioner cannot be heard to contend otherwise by stating that the duty on yarn is absorbed in the duty payable on the fabric and, therefore, the duty on yarn is required to be excluded while arriving at an excisable value of the fabric under Section 4 of the Central Excise and Salt Act, 1944. (6) In the circumstances, the petition is rejected. RULE discharged. Interim relief stands vacated. There shall be no order as to costs. Sd/- [D.A. MEHTA, J] Sd/- [Z.K.SAIYED, J] *** Bhavesh*