Case: Ahmedabad Manufacturing and Calicoprinting Company Limited and A Vs. Union of India and Others

Central Government by Notification No. 20/82-C.E . dated 20th February, 1982 amended Rules 9 and 49 of the Rules. Section 51 of the Finance Act provides that the amendments in Rules 9 and 49 of the Rules shall be deemed to have, and to have always had the effect on and from the date on which the Rules came into force i.e. 28th February, 1944. After the said amendments of the Rules with retrospective effect, the appellants amended the Writ petition and challenged the constitutional validity of Section 51 of the Finance Act, 1982 and of the amendments to Rules 9 and 49 of the Rules. The High Court came to the conclusion that section 51 of the Finance Act, 1982 and Rules 9 and 49 of the Rules, as amended, were valid. It was further held that the retrospective effect give n by Section 51 of the Finance Act, 1982 will be subject to the provisions of Sections 11A and 11B of the Act. It was further held that the yam which is produced at an intermediate stage in the mill of the appellants therein and subjected to the integrated process of weaving the same into fabrics, will be liable to payment of excise duty in view of the amended provisions of Rules 9 and 49 of the Rules. But the sized yam which is actually put into the integrated process will not again be subjected to payment of excise duty for, the unsized yarn, which is sized for the purpose, does not change the nature of the commodity as yarn. The Writ Petition was accordingly allowed in part, as stated aforesaid, and it was this decision which came up in appeal before this Court. This Court agreed with the Delhi High Court and upheld the vires of Rules 9 and 49 of the Rules as well as Section 51 of the Finance Act, 1982. This Court also agreed with the High Court that the retrospective effect given by section 51 of the Finance Act, 1982 will be subject to the Provisions of Sections 11A and 11B of the Act. This Court also agreed with the view of the High Court that the yarn which is produced at an intermediate stage in the mill of the appellants and subjected to integrated process of weaving the same into fabrics, would be liable to payment of excise duty in view of the amended provisions of the Rules, But, this Court further agreed with the High Court, the sized yarn which is actually put into the integrated process will not again be subjected to payment of excise duty for, the unsized yarn, which is sized for the purpose does not change the nature of the commodity as yarn. This Court observed at pages 720 and 721 of the report as under:-"In the instant case, the appellants are liable to pay excise duty on the yarn which is obtained at an intermediate stage and, the reafter, further processed in an integrated process for weaving the same into fabrics.

Court's reasoning:
It will be noticed from the aforesaid items that the measure for imposition of excise duty is by weight "per kilogram" in all the three items, namely-18.1, 18.111 and 18E. Therefore, the aforesaid decision in J.K . Couon Mills will be applicable to all types of cases under Items 18.1, 18.111 and 18E. After the decision of the Gujarat High Court, instead of granting the refund, the Superintendent of Central Excise, Range IV, Division V, Ahmedabad, issued impugned notices, collectively annexed as Annexures B and C to the present writ petition in pursuance of the directives dated 24th May, 1982 which are subject matter of challenge in the present writ petition.On behalf of the respondents Mr. Ganguly learned counsel submitted that this Honble Court ought not to entertain the present writ petition under Article 32 of the Constitution. He, however, could not dispute that the matter is directly covered by the decision of this Court in the aforesaid case of J.K Cotton Mills