1. The sole common question that arises for consideration in all these cases is, whether wet grinder is exigible to excise duty under Excise Tariff Item 33C.

2. The petitioner in W.P 3233, 3244, 4281, 4282, 4348, 4473, 5161 and 7494 of 1982 are traders-dealers in wet grinders among other things. The petitioners in W.P 596, 4280, 5127 of 1981 and 8588 of 1982, are manufacturers of wet grinders.

3. In W.P 3233, 3244, 4280 to 4282, 4348, 4473, 5127 and 5161 of 1981, the prayer is for the issue of writs of prohibition prohibiting the respondents from in any manner acting on the strength of Trade Notice No. 170/80/4G/GL/80 dated 3-10-1980 reclassifying the domestic grinder marketed by the petitioners, and giving effect to such reclassification in any manner or under some other guise. The prayer in the W.Ps Nos. 7494 and 8588 of 1982 is to quash the above said Trade Notice and for a consequential mandamus restraining the respondents from giving effect to the same. The prayer in W.P 596 of 1981 is to quash the impugned order of the Collector, Central Excise, and for a consequential mandamus restraining the respondents from giving effect to the Trade Notice. It is an admitted fact that both the traders and the manufacturers purchase from outsiders electric motors to fix the same in grinders. It is also an admitted fact that Excise Tariff Item 33C came into force with effect from 1-3-1969 by Finance Act No. 14 of 1969. The facts and circumstances leading to the filing of these writ petitions may now be noted. We have noticed earlier that Excise Tariff Item 33C was introduced by Finance Act 14 of 1969 with effect from 1-3-1969. When the departmental people called upon the manufacturers in wet grinders to take out a licence under the Central Excise Act, they protested and made representations through the Manufacturers' association. Subsequently, the manufacturers were informed by the Central Excise Officers that the domestic grinders will not fall within the scope of Excise Tariff Item 33C. Notwithstanding the stand taken by the Central Excise officials earlier at a later point of time, the department tried to make inroads by bringing out trade notices, to the manufacturers stating that the domestic grinders will fall within the scope of Item 33C of Central Excise Tariff. Again representations were made by the manufacturers as well as traders. After detailed discussion, the Government of India, Ministry of Finance, Central Board of Excise and Customs, New Delhi, by their reference No. 154/1/75.CX4 dated 12-6-1975, issued a circular stating that wet grinders driven by external motor system would fall outside the scope of Item 33C of the Central Excise Tariff. While so, suddenly another circular Trade Notice which is impugned in these writ petitions came to be issued stating that the wet grinders marketed without any electrical motor will fall under Tariff Item 68 and if the same is marketed with electric motor, will fall under Tariff Item 33C The petitioners, aggrieved by the change in the view expressed in the Trade Notice, have filed these writ petitions for the reliefs as mentioned above.

4. The respondents, apart from raising a preliminary objection as to the maintainability of the writ petitions, have also answered the points raised in the affidavits filed in support of the writ petitions in their common counter affidavit as well as the individual counter affidavits. The substance of the counter affidavits may now be noted. According to the respondents, the impugned trade notice is just a communication advice to the trade and the same has no legal effect. The Assessing and Classifying Officers are independent quasi-judicial authorities and they are not bound by any trade notice in discharge of their legal duties. The trade notices have no legal effect and, therefore, they cannot be impugned in proceedings under Article 226 of the Constitution of India. So far as the petitioner in W.P 596 of 1981 is concerned, he has no effective alternative statutory alternative remedy. For these reasons, the respondents urge that the writ petitions are not maintainable.

5. On merits, the respondents have stated that though the manufacturer of wet grinder and trader in wet grinder purchase the electric motor separately from another manufacturer, they will be liable to pay excise duty under Item 33C of the Central Excise Tariff in view of the process of manufacture involved in fitting motor to the steel frame of the wet grinder in the space allotted for the same and by connecting the wheel base of the grinder with the motor by using a V-belt. It is the case of the respondents that after fitting the electric motor to the steel frame, in the manner stated above, a new and different product emerges and the same is so commercially consumed in the market which is different from the raw materials, namely, motor and grinder portion. Therefore, the new produce is exigible to excise duty under Item 33C of the Central Excise Tariff. For this purpose, the respondent relies upon the definition of ‘manufacture’ in Section 2(f) of the Central Excises and Salt Act, 1944. It is stated in the counter affidavit that invariably the petitioners are marketing the wet grinders after assembling the same, and that no consumer will venture to but a wet grinder in any unassembled condition as the assembly involves a number of manufacturing operations. The fact that electric motor fitted into the wet grinder has already been subjected to excise duty is of no consequence as the electric motor was subjected to excise duty under another specific tariff entry. But the excise duty levied after the motor is fitted to the wet grinder is on a commercially different and distinct product, falling under Item 33C of the Central Excise Tariff. The scheme of excise itself envisages levy of duty on the raw materials as well as the finished goods so long as the articles fall under different item or special item of the same Tariff Item. The contention that the traders are not manufacturers and they are selling only the goods already manufactured, according to the respondents, is a misconceived one as the wet grinder marketed by the trader is different from the mere wet grinder without a motor and motor purchased by them previously separately. Even otherwise, according to the respondent, the liability for Dayment of excise duty is fastened vicariously on the petitioners as well. The wet grinder in question is certainly a domestic appliance and it is primarily designed to operate on electrical energy. The electrical motor is an integral part of the grinder and a grinder of the nature in question without motor will be a misnomer in the market. Only after the fitment of the motor, the wet grinder is brought to the market and called as such in the commercial parlance. The claim of the petitioners that wet grinders in question can be operated even without electricity, for example, by hand or otherwise, will make the purpose nugatory and such allegation is made only for the purpose of the case. The language used in Entry 33C is quite clear and all types of domestic electric appliance, are covered under Item 33C. The legal position will be quite clear by reading the Tariff Entry vis-a-vis Notification 33/69 dated 1-3-1969 issued under Rule 8 of the Central Excise Rules. That Notification exempts all domestic and electrical appliances other than those mentioned in the schedule annexed to the notification. The grinders and mixies are specifically included under Item No. 3 in the schedule which means that the wet grinders are liable to duty.

6. This respondents have further stated that there are questions of fact raised by the petitioners which cannot be satisfactorily decide in the proceedings under Article 266 of the Constitution and these questions must be left to be decided by the appropriate authorities functioning under the Central Excises and Salt Act. The wet grinders are commonly known and used only as an electric appliance and not otherwise. On the basis of these averments in the counter affidavits, the respondents have prayed for the dismissal of the writ petitions.

7. Mr. A.K Kailasam, learned counsel for the petitioners, placing reliance heavily on two Division Bench judgments of the Gujarat High Court namely, Balakrishna Rechhodlal Sha v. Asst. Collector of Central Excise, Ahmedabad, reported in 1979 E.L.T 377 and Shri Punit Ghar Ganti v. Union of India, reported in 1981 E.L.T 121, submitted that the goods dealt with by the Gujarat High Court are identical to the goods in dispute in these cases and the Excise Law being a Central enactment, must be enforced uniformly throughout the country and, therefore, the contrary view taken by the Central Excise authorities in Tamil Nadu State cannot be sustained. In support of this proposition, he relied on the following decisions: The Union of India v. The Elphinstone Spinning and Weaving Mills Co. Ltd., reported in 1969 E.L.T 680, Lachmandas Tobacco dealers v. Union of India, reported in 1978 E.L.T 502, Geep Flashlight Industries Ltd., Allahabad v. Union of India, reported in 1979 E.L.T 391, and Arlabs Ltd. v. A.K Bandyopadha reported in 1981 E.L.R 684 and Electronic Industrial Corporation v. Collector of Customs, Bangalore reported in 1982 E.L.T 15. Learned counsel further submits that the reason given by the Collector of Central Excise in the impugned order in W.P 596 of 1981 that the Government have not accepted the Gujarat High Court's judgment cannot be allowed to stand. He brought to my notice that the Revenue, aggrieved by the judgment of the Gujarat High Court preferred a Special Leave Petition to the Supreme Court and the Supreme Court declined to admit the Special Leave end thereby confirmed the judgment of the Gujarat High Court.

8. The learned counsel, apart from placing reliance on the judgment of the Gujarat High Court (above referred to) submitted that immediately after the introduction of Item 33C in the Central Excise Tariff, there was some doubt whether wet grinders will fall under Item 33C of the Central Excise Tariff. It was decided by the authorities concerned after a prolonged discussion with the traders and among themselves that wet grinders will not fall under Item 33C of the Central Excise tariff inasmuch as they did not have in-built motors for instant operation in the system itself. But they are operated by V-belt mechanism and through external motors. This conclusion, reached by the Collector of Central Excise in a conference was accepted by the Central Board of Excise and Customs and the Central Government issued appropriate instructions in this regard. While so, after a long time and when there is no change in the Entry itself, and when there is no judicial pronouncement by way of any other High Court or Supreme Court taking a different view from that of the Gujarat High Court, the respondents have no valid reason to issue the impugned trade notice reclassifying the wet grinders and bringing the same under Item 33C of the Central Excise Tariff. Mr. A.S Kailasam, learned counsel for the petitioners contended that if at all the respondents can depart from their earlier stand, it must be for cogent reasons such as fresh facts subsequently brought to their notice or any relevant change in the Tariff Entry or any other pronouncement of High Court or Supreme Court necessitating reconsideration of the issue. Otherwise, they cannot depart from their earlier stand as and when they like. For this proposition, he relied on a Division Bench decision of the Delhi High Court in J.K Synthetics Ltd. v. Union of India, 1981 E.L.T 328, and two other judgments of this Court in Indian Organic Chemicals Ltd. v. Union of India, 1983 E.L.T 34 and Madras Rubber Factory Ltd. v. Asst. Collector of Central Excise Madras, 1981 E.L.T 565.

9. Learned counsel for the petitioners further contended that in the fitment of motor into the wet grinder in the places meant for it, no manufacturing process takes place within the meaning of Section 2(f) of the Act and the assumption on the part of the respondents that in the process of fitment of motor, there was a process of manufacture, and at the end, a new product emerges out of such manufacturing process exigible to excise duty is without any basis. To substantiate his contention that there is no manufacturing process involved, he cited a decision in Union of India v. Delhi Cloth and General Mills Co. Ltd., 1977 E.L.T 199.

10. The learned counsel submitted that the trade notice impugned in these writ peritions will be binding on the authorities subordinate to the Collector who has issued the Trade notices and they cannot pass orders ignoring the same. In support of this, he relied on the following judgments - B. Rajagopal v. State Transport Appellate Tribunal, Madras, AIR 1964 S.C 1573, Orient Paper Mills Ltd. v. Union of India, AIR 1969 S.C 48, Union of India v. Tata Iron and Steel Co. Ltd., Jamshedpur, 1977 E.L.T (J 6), Bata India Ltd. v. Asst. Collector of Central Excise, Patna, 1978 E.L.T (J. 211), Guest Keen Williams Ltd. v. Union of India, 1980 E.L.T 6, State Chemicals (Bombay) Ltd. v. Union of India, 1980 E.L.T 133, Poona, Bottling Co. Ltd. v. Union of India, 1981 E.L.T 389 and K.P Verghese v. Income Tax Officer, Ernakulam, (1981) 4 SCC 173 : AIR 1981 S.C 1922. The learned counsel also cited a Division Bench judgment of this court in William Jacks and Co. Ltd. v. State of Madras, 11 S.T.C 340, to substantiate his contention that wet grinder will not come within the purview of Item 33C of Central Excise Tariff.

11. On these contentions, the learned counsel submitted that the impugned trade notice is liable to be quashed. So far as W.P 596 of 1981 is concerned, the learned counsel submitted that the impuged order is based on the trade notice and, therefore, it is liable to be set aside even on that ground apart from the fact that the trade notice is not in conformity with Item 33C of the Central Excise Tariff.

12. Mr. T. Somasundaram, learned counsel appearing for the respondents, answering the contentions advanced by the learned counsel for the petitioners submitted that the assessing authorities are entrusted with quasi-judicial functions and as such, the trade notice, even if it is one issued by Central Excise Board, will not bind them and the assessing authorities will function independently of the trade notice. In support of this, he cited the judgment of the Supreme Court in Orient Paper Mill Ltd. v. Union of India, AIR 1969 S.C 48 — 1969-1 SCR 45, Union of India v. The Elplinstone Spinning and Weaving Mills Ltd., 1978 E.L.T 680 and Madhu Wool Spinning Mills v. Union of India, 1983 E.L.T 2200.

13. Next he contended that the writ petitions with prayers for the issue of writs of prohibition are misconceived as no writs for Prohibition will lie in the facts and circumstances of the case, inasmuch as the jurisdiction of the Assessing Officer is not in doubt. In support of this he relied on a Division Bench judgment of this court in Collector of Central Excise, Madurai v. Madurai Coats Ltd., 1986 E.L.T 157. The learned counsel also submitted that Rule 233 of the Central Excise Rules enables the Revenue to issue trade notices and, therefore, the petitioners cannot challenge the impugned trade notice. The further contention is that Entry 33C of the Central Excise Tariff has to be construed in the light of the words employed therein and decisions interpreting the items or entries in other enactments cannot be relied on for understanding the scope of Entry 33C. For this proposition, he cited a decision in Brooke Bond India Ltd. v. Union of India, 1984 E.L.T 32. The learned counsel submitted that even though the manufacturer of wet grinder and the trader have purchased electric motors from third parties and thereafter fitted the latter into the steel frame of the wet grinder, and connected the motor with the wet grinder by V-belt, both the trader and the manufacturer are liable to pay the excise duty in view of the fact that in fitting the electric motor with the wet grinder, a manufacturing process takes place and as a result of such a manufacturing process, a commercially new product emerges. Section 2(f) of the Act defines that the manufacture and the process employed in fitting the electric motor into the steel frame of the wet grinder will amount to manufacture within the meaning of Section 2(f) of the Act. For this proposition, he cited two decisions, namely Empire Industries Ltd. v. Union of India, 1985 E.L.T 279 and Vijaya Cycle and Rickshaw Co. v. Commissioner of Sales Tax, U.P, 27 S.T.C 573.

14. Mr. T. Somasundaram, learned counsel further submitted that a perusal of the Notification 33/69 issued under Rule 8 of the Rules framed under Central Excises and Salt Act will clearly show that the wet grinder in question will fall under Item 33(c) of the Central Excise Tariff. Even otherwise, this court and the Supreme Court in a number of cases have taken the view that for the purpose of levy of tax or duty, on any particular commodity, dictionary meaning of the word should not normally be resorted to, but the meaning given to the commodity in question by the common people or traders must be taken into account. If that test is applied, the grinder in question will certainly fall under Item 33C of the Central Excise Tariff as without electric motor wet grinder is incomplete.

15. The learned counsel for the Revenue distinguished the two Division Bench judgments of the Gujarat High Court on which the petitioners' counsel have placed heavy reliance by stating that the goods dealt with by the Gujarat High Court were entirely different from the goods that are being considered in these cases. The learned counsel further explained that though in the impuged order in W.P 596 of 1981, the Collector, Central Excise, has given the reason for not accepting the Gujarat High Court judgment by stating that the Government have not accepted the judgments, the correct reason is that the goods dealt with by the Gujarat High Court were different. Therefore, the ruling of the Gujarat High Court will not apply to the facts of the present case.

16. So far as the impugned order in W.P 596 of 1981 is concerned, it is the contention of the learned counsel that though the Collector has referred to the impugned trade notice, the ultimate order is on the basis of his independent opinion uninfluenced by the impugned trade notice. Therefore, if the petitioner in W.P 596 of 1981 is aggrieved, he must file an appeal against that order.

17. Mr. A.S Kailasam, learned counsel appearing for the petitioners in reply to the arguments of the learned counsel for the Revenue submitted that it is not open to the respondents to give a new reason for not accepting the ruling of the Gujarat High Court. The reason already given in the impugned order in W.P 596 of 1981, alone will have to be taken into account and not the reasons given in the counter affidavit. For this contention, he relied on the following judgments - Pir Sidik Md. Shah v. Mst. Saran, 58 MLJ 7,. Parry & Co. Ltd. v. P.C Pal, 1970-2-L.I.C 1071 and In re Hind Hosiery Mills, 1982 ELT 424.

18. Let me now consider the rival submissions of the learned counsel on both sides. We have noticed earlier that Item 33C was introduced into the Central Excise Tariff by Finance Act 14 of 1969 with effect from 1-3-1969. Immediately thereafter, the Superintendent of Central Excise, seems to have issued communications to the manufacturers and dealers in wet grinders calling upon them to comply with the all formalities under the Act and Rules. One such communication reads as follows;

“Office of the Superintendent of Central Excise MO at “A”.

13.3.1969

IMMEDIATE

M/s. Chandra Agencies,

84 Palakarai

Trichi - 1

Dear Sirs,

Sub: CE Budget 1969—New Census—Licensing of domestic Electric appliance—regarding

It has been decided that electric grinders are excisable, and all formalities of the CE Act and Rules, 1944 are to be observed.

The AL 4 application with the applicable Central Excise Revenue stamp, D-2 declaration, plan of premises in triplicate and 3 copies of the price list of such grinders may be sent to this office immediately for necessary action.

Yours faithfully

for Superintendent of Central Excise

MOR “A” Palakarai

Trichi - 1”

It appears that the concerned dealer complied with the formalities in response to the communication sent by the Superintendent of Central Excise. Subsequently, the said dealer received a communication which reads as follows—

M.O.R “A”

Trichi, 25.5.69

M/s. Chandra Agencies

84 Palakarai,

Trichi

Dear Sir,

Sub: AL 4 application bearing Rs. 100/- Central Excise revenue stamp and ground plan—Returned

Your application in AL 4 bearing Rs. 100/- Central Excise revenue stamp and ground plan in triplicate are returned herewith, as licence is not required for manufacture of wet rice grinders. This may please be acknowledged.

Yours faithfully

Sd/-…… 25.5.69

Superintendent of Central Excise

MOR “A”

Palakarai, Trichi - 1”

The same dealer further received another communication expressly stating that the wet rice grinders are not excisable. That communication is set out below:—

OC/1545/69

MOR “A”, Trichi, 30-5-1969

M/s. Chandra Agencies

84 Palakarai, Trichi-1.

Sub: Central Excise—Wet rice grinders—Instructions received-Communicated.

** ** **

Instructions have been, received from the Assistant Collector of Central Excise 1AO Trichi, to the effect that, wet rice grinders are not excisable and the same are communicated to you for your information.

Yours faithfully,

Sd./-……… 30-5-1969

for Superintendent, Central Excise,

MOR “A”, Palkarai, Trichi-1.”

Yet another communication from the Central Excise Integrated Office, Trichirapalli, has been produced by the learned counsel for the petitioner, which is to the following effect:—

CENTRAL EXCISE INTEGRATED DIVISIONAL OFFICE TRICHIRAPALLI

C. No. V/33C/14/1/69/IDODt. 19-8-1969

The Superintendent of Central Excise, MOR-‘A’, Trichi.

Sub.: Central Excise—1969 Budget—Domestic Electrical appliance-Grinding—AL 4 of M/s. Chandra Agencies.

Ref.: Range Officers O.C 1205/3-5-1969

In view of the fact that wet rice grinder is not excisable the AL-4 application with Central Excise revenue stamp for the value of Rs. 100/- (Rupees one hundred) and the ground plan of M/s. Chandra Agencies received in this office for issue of L-4 licence are returned herewith. The papers may be handed over to the party and necessary acknowledgement obtained and filed in the MOR Office.

Sd./- V. Thirumalachari for Asstt. Collector

Encl. : AL-4 and ground plan

Copy to M/s. Chandra Agencies, 84, Palakarai, Trichi.”

19. A communication from the Government of India, Central Board of Excise and Customs received by M/s. Wet Grinders Manufacturers Association is set out below:—

“GOVERNMENT OF INDIA Central Board of Excise and Customs

F. No. 46/2/69.CX-4New Delhi

the 15th January, 1970

The Secretary

Central Board of Excise and Customs

M/s. Wet Grinders Manufacturers Association,

C/o Jayaradha Industries,

Ganapathinagar, Mayuram, Tanjore Dt.

Tamil Nadu.

Sub.: Domestic Electric appliances—Excise duty on

Dear Sirs,

I am directed to refer to the correspondence resting with your letter dated 25th October, 1969 on the above subject and to say that necessary instructions have been issued to the Collector of Central Excise, Madras, who may kindly be contacted.

Yours faithfully,

Sd./- Bharat Das

for Secretary, Central Board of Excise & Customs.”

20. The above communication was received in the wake of the department's sudden change in the attitude in respect of exigibility to excise duty on manufacture/sale of wet grinders. In other words, the Central Excise Officials, taking a different view, suddenly began to seize the goods (wet grinders) on the basis that the manufacturers—dealers cannot deal with them without payment of excise duty under Item 33C of Central Excise Tariff and started issuing notices for further action. After the communication of Central Board of Excise and Customs, dated 15-1-1970 referred to above, the following communication was sent by the concerned assessing authority—

“OFFICE OF ASSISTANT COLLECTOR OF CENTRAL EXCISE

IDO: ERODE

C. No. V/33.C/W16-2-74Dt. 3rd July, 1974

Sub.: Central Excise—Domestic Electric appliances—Electric grinder--Seizure of—durability—Reg.

Ref.: Case records for Nos. 20/74, 21/74 and 23/74 of Preventive Group, Erode.

Inasmuch as the electric grinders seized from M/s. K.A.S and Sons Erode, and from M/s. Sri Ganesh Industries, Erode, do not fall within the scope of Item 33C of the Central Excise Tariff attracting excise duty, they are ordered to be released to the parties concerned.

Sd./- N.K Srinivasan

Asstt. Collector

Attested: Sd./- K. Ragunathan, Superintendent (Tech.)

To: The Superintendent, Preventive Group, Erode

Copy to: M/s. K.A.S & Sons, 588/1 Cauvery Road, Erode. Sri Ganesh Industries, 158 Netaji Road, Erode. Files C.V 33-C/15-1-74-B2, C. No. V/33C/15-3-74 B1 and Dode/V/33.C/20-1-69”.

21. This was followed by a communication issued by the Government of India, Ministry of Finance, Central Board of Excise and Customs, New Delhi. This communication is of some importance, and therefore, it is set out in full—

“Copy of Letter F. No. 154/1/75CX-4, dt. 12-6-1975 from Government of India, Ministry of Finance (Central Board of Excise and Customs), New Delhi.

Sub.: Central Excise—Domestic electrical appliance—inclusion of a point wet grinder from South zone.

I am directed to state that the question whether wet grinders etc. produced for domestic use and run by V-Belt mechanism connected to external electrical motor with the grinding system is classifiable as “Domestic electrical appliances” for levy of duty under Item 33C CET and that whether the scope of Board's clarificatory Letter F. No. W2/69-CX-4, dated 15-1-1970 requires any review or clarification was considered by the Collectors in conference. The conference considered the various aspects including the recommendations of the Dts. General of Technical Development etc. and decide that such grinders which do not have in-built motors for instant operation in the system itself and which are operated by the V-Belt mechanism through external motors should fall outside the scope of Item 33C-CET

2. Board agrees with the decision of the Collectors in conference and it is clarified that the scope of the word ‘instantaneous’ used in the Board's letter dated 15-1-1970 would cover only those electrical appliances having in-built motors for such instant operation. All other mechanisms depending upon the external motor system as in this case and driven by V-Belt would fall outsie the scope of Item 33C CET.”

22. On this, basis, the manufacturer as well as the dealers in wet grinders were carrying on business without subjecting themselves to payment of excise duty under Item 33C of Central Excise Tariff. While so, suddenly another communication was issued by the Central Board, Excise and Customs which is to the following effect:

“Domestic Electrical Appliances

Central Excise—Item No. 33C Domestic Electric appliances—Classification of wet grinders—Reg.

A question has been raised whether a wet grinder, which has a detachable motor with a ‘V belt’ arrangement for transmission of motion would be classifiable as a ‘Domestic Electrical appliance’ under Item 33C of the Central Excise Tariff

2. The issue was discussed in the Seventh South Regional Central Excise-cum-General conference held at Madras on 15th December, 1978.

3. The Conference noted that the Budget instructions issued at the time of insertion of Item 33C in the Central Excise Tariff in 1969 had emphasised that for an appliance, to attract levy, under the item, it should be essentially of the domestic type and the appliance should also be one which has an in-built electrical system so as to work when connected with a circuit. The Conference also noted that in Tariff advice No. 37/77 the Board had considered that the arrangement of a drive through ‘V’ belt was only a matter of convenience and the washing-cum-drying machine which had a motor used in the cabinet and which worked through the ‘V’ belt arrangement would definitely fall within the scope of Item 33C of Central Excise Tariff. According to the conference, the criterion for in-built mechanism for instantaneous operation with emphasis on the mode of transmission as stipulated in Tariff Advice No. 23/75, dated 12-6-1975 (F. No. 154/1/75-CX-4) are not explicitly built into Tariff.

4. The Conference therefore observed that the mode of transmission of the motion generated in the motor from the power source should not make any difference to the question of classification as the explanation contained in the entry under Tariff Item 33C makes it clear that for product to attract levy of under the item, it must essentially be capable of domestic use and it must also be of the nature of an electrical appliance. The conference felt that the Tariff Advice issued in the case of ‘Washotax’ (Tariff Advice No. 37/77, dated 10-10-1977 F. No. 154/4/77-CX-4) should apply to the wet grinder in question, as well subject, however, to the model being ether wise on merits considered as falling under T.I 33C of Central Excise Tariff.

5. The Board agree with the above views of the conference and accordingly, holds that the wet grinders would be classifiable under Item No. 33C of the Central Excise Tariff.

6. Tariff Advice 23/75, dated 12-6-1975 may, therefore, be treated as cancelled.

7. Necessary instructions may please be issued to the filed formations. The Trade interests may also be suitably informed as per annexure.

(C.B.E & C.F No. 154/5/78-CX-4, dated 18-6-1979)

(Tariff Arrv. No. 27/79)”

23. This was followed by another communication which is to the following effect—

Central Excise—Item No. 33C—Domestic appliances—Classification

of wet grinders.

Attention is invited to Tariff Advice No. 27/79, dated 18th June, 1979, vide which the issue 5f classification of wet grinders was decided.

2. In this connection, it is to clarify that where the grinder is shown to be marketed without an electric motor, it would not be domestic electrical appliance covered under T.I 33C and therefore, it would have to be considered for assessment under T.I 68. It was stated in the Tariff Advice mentioned above that the mode of transmission of the motion generated in the motor from the power source should not make any difference to the question of classification as the explanation contained in the entry under T.I 33C makes it clear that for a product to attract levy under the item, it must essentially be capable of domestic use and it must also be of the nature of an electric appliance. In the light of this position in those cases where the wet grinder is marketed, without an electric motor, it would have to be considered for assessment under T.I 68 and not under T.I 33C.

(C.B.E & C.F No. 154/5/78-CX-4, dated 6-9-1980)”.

24. Based on the above two communications the impugned trade notice was issued by the Central Excise Collectorate which reads as follows:—

“THE MADRAS CENTRAL EXCISE COLLECTORATE - MADRAS 35

Trade Notice No. 170/80 Dt. 3-10-1980 40.General/80

Sub.: Central Excise—Item No. 33C-Domestic Electrical appliances-Classification of wet grinders.

The trade is advised that where a wet grinder is marketed without an electric motor, such wet grinders will have to be considered for assessment under T.I No. 68 and not under T.I No. 33C. However, wet grinder marketed with electric motor will fall under T.I No. 33C.

The contents of this trade notice may please be brought to the notice of all constituent members of the Association.

(Issued from File C. No. V/33C/30-3-80/C-D-1II)

Sd./- S.K Choudhury

Dy. Collector of Technical for Collector.”

25. To complete the narration, it is necessary to set out Entry 33C of the Central Excise Tariff which is to the following effect:—

“ITEM No. 33C—Domestic Electrical appliances

Item No. Tariff description Rate of duty 33C Domestic electrical appliances, not elsewhere specified. Thirty percent ad valorem. Explanation-I. - ‘Domestic electrical appliances’ means electrical appliances normally used in the household and similar appliances used in hotels, restaurants, hostels, offices, educational institution hospitals, train, kitchens, aircraft or ships pantries, canteens, tailoring establishments laundry shops and hair dressing saloons. Explanation-II. - Interchangeables parts or auxiliary devices accompanying an appliance to make it suitable for various purposes shall be assessed to duty along with the appliance.”

26. With this backdrop, let me proceed to consider the common issue raised in all these cases.

27. Though the learned counsel on both sides advanced arguments on various aspects, after carefully going through the Division Bench decision of the Gujarat High Court in Balakrishna Rechhodlal Shah v. Asstt. Collector of Central Excise, Ahmedabad, 1979 ELT 377, I consider that the matter is not res integra. Though, strictly speaking, the Division Bench judgment is not binding on me, yet, in view of the fact that the subject matter under consideration being one falling under Central enacttents, and in the interests of all concerned, the enforcement of the levy must be uniform throughout the country and in addition to that I am in respectful agreement with the ratio laid down by the Division Bench, I am following the same ratio. If once I come to the conclusion that the ratio of the Division Bench judgment of the Gujarat High Court (referred to above) applies to the facts of this case, there is no need for me to deal with all the aspects argued before me. It is enough if I give reasons how the ratio of the Division Bench judgment applies in all fours to the facts of the facts of the present case.

28. Mr. T. Somasundaram, learned counsel for the Revenue, as pointed out earlier, submitted that the ratio of the Division Bench judgment will not apply to the facts of the present cases as the goods dealt with by the Gujarat High Court are different from the one under consideration in these cases. On a careful scrutiny of the Division Bench judgment, I find that the learned counsel for the Revenue is not right in his above submission. Further, more than the nature of the goods, the ratio is important. Let me now analyse the facts and goods that were the subject matter of the Division Bench judgment of the Gujarat High Court and the ratio laid down by the learned Judges. The Division Bench judgment of the Gujarat High Court as reported is extracted in full:—

“1. The short question which arises in all these three petitions is whether the domestic grinding mills or flour mills in question manufactured by the petitioners attract the duty under the amended Entry 33C, which came into force with effect from March 1, 1969 by the Finance Act No. 14 of 1969. So far as the first two petitioners are concerned, at the initial stage the authorities had required them to apply for the licence for manufacture of these domestic flour mills. The authorities had asked these two petitioners to include in the price list the value of the electric motor. However, finally, the authorities took a view that this domestic grinders were non-excisable under Entry 33C as they had no in-built electric power motor. Therefore, so far as the petitioners manufacturers were concerned, the aforesaid Entry 33C was not attracted. So far as other similar products were concerned, even the Central Government had in their order dated May 31, 1972, taken this view. The Government found the manufacturer's contention justified that such domestic appliances which had no in-built electric motor would not attract Central Excise Item 33C, because that entry was applicable to sophisticated types of units in which electric motor was used in the unit itself and the working parts were so specially designed and were integrated into a whole unit as to form such domestic electric appliance. In view of this decision of the Central Government, all the petitioners had not to pay any such excise duty. This view was in accordance with the relevant trade notice dated March 5, 1969 No. 26 of 1969 which had been issued by the authorities notifying that Government of India had clarified that the exemption certificate No. 33 of 1969 dated March 1, 1969 by which certain categories of domestic electric appliances were brought under exemption purview should be construed as referring only to such appliances as have in-built electric devices to operate them instantaneously when connected with the main or with the power. In other words, the appliances referred to in the notification which did not have inbuilt electrical devices did not attract the levy. All trade Associations, Chambers of Commerce and members of E.A.O, were requested to bring this to the notice of their members, manufacturers. Thereafter the Central Government has now sought to levy duty on the very same article by taking a different view as per the order which is challenged by the second petitioner, dated September 17, 1973. In that order they have pointed out that according to the size, capacity output and the small horse power of the motor required for this appliance, it was clearly a domestic appliance and it was advertised as such domestic appliance. It was further pointed out that the design in the unit was such that the motor specially fitted to the unit, and therefore, such grinders were liable to be assessed as domestic electrical appliances under Item 33C of the Tariff schedule. Accordingly, even the first petitioner in whose case the Collectorate has taken a final decision that these domestic flour mills were non-excisable under Entry 33C were also required to pay duty under this item. The same is the case of the third petitioners who are fresh manufacturers. Therefore, all these three petitioners have challenged the aforesaid levy under Item 33C.

2.……………………….

3. Therefore, this Entry 33C will have to be read along with the relevant exemption modification issued under Rule 8 by the Central Government as they formed one integrated scheme of levy of excise. Under Item 33C domestic electrical appliances not elsewhere specified are included and under Explanation-I, these electrical appliances are those normally used in the household and similar appliances used in hotels, restaurants, hostels, offices, educational institutions, hospitals, train kitchens, air craft or ship pantries canteens, tailoring establishments, laundry shops and hair dressing saloons. Under Explanation II, along with the appliances, even interchangeable parts or auxiliary services accompanying an appliance to make it suitable for various purposes are to be assessed to duty along with the appliance. The exemption notification of March 1, 1969, however, exempted domestic electrical appliances falling under this Item 33C other than those 20 specific which were specified in the schedule. The specific entry in the schedule which is referred to in this connection in Item “3. Grinders and Mixers”. In fact, all these schedule entries make one thing clear that all these appliances are completely assembled appliances, and, therefore, they would have the electric element of electrical motor fitted with them. Unless the manufacturer has manufactured a complete domestic electric appliance which falls under any of these twenty items of the schedule, in view of this exempted and the Entry 33C, duty under this system would not be attracted. If therefore, the manufacturer has only produced domestic appliances which can be properly fitting into it a separate electric motor be converted into a domestic electric grinder, excise duty in question would not be attracted. The excise duty falls on the manufacture or production of the goods in question. It is not a duty on the sales, therefore, whatever may have happened at the stage of sale, as in this case, that a particular manufacturer at the time of sales is supplying to the customer this request electric unit manufactured by some other manufacturer or the customer at his place gets the electric motor fitted into this unit, it is obvious that what was manufactured by the petitioners was not an electrical appliance, but what can be completed into one whole electrical appliance but what can be completed into one whole electrical appliance after purchasing a separate electric motor manufactured by another manufacturer. That is why even the further exemption notification, which was issued on the same day i.e, March 1, 1969 for giving partial exemption to the extent duty was paid on electric motor in case of such domestic electrical appliances which attracted duty, has specifically mentioned that electrical appliances must be one fitted with duty paid electric motor, rotor or starter. It is this electric element or motor or rotor or starter which give the specific character to the goods of this description as electrical appliances. Unless electrical part is fitted into it by which the said appliance works and the rest of the assemblage would be only a domestic appliance which could not fall within the specific Tariff item of electric appliances, but would be any other kind of power driven domestic grinder. It is only when the electric motor is fitted into it that it becomes a domestic electric grinder so as to attract duty under. Item 33C. Therefore, the Central Government's first order was clearly in accordance with the scheme of this Tariff Item. That interpretation was even accounted to the trade by the aforesaid trade notice.

4………………

5. Mr. Vekharia next contended that the aforesaid trade notice could not control the plain meaning of the statute. Even in this connection, the legal position is now well settled. In J.K Steel Ltd. v. Union of India, 1978 ELT (J. 355) in the majority view, it was in terms pointed out that it was permissible to look at notification issued by the Central Government which had given reliefs of various kinds. Even in the dissenting judgment of his Lordship Hegde 3. the same view is taken after referring to the settled legal position. At page 1186 it was pointed out that it was clear that several 3udges in England had referred to the subordinate legislation made under a statute for the purpose of interpreting that statute, though for the limited purpose of knowing how the department which was entrusted with the task of implementing that statute, had understood that statute. In the case of fiscal statutes, it might not be inappropriate to take into consideration the exemption granted in interpreting the nature and the scope of the impost. In the matter of fiscal legislation the initiative was in the hands of the executive. Generally speaking, the question of exemption was left to the discretion of the Government. It ought to be so because the exercise of that power depended on various circumstances some of which could not be anticipated in advance. But yet the levy and exemptions were parts of the same scheme of taxation. The two together carried into effect the purpose of the legislation. For finding out the true scheme of a taxing measure the Court has to take into consideration not merely the levy but also the exemptions granted. The Supreme Court in Kailashnath v. State of U.P, AIR 1957 S.C 790 held that the exemption granted in pursuance of notification issued under the U.P Sales Tax Act must be considered as having been contained in the parent Act itself. One English decision which earlier referred to by his Lordship was of the House of Lords reported in 1951 A.C 531 where it was pointed out that although the regulations couid not control the construction of the Act, it was of some importance to consider whether they fitted into the construction which the Act, properly bore. Therefore, even though the trade notice could not alter the meaning of the words of the statute, it could be looked at as being an interpretation placed by the appropriate Government department on the words of the statute. Here we are not reading a trade notice for the purpose of controlling the plain meaning of the Tariff Entry. We are only reading at it is even the Government construction fits in and support our prima facie construction the relevant entry, when it is read with the entire exemption scheme. As earlier pointed out by us, the excise levy is on the production or manufacture and is not a sales tax levy. Therefore, what is taxed is production or manufacture and if the article at the stage of production or manufacture was an unassembled article or was not completely integrated whole domestic electrical appliance, it is obvious that the excise duty under the relevant Entry 33C would not be attracted. Keeping in mind this relevant scheme of the exemption notification, in the relevant schedule, which covered only these appliances which were complete domestic electrical appliances by specifying 20 of these items and the partial exemption which was given of duty paid at the earlier stage on the electric motor in the second para of that notification it is clear that it is only when the electric motor, rotor or starter is in-built to the electrical appliance that such domestic electrical appliance attracts duty under the relevant Entry 33C. Therefore, the trade notice was completely in accordance with the relevant scheme on this taxing statute and the Central Government has in the subsequent decision proceeded on a complete misconception and has plainly misread the provisions of this entry. Therefore, the impugned levy in case of the petitioners is wholly ultra vires the aforesaid Entry 33C so far as these domestic flour mills or domestic grinders are concerned.

6. Mr. Varkharia has of course vehemently argued that so far as petitioner No. 1 was concerned, it was stated even in the petitions that the domestic grinder is a mechanical device consisting of two stones and other mechanical parts. These mechanical parts operate by power provided by a separate electric motor and V-belt. In fact, in all the three cases there is no dispute that the petitioners, manufacturers were not manufacturing electric motors, and the grinder manufactured by them had to be fitted with the electric motor. It was only when the customers wanted an electric motor to be fitted by purchasing a separate electric motor by a different manufacturer that the electrical part was added in this mechanism. Therefore, the electric motor was totally separate part which was not manufactured by these manufacturers. It had to be fitted into the manufactured item of the petitioners. It is wholly immaterial that at the stage of sale, the petitioners at the request of the customers fit an electric motor or leave it to the customers to get electric motor remitted into this unit. That would not make the article in its original state excisable as manufactured by the petitioners. In that view of the matter, all three petitions must be allowed by quashing the impugned levy and declaring that the petitioners' domestic grinders do not attract duty under the relevant Entry 33C. Therefore, respondents authorities are restrained from levying any duty under the aforesaid Entry 33C on these goods in question, Rule is accordingly made absolute with costs in each case.”

29. The goods in question were domestic grinding mills or flour mills. The description of the goods makes me to think that those goods are nothing but domestic grinders. In fact, presumably the Department itself accepting the fact that the goods dealt with in the judgment of the Gujarat High Court and the goods in question are identical, the reason given in the impugned order in W.P 596 of 1981 is that the Government have not accepted that decision. The Central Excise Collector never said in the order that the goods considered by the Division Bench of the Gujarat High Court were different. Further, I find from the discussion in the judgment that almost all the questions raised by the learned counsel for the Revenue in these cases were raised before the learned Judges of the Gujarat High Court, but did not find acceptance with them. The learned Judges have considered similar trade notice issued by the Government of India holding that domestic grinders were non-excisable under Entry 33C as they had no inbuilt electric power motor and that Entry was applicable to sophisticated types of units in which motor was used in the unit itself and the working parts were so specially designed and were integrated into the whole unit as to form sub-domestic electric appliance. The learned Judges also considered the effect of notification issued under Rule 8 and came to the conclusion that the Notification helps only the case advanced by the traders and manufacturers of wet grinders. The learned Judges also considered the argument whether there was any manufacturing process in fitting the electric motor with that portion of the wet grinder and connecting both by V-belts. The learned Judges have held that would not make the article in its original state excisable as manufactured by the manufacturers. Ultimately, the ratio seems to be that only when the electric motor, rotor or starter is inbuilt in the electric appliance that such domestic applicable attracts duty under Entry 33C. In all these cases, under consideration, it is not in dispute that electrical motor is a separate unit and it is connected with the wet grinder by V-belt. Therefore, applying the principles laid down by the Division Bench judgment of the Gujarat High Court, I do not find any difficulty in holding that the wet grinders in question will not fall under Entry 33C of Central Excise Tariff.

30. There is one more weighty reason for my agreeing with the Division Bench judgment of the Gujarat High Court and that is, that judgment was taken on appeal to the Supreme Court by the Revenue and the same was dismissed in limine by the Supreme Court by rejecting the special Leave Petition. The same High Court followed that judgment in Shri Pudit Ghar Ganti v. Union of India, 1981 ELT 121. I would like to give some more additional reasons to sustain the view that wet grinders will not fall under Item 33C of the Central Excise Tariff. Though the Division Bench judgment of the Gujarat High Court is reported in 1979 E.L.T 377 the judgment was delivered on 18-12-1974. We have already noticed the view taken by the Government of India, Ministry of Finance (Central Board of Excise and Customs), New Delhi on 12-6-1975, accepting the conclusion reached in the Collectors' conference. It can be reasonably presumed that before coming to the conclusion that those electrical appliances having in-built motors for instant operation will fall under Item 33C of Central Excise Tariff and all other mechanisms depending upon the external motor system such as the electric motor driven by V-belt would fall outside the scope of item 33C of the Central Excise Tariff, the department must have had the advantage of the Division Bench judgment of the Gujarat High Court, If so, the impugned trade notice which is based on the subsequent communication of the Central Board of Excise and Customs, dated 18-6-1979, cannot be sustained in the absence of any change in the Tariff Item or the subsequent judgments of the other High Courts or Supreme Court. As rightly contended by the learned counsel for the petitioner placing reliance on a Division Bench judgment of the Delhi High Court in J.K Synthetics Ltd. v. Union of India, 1981 ELT 328, before the department departs from its earlier stand, they must give cogent reasons such as fresh Acts or change in relevant Tariff Entry or any further decisions of a High Court or Supreme Court necessitating the reconsideration of the earlier view. In this case, the only reason given is that Washotax has been brought under Item 33C and consequently the wet grinders must also be classified under Item 33C of;the Central Excise Tariff. This reason does not satisfy the conditions for change of view as laid down in the Division Bench judgment of the Delhi High Court with which I respectfully agree. The Division Bench judgment of the Delhi High Court in the case cited above, has held as follows:—

“The question which we are now called upon to consider is as to the precise scope of this limitation. What will be its effect in a case where there are no changes in the circumstances, either factual or legal? Will it be open to the department, without any cogent reasons and merely at its own caprice, to refuse to follow the conclusion reached on the earlier occasion and to take-up a totally different stand in a subsequent year? In answering this question, it has to be appreciated that, while what is sought to be done in this case is to ignore or brush aside the decision taken by one of the departmental authorities on the same issue for an earlier period, it should make no difference in principle even in a case where the decision for the earlier year had been confirmed by the High Court or Supreme Court in appropriate proceedings for, as pointed out by Lord Radcliffe, the rule operates not because of the nature of the proceedings in which the decision was taken earlier but because of the truly limited scope of the issue decided earlier. If that be so, the question for consideration would be whether, for a subsequent period, the department can contend that the decision on an issue on an earlier occasion would have no importance or relevance whatever when the issue arises subsequently, even if it had been contested upon and decided by, the High Court or Supreme Court for the earlier period. If the matter is looked at from their larger perspective, we think it will be clear that there can be only one answer to this question, viz., that the department should not be permitted to take different stands unless there is any good or cogent reason for the change in view. For example, if the facts are different or if further and fresh facts are brought on record or if the process of manufacture has changed or if the relevant entries in the Tariff have undergone a modification or if, subsequent to the earlier decision there has been the pronouncement of a High Court or the Supreme Court which necessitates reconsideration of the issue, it can hardly be doubted that the department can take a different view and have the matter agitated right upto the Supreme Court, if necessary. But when there is no change at air and when the position is exactly the same, legally and factually, as it was on the earlier occasion then we think that the department should be restrained from capriciously changing its stand and inflicting unnecessary proceedings and hardship upon assessees.”

31. Though Mr. T. Somasundaram, learned counsel for the Revenue, strongly emphasised the fact that Trade notice is not binding on the assessing authority and they are expected to pass orders independent of information contained in the trade notice, the fact remains that in the assessment order in W.P 596 of 1981, the Collector has squarely placed reliance on trade notice and has levied excise duty on wet grinders under Item 33C of Central Excise Tariff. Therefore, the contention that the writ petitions are premature and not maintainable against trade notice cannot be accepted.

32. In the light of the foregoing discussion, I hold that the wet grinder falls outside the scope of Item 33C of the Central Excise Tariff. I answer the question posed at the outset accordingly. In view of the above conclusion, there is no need or necessity to formally quash the impugned trade notice as this decision is binding on the assessing authorities. However, the impugned order of the assessing authorities in W.P 596 of 1981 is set aside and the writ petition is allowed. All the other writ petitions are dismissed on the ground that no formal absolute rule nisi need go quashing the trade notice for reasons already given, I direct the parties to bear their own costs.