Messers Ctm Technical Textiles LTD vs. Union Of INDIA

Facts

The petitioner, M/s. CTM Technical Textiles Ltd., manufactures Agro Shade Nets and Geo Grids, classifying them under Heading Nos. 6005 and 5911 respectively, claiming exemption from excise duty. The revenue initiated proceedings, alleging these products were articles of plastics, not textile fabrics, and demanded excise duty. The petitioner challenged notices dated 18.12.2015, 21.06.2017, and 07.05.2018, and an Order in Original dated 30.06.2020 passed by the Commissioner of Central Excise, Ahmedabad. The petitioner also sought to prohibit action based on earlier CBEC Orders and Trade Notices. The core of the dispute revolved around the classification of the petitioner's products and alleged discrimination in treatment compared to other manufacturers.

Held

The Court held that the impugned Order in Original dated 30.06.2020 passed by the respondent no.2 (Commissioner of Central Excise) was liable to be quashed and set aside. The matter was remitted back to the respondent no.2 for fresh consideration of all issues discussed in the judgment. The respondent no.2 was directed to provide an adequate opportunity of hearing to the writ-applicants and decide the matter afresh, particularly addressing the issue of discrimination raised by the writ-applicants. The Court also directed the Union of India to re-examine CBEC Circular/Order No.8/92 dated 24.09.1992 and Ahmedabad Collectorate Trade Notice No.78/94 dated 09.05.1994 in light of the Court's observations. Proceedings for recovery of dues based on the impugned order were terminated. The Court did not definitively rule on the classification of the products but emphasized the need for fresh consideration, including the aspect of discrimination.

Key Issues

1. Whether the Agro Shade Nets and Geo Grids manufactured by the petitioner are textile fabrics falling under Heading Nos. 6005 and 5911 of the Central Excise Tariff, or articles of plastics falling under Sub-Heading 39, thereby attracting excise duty? (Question of law and fact, concerning classification under the Central Excise Tariff Act). 2. Whether the action of the revenue authorities in demanding excise duty from the petitioner, while allegedly allowing other similarly situated manufacturers to classify their products as textile fabrics and pay nil duty, amounts to discrimination violating Articles 14 and 19(1)(g) of the Constitution of India? (Question of law and fact, concerning discrimination and constitutional rights). Petitioner's Arguments: The petitioner contended that their products are indeed textile fabrics, citing their manufacturing process and classification under the specified headings. They argued that other manufacturers producing similar goods are treated as textile fabrics and are not paying excise duty, thus alleging discriminatory treatment by the revenue. They relied on various circulars and decisions of the High Court and Supreme Court concerning classification and discrimination. Revenue's Arguments: The revenue argued that the products, being made from HDPE granules and polyester yarns, are essentially articles of plastics and not textile fabrics, thus liable for excise duty. The judgment does not explicitly record specific arguments from the revenue regarding the discrimination claim, beyond their stance on classification.