Judgment

TULZAPURKAR, J.:- Two contentions under a Scheme called "Tax Credit Certificate (Excise Duty on Excess Clearance) Scheme, 1965" framed by the Central Government under S. 280ZD of the Income Tax Act, 1961, which were, negatived by the High Court, have again been pressed by the appellant company before us in these appeals but after hearing counsel for the appellant company at some length and after going through the relevant provisions of the said Scheme, relevant sections of the Income Tax Act, 1961 and S. 80 of the Finance Act 1965 we are satisfied that the High Court was right in the view which it took on both the contentions and the appeals deserve to be dismissed.

2. With a view to encourage investment in new equity shares and to stimulate industrial output the Government of India introduced certain special provisions in Chapter XXII-B of the Income Tax Act, 1961 for the grant of tax. credit certificate and S. 280ZD is one of such provisions which provides for the grant of tax credit certificate by way of incentive for increased production of goods and the "Tax Certificate (Excise Duty on Excess Clearance) Scheme 1965" was framed by the Central Government under this section and it was made applicable to the cement industry in 1965. Under the Scheme the amount of tax credit to which a manufacturer of cement is entitled is calculated at a rate not exceeding 25% of the amount of the duty of excise payable by him on the quantity of excess production during the financial year as compared to the production in the base year and the financial year 1964-65 is defined as the base year in relation to an existing undertaking. For the year 1965-66, being the concerned year in the instant case the excise duty for cement levied under the Central Excises and Salt Act, 1944 (for short the Excise Act) was Rs. 23.60 per ton but under S. 80 of the Finance Act 1965 a special duty of excise equal to 25% of the total amount of excise chargeable under the Excise Act on various articles including cement was levied. On the excess clearance of cement made during the concerned year i.e. 1965-66 over and above the quantity cleared in the base year the appellant Company applied for the grant of tax credit certificate to the concerned authority under the Scheme for an amount calculated at the rate of 25% of the entire amount of duty of excise paid by it, that is to say, 25% of the basic excise duty levied under the Excise Act at Rs. 23.60 per ton plus the amount of special excise duty paid by it under S. 80 of the Finance Act. The concerned authority granted tax credit certificate only in respect of the Central Excise Duty levied under the Excise Act, taking the view that the appellant was not entitled to have any tax credit in respect of any other excise duty levied under a different enactment, namely, S. 80 of the Finance Act. The appellant challenged before the High Court the aforesaid view of the authorities but the High Court negatived the challenge principally on the ground that tax credit would not be available to the appellant company in respect of the special excise duty levied under S. 80 of the Finance Act having regard to the special meaning assigned to the expression duty of excise by clause (b) of sub-s. (6) of S. 280ZD.

3. It is clear that under S. 280ZD (1) a manufacturer of the concerned goods is entitled to be granted a tax credit certificate for an amount calculated at the rate not exceeding 25% of "the amount of duty of excise payable by him" on that quantum of the goods cleared by him during the relevant financial year which exceeds the quantum of goods cleared by him during the base year and clause (b) of sub-s. (6) of S. 280ZD defines the expression duty of excise for the purpose of the aforesaid provision in a special manner and clause (b) says " duty of excise means the duty of excise leviable under the Central Excises and Salt Act, 1944". Obviously the special excise duty which was levied under S. 80 of the Finance Act 1965