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1981 Supreme(Pat) 24
IN THE HIGH COURT OF PATNA
L.M. Sharma and B.S. Sinha, JJ.
M/s. Shri Madhav Mills Private Ltd. - Appellants
Vs.
Collector of Central Excise & Others - Respondent
Civil Writ Jurisdiction Case No. 1092 of 1978
Decided On: 28.01.1981
Advocate Appeared:
For Appellant/Petitioner/Plaintiff: Messrs S.B. Sanyal and N.K. Agrawal
For Respondents/Defendant: Messrs A.K. Sinha, (Standing Counsel for Central Government)
The expression "all excisable goods cleared" in a notification exempting certain goods from excise duty refers only to such excisable goods on which excise duty has been paid.
Headnote:
CENTRAL EXCISE - EXEMPTION - NOTIFICATION - INTERPRETATION - "ALL EXCISEABLE GOODS CLEARED" - MEANING - WHETHER INCLUDES EXCISEABLE GOODS EXEMPTED FROM DUTY - "EXCISEABLE GOODS" - MEANING - WHETHER INCLUDES GOODS EXEMPTED FROM DUTY.
Fact of the Case:
The petitioner, a manufacturer of Maida, bolts, nuts, and screws, challenged the interpretation of a notification issued by the Government of India exempting certain goods from excise duty. The petitioner claimed that the value of Maida manufactured by it in the preceding financial year could not be included in determining the exemption under the notification.
Finding of the Court:
The court held that the expression "all excisable goods cleared" in the notification referred only to such excisable goods on which excise duty had been paid. The court further held that the expression "excisable goods" in the definition of "excisable goods" in section 2(d) of the Central Excise and Salt Act, 1944, included goods specified in the First Schedule as being subject to a duty of excise, and that the exemption of such duty was the result of an eclipse caused by the notification under rule 8(1) of the Central Excise Rules, 1944.
Issues: 1. Whether the value of Maida manufactured by the petitioner in the preceding financial year could be included in determining the exemption under the notification. 2. Whether the expression "excisable goods" in the definition of "excisable goods" in section 2(d) of the Central Excise and Salt Act, 1944, included goods exempted from duty.
Ratio Decidendi: 1. The court interpreted the expression "all excisable goods cleared" in the notification to mean only those excisable goods on which excise duty had been paid. The court reasoned that the word "cleared" in the notification signified the removal of an obstruction which was in the way on account of the imposition of excise duty and which obstruction was removed when the excise duty had been paid. 2. The court held that the expression "excisable goods" in the definition of "excisable goods" in section 2(d) of the Central Excise and Salt Act, 1944, included goods specified in the First Schedule as being subject to a duty of excise, and that the exemption of such duty was the result of an eclipse caused by the notification under rule 8(1) of the Central Excise Rules, 1944.
Final Decision: The court allowed the petition and quashed the impugned order of the Assistant Collector of Central Excise.
Brishketu Saran Sinha, J.
1. Messrs Shri Madhav Mills Private Limited (hereinafter referred to as 'the Mills') are engaged in the manufacture of Maida, which is item No. 1-F of the First Schedule attached to the Central Excise and Salt Act, 1944, (hereinafter referred to as 'the Excise Act') and bolts, nuts and screws which are item No. 52 of the said Schedule as also certain articles which are included under item No. 68 of the Schedule. The details of the other items excluding those under items 1-F and 58 are given in annexure 4 appended to the writ application. By a notification issued by the Government of India dated 10th August, 1971, item no 1-F, of the First Schedule, to the Excise Act, has been exempted from payment of duty under sub-rule (1) of rule 8 of the Central Excise Rules, 1944, (hereinafter referred to as 'the rules'), copy of which is Annexure 1. Thereafter by a notification dated 18th June, 1977, under rule 8(1) of the Rules (copy of which is annexure 2) the Government of India exempted goods falling under item 68 of the First Schedule, if to be utilized for home consumption and if the total value of all excisable goods in the preceding financial year does not exceed Rupees Thirty lakhs. The petitioner claims that under the aforesaid notification the total value of Maida manufactured by it in the preceding financial year could not be included in determining the exemption. The Assistant Collector of Central Excise (respondent No. 3), however, asserts that the value of the Maida cleared in the previous financial year shall be taken into account for determining the exemption under the aforesaid notification. Hence this application.
2. The Excise Act, under section 2(d) defines excisable goods and section 3 is the charging section which provides that there shall be levied and collected in such manner as may be prescribed, duties of excise on all excisable goods other than salt which are produced or manufactured at the rates set forth in the First Schedule and it further empowers different tariff values to be fixed for different classes or descriptions of the same article. Section 6 authorizes the Central Government, by notification from such date as may be specified in it, to have for the production or manufacture or any process of production or manufacture of any specified goods included in the First Schedule or of saltpetre or of any specified component parts or ingredients of such goods or of specified containers of such goods in accordance with the terms and conditions granted under this Act. The First Schedule attached to the Act details the items of goods as also the basic and additional rates of duty. It appears that to begin with, the First Schedule contained 11 items which has now increased to 68 items. Section 3 empowers the Central Government to make rules and under section 38 such rules have to be laid before each House of Parliament while it is in session for a total period of 30 days which may be comprised in one or two more successive sessions. The Houses have the power to modify or annul the Rules. Under rule 8(1) the Central Government is authorized from time to time by notification in the official gazette to exempt, subject to such conditions as may be specified in the notification, any excisable goods from the whole or any part of the duty Levi able on such goods. The aforesaid two notifications, annexure 1 and 2, have been issued under this provision.
3. Relevant facts leading to this application are that, as already pointed out earlier, by a notification copy of which is annexure 1, Maida was exempted from the duty of excise Levi able thereon. Thereafter in 1977, came the notification copy of which is annexure 2, granting exemption under certain conditions to articles manufactured under item No. 68. These items manufactured by the mills are M. Shrivetts, castings machinery parts, job work etc. Item 68 under the Schedule provided at the relevant period the rate of duty as 2% ad valorem.
