DEBIPROSAD PAL, J.

( 1 ) THE petitioner-company owns and runs three paper mills situated at the following places: (1) No. 1 Mill at Titaghar, West Bengal. (2) No. 2 Mill at Kankinara, West Bengal. (3) No. 3 Mill at Choudwar, Cuttack, Orissa. There are 32 varying qualities or types of paper alleged to have been manufactured at the said three paper mills. Some of these different varieties of paper are as follows : (a) White printing and writing light and heavy. (b) Coloured printing and writing heavy and light. (c) Unbleached varieties. (d) Embossed covers. (e) Blottings. (f) Paste boards. (g) Coated paper. (h) Impression paper, etc. The petitioner made an application dated 21st June, 1967, in the statutory form before the appropriate authority for the grant of a tax credit certificate under Section 280zd of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), read with the Tax Credit Certificate (Excise Duty on Excess Clearance) Scheme, 1965 (hereinafter referred to as "the scheme"), for the financial year 1966-67. The basis on which the petitioner claims the tax credit certificate has not been clearly stated in the petition. In the course of the hearing, learned counsel for the petitioner explained that this claim was made on the basis of the quantity of a particular quality of paper manufactured by the petitioner and cleared by it during the relevant financial year from a particular factory. On such basis the claim made by the petitioner amounted to Rs. 9,88,893. 18, the break-up of which has been set out in annexure "b" to the petition. The respondent No. 2 by an order dated 2nd February, 1968, restricted the claim of the petitioner to Rs. 4,19,375. In calculating the amount for which tax credit certificate was granted, the Central authority, the Deputy Director of Inspection, Customs and Central Excise, being respondent No. 2, proceeded on the basis that any individual manufacturing unit is not entitled to claim this benefit. According to him under Section 280zd of the Act a "person" as defined in Section 2 of the Act is entitled to a tax credit certificate. He was, therefore, of the view that tax credit will have to be determined on the overall net excess clearance after taking into account the shortfall in any unit in a group owned by such individual, firm or corporate body. In other words, according to the respondent No. 2, the net excess clearance during the relevant financial year over the clearance during the base year would have to be calculated in respect of all the three units together and not individually.

( 2 ) AGGRIEVED by this order the petitioner came to this court and obtained a rule nisi. An affidavit of Sri A. N. Bhattacharya affirmed on 22nd April, 1970, has been filed on behalf of respondents Nos. 1 to 3.

( 3 ) THE learned counsel for the petitioner has mainly contended that according to the object for which Section 280zd was introduced, the benefit of the tax credit should be allowed in respect of each quality or variety of paper which itself constitutes the goods. His further submission is that the benefit of such credit is to be allowed factory-wise and not on the basis of overall clearance of such goods from all the factories. To appreciate the rival contentions of the parties it is necessary to examine the relevant Sections of the Act and the Scheme framed thereunder. The Finance Act, 1965, has introduced a new scheme of tax credit certificate and the provisions relating thereto are embodied in Chapter XXIIB of the Act. Section 280zb provides for the grant of a tax credit certificate for increased production of goods. This certificate is granted to any person who manufactures or produces any goods for an amount calculated with reference to the excess amount of duty of Central excise payable by him on that quantum of goods cleared by him during the relevant financial year over the amount of such duty which he has paid on the quantum of the goods cleared by him during the base year. The

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