1981 Supreme(Mad) 179

High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE RAMANUJAM & THE HONOURABLE MR. JUSTICE MAHESWARAN
Government of India - Appellant
Versus
Madras Aluminium Company Limited, Coimbatore - Respondent
Case No : Writ Appeal 545 of 1977 and Writ Petition Nos. 1302 and 4147 of 1976 and 1530 and 4151 of 1978
Decided On : 30 April 1981

The exemption notification applies to the regulatory duty as well and the method of calculation adopted by the company brings out the true spirit and intent of the notification.

Headnote:

CENTRAL EXCISE - EXEMPTION NOTIFICATION - INTERPRETATION - SCOPE OF NOTIFICATION - METHOD OF CALCULATION OF DUTY EXEMPTED.

Fact of the Case:

The Madras Aluminium Co. Ltd. filed a price list for approval before the Superintendent of Central Excise, Mettur, M.O.R. for aluminium in various forms produced by them. The said price list was prepared taking into account the Notification dated 24th May, 1971, hereinafter referred to as the Exemption notification, issued by the Ministry of Finance (Department of Revenue and Insurance), Government of India, granting exemption in respect of certain varieties of aluminium from a portion of excise duty payable thereon. The Superintendent of Central Excise, Mettur before approving the price list enhanced the assessable value of the goods as shown by the company giving effect to his own interpretation of the provisions of the said Notification. Subsequently he passed an adjudication order dated 2-2-1972, in which he justified and confirmed the enhancement made by him in the assessable value. The Company filed an appeal before the Appellate Collector of Central Excise against the order of the Superintendent. He allowed the appeal holding that the said Notification was meant to benefit certain manufacturers, that there was no warrant for including the financial benefit arising from the exemption for getting more duty from the company thereby neutralising to some extent the benefit of the exemption notification and that the decisions of the Madras High Court inM/s. Madras Rubber Factorycase and the judgment of the Patna High Court inBata Shoe Co.case, applied to the case before him. Subsequently the Central Government issued a show cause notice as to why the order of the Appellate Collector should not be set aside and the order of the Superintendent of Central Excise dated 2-2-1972, should not be restored. The Company replied to the show cause notice by their letter dated 2-9-1973, contending that the order of the Appellate Collector could not be revised merely on the ground that the judgments of the Madras High Court and the Patna High Court referred to by him had been appealed against, that the method of working out the exemption to the Superintendent of Central Excise is erroneous, that the spirit of the said exemption notification was to give relief to small producers of aluminium and the relief so granted cannot be taken away or made illusory by an erroneous interpretation of the notification. After giving a personal hearing to the Company, the Central Government held that the Madras and Patna decisions are not applicable to the case, that the Appellate Collector's order varying the Superintendent order was not legalily correct and, therefore, that order has to be set aside and the order of the Superintendent of Central Excise restored. The Company challenged the validity of the order dated 11-12-1975 passed by the Central Government in W.P. 303 of 1974. The said writ petition was allowed by Mohan J. on 8-6-1977 upholding the order passed by the AppellateCollector. W.A.: 545 of 1977 has been filed by the Central Government against the judgment rendered by Mohan J. The Company also has filed W.P.No. 1302 of 1976 questioning the collection of excess regulatory duty after 21-1-1972 and 13-3-1972 as fresh sale prices were fixed by the Government. Messrs. Tata Oil Mills Ltd. hereinafter referred to as the Mills, have also firm similar writ petitions No. 4147 of 1976, 1530 and 4151 of 1978, questioning the fixation of higher assessable value by the Superintendent of Central Excise applying the similer exemption notification No. 25 of 1975 dated 1-3-1975 which exempted certain varieties of roaps from a portion of the excise duty leviable thereon.

Finding of the Court:

The court held that the exemption notification applies to the regulatory duty as well and that the method of calculation adopted by the company brings out the true spirit and intent of the notification.

Issues: 1. Whether the exemption notification applies to the regulatory duty as well? 2. How the exemption granted under the notification is to be worked out?

Ratio Decidendi: 1. The court held that the term 'income-tax' occurring in Section 2 of the Finance Act, 1964Finance Act, 1963, but the surcharges prescribed thereunder had to be charged. The above decision of the Supreme Court clearly supports the company's stand that the regulatory duty which is in the form of surcharge on the excise duty should be treated as part of the excise duty, and, therefore, the 'duty leviable thereon' referred to in the Notification dated 24-5-1971, took within it the regulatory duty and the additional regulatory duty leviable in respect of aluminium products manufactured. 2. The court held that the plain wording of the notifications indicates that from the excise duty leviable certain deductions are to be made. We do not see how the notification could be interpreted as applicable only in cases where the excise duty is reduced from the wholesale price and the benefit of exemption is passed on ; to the consumers.

Final Decision: The writ appeal is dismissed and the writ petitions are allowed and the rule nisi issued in each of the writ petitions is made absolute. There will be no o'der as to costs.