A notification exempting matches manufactured without the aid of power from excise duty in excess of Rs. 4.50 per gross boxes of 50 matches each did not cover the case of matches packed in boxes with only the outer slide made of cardboard.

V. RAMASWAMI, J.

In respect of matches which is an excisable commodity, the Central Government issued a notification No. 42 of 1981, dated 1st March, 1981, in exercise of their powers conferred on them under sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, and that reads as follows-

"In exercise of the powers conferred by sub-rule @2.5x4.5=(1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts matches in or in relation to the manufacture of which none of the following mechanical processes, namely :-

(i) box making;

(ii) frame filling;

(iii) dipping of splints in the composition for match heads ;

(iv) filling of boxes with matches ;

(v) labelling or banderolling, or both ; and

(vi) packaging, is ordinarily carried on with the aid of power, falling under item No. 38 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) and cleared for home consumption by a manufacturer ;o from so much of the duty of excise leviable thereon as is in excess of Rs. 4.50 per gross boxes of 50 matches each :

Provided that-

(i) in the case of matches packed in boxes in which both the outer slide as well as the inner slide are made of card board, the amount of exemption shall be increased by sixty paise per gross of boxes ;

(ii) in the case of matches packed in boxes in which the inner slide alone is made of card board, the amount of exemption shall be increased by twenty-four paise per gross of boxes ;

(iii) the amount of exemption shall be increased, or further-increased, as the case may be, by fifty paise per gross of boxes if bamboo is used for the splints or for both splints and veneers ;

(iv) if the splints of such matches are made of bamboo and the matches are packed in boxes of 40s, the rate of duty shall be four-fifths of the rate applicable to matches of identical description produced in the same factory but packed in boxes of 50s and if such packing in boxes of 50s is not done, it shall be four-fifths of the notionally determined rate for matches packed in boxes of 50s.This notification shall come into force on the 1st day of April, 1981.

(vide Notification No. 42/81-CE, dated 1-3-1981 as amended by notification No. 88/81-CE, dated 31-3-1981 and notification No. 89/81-CE, dated 31-3-1981),

2.The petitioners who manufacture matches, put back the same in boxes in which the outer slide alone is made of card board, claimed that they are also entitled to the benefit of exemption and the demand by the first respondent for payment of excise duty at the rate of Rs. 4.50 per gross boxes of 50 matches each, was illegal. It may be mentioned that under item 38 of the First Schedule to the Central Excises and Salt Act 1944, the normal rate of duty is Rs. 1.30 for every 1000 matches or fraction thereof, so that for a gross boxes of 50 matches, each, the normal duty payable will be Rs. 10.40. Under the notification above cited, if in relation to the manufacture of matches, mechanical processes are not involved, excise duty was payable only at the rate of Rs. 4.50 per gross boxes of 50 matches each and the exemption covered the duty payable for over and above the said sum of Rs. 4.50. A further exemption is provided even among those who manufacture matches not using mechanical processes, in cases where matches are packed in boxes in which both the outer slide as well as the inner slide are made of card board or where such matches are packed in boxes in which the inner slide is made of card board. As already stated, the petitioners herein are manufacturers of matches where the matches are packed in boxes in which the outer slide alone are made of card board, on the ground that the notification did not cover such categories and that the first respondent demanded duty to be paid at the rate of Rs.. 4.50 per gross boxes of 50 matches each.

3.The learned counsel for the petitioners contended that clause (1) of the proviso dealt with a case of matches packed in boxes in which both the outer slide as well