Back
1993 Supreme(Mad) 653
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE VENKATASWAMI
Dukes Pharma
Versus
Government of India
Writ Petition No. 8885 of 1985 etc.
Decided On : 06-10-1993
The clubbing of clearances of Loan Licensees with the clearances of factory owners for the purpose of considering the exemption or concession granted by a relevant notification issued under Rule 8(1) of the Central Excise Rules was valid and permissible.
Headnote:
CENTRAL EXCISE - EXEMPTION - NOTIFICATION - INTERPRETATION - LOAN LICENSEES - CLUBBING OF CLEARANCES - VALIDITY - NOTIFICATION NO. 83/83 DATED 1-3-1983 - CLAUSES 1 TO 3 - CONSTITUTIONALITY - ARTICLES 14 AND 19(1)(G) OF THE CONSTITUTION OF INDIA.
Fact of the Case:
The petitioners, who are manufacturers of patent or proprietary medicines (P.P. Medicines), challenged the clubbing of clearances of Loan Licensees with the clearances of factory owners for the purpose of considering the exemption or concession granted by a relevant notification issued under Rule 8(1) of the Central Excise Rules.
Finding of the Court:
The Court held that the clubbing of clearances of Loan Licensees with the clearances of factory owners for the purpose of considering the exemption or concession granted by a relevant notification issued under Rule 8(1) of the Central Excise Rules was valid and permissible.
Issues: Whether the clearances (of the manufactured products, namely, P.P. Medicines) of the factory owner can be clubbed with the clearances of Loan Licensees and vice versa, for the purpose of considering the exemption or concession granted by a relevant notification issued under Rule 8(1) of the Central Excise Rules?
Ratio Decidendi: The Court relied on the following precedents to arrive at its decision: 1. W.P. No. 1940 of 1981, etc. batch [Smt. S. Pannadeviv.The Government of Indiarepresented by Secretary to Government, Ministry of Finance, Department of Revenue, New Delhi - Order dated 6-4-1990] by Kanakaraj, J. 2. Writ Appeal Nos. 233 to 236 of 1991 (C.J. Hewlett &Sons India (P) Ltd.v.Government of Indiarepresented by Secretary to Government, Ministry of Finance, Department of Revenue, New Delhi - Judgment dated 13-3-1991) by a Division Bench. 3. W.P. No. 16340 of 1990 [Vopak Pharmaceuticals rep. byPartnerv.The Union of Indiarep. by its Secretary to Government, Ministry of Finance, Department of Revenue, New Delhi - order dated 5-11-1990] by Kanakaraj, J. 4. W.P. Nos. 991 of 1989, 13599, of 1988, etc. Batch - Order dated 15-4-1991 (Leennoc Laboratories Pvt. Ltd. by Director, Madrasv.The Union of India) and W.P. Nos. 5274, 7207, 8137 and 9772 of 1985 (Dooumed Laboratories Pvt. Ltd.v. The Union of India- Order dated 7-10-1991) by S. Ramalingam, J. 5. Indica Laboratories Pvt. Ltd.v. Union of India, a Division Bench judgment of the Gujarat High Court.
Final Decision: The Court dismissed all the writ petitions, except W.P. No. 7533 of 1986, which was also dismissed but without any order as to costs.
The Order of the Court is as follows :
In all these cases, though different Notifications are mentioned in the affidavits filed in support of these petitions, the sole question of law advanced before me being common, these writ petitions are disposed of by this common Order.
2.I shall set out at the appropriate place the common question of law that arises for consideration, after narrating the facts that are necessary for appreciating and understanding the issue before us.
3.Brief facts may now be noted. Except the petitioner in W.P. No. 8 of 1989 and first petitioner in W.P. No. 8885 of 1985, other petitioners are owners of factories wherein patent or proprietary medicines (hereinafter referred to as P.P. Medicines) are manufactured. They also allow other manufacturers of P.P. Medicines but do not own factories, to hire shift or shifts at their factories for manufacture of P.P. Medicines. Such manufacturers who do not own their own factories, but hire shift or shifts at the factories owned by others for manufacture of P.P. Medicines are called Loan Licensees. Such type of Loan Licensees are recognised under Rules 69A and 74B of the Drugs and Cosmetics Rules, 1945. The first petitioner in W.P. No. 8885 of 1985 and the petitioner in W.P. No. 8 of 1989 are such Loan Licensees.
4.Now let me set out the common question that arises for consideration in all these cases.
"Whether the clearances (of the manufactured products, namely, P.P. Medicines) of the factory owner can be clubbed with the clearances of Loan Licensees and vice versa, for the purpose of considering the exemption or concession granted by a relevant notification issued under Rule 8(1) of the Central Excise Rules?"*
5.Before proceeding further, it may be stated that the earliest Notification brought to my notice in connection with this issue is Notification No. 80 of 80 dated 19-6-1980, as modified by another Notification dated 25-3-1981. Similar Notifications appear to have been issued every financial year, and we are concerned with Notification Nos. 83/83, 85/85 and 175/86, as amended by Notification No. 174/89. It may at once be stated that though in all these Notifications, the ceiling limits for the purpose of exemption/concession vary, the sum and substance or basis of the Notifications is similar and, therefore, if one Notification is set out, that will serve the purpose to answer the question raised before me. Accordingly, relevant clauses of the Notification 83/83 are set out below :-"GENERAL EXEMPTION TO SMALL SCALE MANUFACTURERS
83/83-C.E., dated 1-3-1983
General Exemption scheme for manufacturers of 67 specified items in the small scale sector has been notified. GSR. In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 80/80-Central Excise, dated the 19th June, 1980, the Central Government hereby exempts the excisable goods of the description specified in column (3) of the Table hereto annexed (hereinafter referred to as the "specified goods"), and falling under such Item Number of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), as is specified in the corresponding entry in column (2) of the said Table, and cleared for home consumption on or after the 1st day of April in any financial year, by or on behalf of a manufacturer from one or more factories,
(a) in the case of first clearances of the specified goods upto an aggregate value not exceeding rupees five lakhs, from the whole of the duty of excise leviable thereon under section 3 of the said Act; and
(b) in the case of the clearances (being clearances of the specified goods of an aggregate value not exceeding rupees twenty lakhs) immediately following the said first clearances of the value specified in clause (a), from so much of the duty of excise leviable thereon under section 3 of the said Act (read wi
