1989 Supreme(P&H) 459

PUNJAB & HARYANA HIGH COURT
Sukhdev Singh Kang , A.P.Chowdhri and - JJ.
Hind Rubber Factory
Versus
Union Of India
Civil Writ Petition No. 4516 of 1984,
Decided On : MAY 30, 1989

Excisable goods do not cease to be excisable goods on exemption being granted under Rule 8 of the Central Excise Rules, 1944.

Headnote:

CENTRAL EXCISE - EXCISABLE GOODS - EXEMPTION - NOTIFICATION - INTERPRETATION - Whether any goods which are exempted from the payment of Excise Duty under a notification issued in pursuance of Rule 8 of the Central Excise Rules, 1944 (hereinafter referred to as the Rules) ceases to be ex-cisable goods within the meaning of Sec.2 (d) of the Central Excise and Salt Act, 1944 (the Act for short) is the short but important question raised in this writ petition.

Fact of the Case:

The petitioner, M/s Hind Rubber Factory, is engaged in the business of manufacturing cheap rubber chappals and transmission rubber beltings. Footwears including rubber chappals fall under tariff item No.36 of the First Schedule to the Act whereas transmission rubber beltings (T. R. B.) fall under item No.16-A (4) of the First Schedule. The Central Government vide notification dated 24th July, 1967 issued under Rule 8 of the Rules exempted certain goods from the duty of excise leviable thereon. The Central Government had issued another notification No.80/80-CE dated 19th June, 1980 which was subsequently amended vide notification No.123/80-CE dated 18th July, 1980, whereby excisable goods of the descriptions specified in column No.3 of the table thereto annexed and falling under such item number of the First Schedule of the Act as is specified in the table and cleared for home consumption on or after the first day of April in any financial year were exempted if the aggregate value of the clearances of the specified goods did not exceed Rs.5 lacs. Through a notification dated 1.3.1981 the exemption of first clearances for home consumption was raised from Rs.5 lacs to Rs.7.5 lacs. Rubber products produced by the petitioner fall under Item No.19 tariff No.16-A of the table annexed with the notification. Notification No.83/83-CE dated 1st March, 1983 covering exemption incorporates an explanation IV which reads as under:" for the purpose of computing the aggregate value of clearances of any excisable goods, which are exempted from the whole of the duty of excise leviable thereon by any other notification (not being a notification where exemption from the whole of the duty of excise leviable thereon is granted based upon the value of quantity of clearances made in a financial year) issued under Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 and for the time being in force, shall not be taken into account. "

Finding of the Court:

The court held that excisable goods do not cease to be excisable goods on exemption being granted under Rule 8 of the Rules. The court relied on the definition of "excisable goods" in Sec.2 (d) of the Act, which consists of two parts: (i) goods specified in the First Schedule, and (ii) goods subject to a duty of excise. The court held that the two parts of the definition are not disjunctive, and that being subject to a duty does not mean actual levy of the excise duty. The court also noted that the First Schedule to the Act is a part of the enactment and only Parliament is empowered to amend the same.

Issues: Whether any goods which are exempted from the payment of Excise Duty under a notification issued in pursuance of Rule 8 of the Central Excise Rules, 1944 (hereinafter referred to as the Rules) ceases to be ex-cisable goods within the meaning of Sec.2 (d) of the Central Excise and Salt Act, 1944 (the Act for short).

Ratio Decidendi: The court held that excisable goods do not cease to be excisable goods on exemption being granted under Rule 8 of the Rules. The court relied on the definition of "excisable goods" in Sec.2 (d) of the Act, which consists of two parts: (i) goods specified in the First Schedule, and (ii) goods subject to a duty of excise. The court held that the two parts of the definition are not disjunctive, and that being subject to a duty does not mean actual levy of the excise duty. The court also noted that the First Schedule to the Act is a part of the enactment and only Parliament is empowered to amend the same.

Final Decision: The petition was dismissed with costs.