Union of India & Ors Vs. M/S Modi
Rubber Limited [1986] INSC 173 (18 August 1986)
BHAGWATI, P.N. (CJ) BHAGWATI, P.N. (CJ)
KHALID, V. (J) OZA, G.L. (J)
CITATION: 1986 AIR 1992 1986 SCR (3) 587 1986
SCC (4) 66 JT 1986 178 1986 SCALE (2)269
CITATOR INFO: F 1987 SC1747 (1)
ACT:
Exemption from duty in special
cases-Government issuing two Notifications on 1.8.74 and 1.3.1981 using the
expression "duty of excise"-Whether the said expression is limited to
basic "duty of excise" levied under the Central Excise and Salt Act,
1944 or it covers also "special duty of excise" levied under various
Finance Acts, additional duty levied under the Additional Duty of Excise (goods
of special importance) Act, 1957 or any other kind of auxiliary duty of excise
levied under a Central enactment.
HEADNOTE:
The manufacture of tyres is subject to duty
of excise under the Central Excise and Salt Tax Act, 1944. Section 3(1) of this
Act provides that there shall be levied and collected in such manner as may be
prescribed by Rules made under the Act duties of excise on all excisable goods
other than salt which are produced and manufactured in India. The word duty for
the purposes of these Rules is defined in clause (v) of Rule 2 to mean
"the duty payable under section 3 of the Act." Section 8(1)
authorises the Central Government to exempt from duty in special cases by
Notifications made there under. As such the exemption which the Central
Government can grant by issuing Notification under sub-rule (1) of Rule 8 of
the Act can only be from the whole or any part of the duty of excise payable
under section 3 of the Act.
Since 1963 special duty of excise was levied
inter alia on manufacture of tyres from year to year up to 1971 by various
Finance Acts passed from time to time. The levy of special duty of excise was
discontinued from 1972 until 1978 when it was again revised by the Finance Act,
1978.
Thereafter, it continued to be levied from
year to year.
By virtue of the powers vested in it, the
Central Government issued the Notification No. 123/74/C-E dated August 1, 1974.
The assessee which manufactured "tyres" and who is eligible to
exemption under the said Notification, submitted, prior to 9.11.1979,
classification l1st in 588 terms of Rule 173B of the Central Excise Rules, 1944
and paid excise duty on the basis that the Notification dated August 1, 1974
granted partial exemption only in respect of basic excise duty levied under the
Act and did not claim any such exemption in respect of special duty of excise.
However, on 9.11.1979 the assessee, while
submitting its classification l1st contended that by reason of the Notification
dated 1.8.74 the assessee was exempted from payment not only in respect of
basic excise duty levied under the Act but also in respect of special duty of
excise levied under the relevant Finance Acts because the language used in the
Notification was not restrictive and it referred generally "to duty of
excise" without any qualification and it, therefore, covered all duties of
excise whether levied under the Central Excise and Salt Act, 1944 or under any
other Central enactment. The Ass1stant Collector of Central Excise rejected the
claim and the assessee being aggrieved filed a writ petition before the Delhi
High Court. The Central Government issued under Notification No. 27/81/C-E
dated 1.3.81, during the pendency of the writ petition, resulting in the
amendment of the writ petition so as to bring the question of interpretation of
the second Notification as well.
The Delhi High Court upheld the contention of
the assessee. Meanwhile Parliament also enacted the Central Excise Laws
(Amendment and Validation) Act 1982 laying down statutory rules which should
guide the court in interpreting Notifications granting exemption from payment
of duty of excise etc. Hence the writ petition by the assessee challenging the
constitutional validity of the 1982 Amendment and Validation Act and the appeal
by Revenue after obtaining special leave.
Allowing the appeal and dismissing the writ
petitions, the Court, ^
HELD: 1. The Central Excise Laws (Amendment
and Validation) Act, 1982 is merely declaratory of the ex1sting law and hence
its constitutional validity cannot be assailed. [601B-C]
2. Under the Notifications dated 8th
November, 1967, 1st August, 1974 and 1st March, 1981 the assessee is entitled
to exemption only in respect of the basic duty of excise leviable under the
Central Excise and Salt Act, 1944 and are not entitled to claim any exemption
in respect of special duty of excise or additional duty of excise or auxiliary duty
of excise. [601D]
3.1 The Notifications dated 1st August,
1974 and 1st March, 1981 589 are issued under Rule 8(1) of the Central Excise
Rules, 1944 and since the definition of "duty" in Rule 2 Clause (v)
must necessarily be projected in Rule 8(1) and the expression "duty of
excise" in Rule 8 (1) must be read in the light of that definition, the
same expression used in these two Notifications issued under Rule 8(1)
simpliciter, without anything more must also be interpreted in the same sense,
namely, duty of excise payable under the Central Excise and Salt Act, 1944 and
the exemption granted under both these Notifications must be regarded as
limited only to such duty of excise. [598D-F]
3.2 Merely because, as a matter of drafting,
the Central Government has in some other Notifications specifically referred to
the excise duty in respect of which exemption is granted as "duty of
excise" leviable under the Central Excise and Salt Act, 1944, it does not
follow that in the absence of such words of specificity in the 1974 and 1981
Notifications, the expression "duty of excise" standing by itself
must be read as referring to all duties of excise.
The legislature sometimes, with a view to
making its intention clear beyond doubt, uses language exabundanti cautela
though it may not be strictly necessary and even without it the same intention
can be spelt out as a matter of judicial construction and this would be more so
in case of subordinate legislation by the executive. [596F-H]
3.3 Further the expression "duty of
excise" in the Notification dated 1st August 1974 could not possibly be
read as comprehending special duty of excise which did not ex1st at the date of
this Notification and came to be levied almost four years later. It is only
when a new duty of excise is levied, whether special duty of excise or
auxiliary duty of excise or any other kind of duty of excise, that a question
could arise whether any particular article should be exempted from payment of
such duty of excise and the Central Government would then have to apply its
mind to this question and having regard to the nature and extent of such duty
of excise and the object and purpose for which it is levied and the economic
situation including supply and demand position then prevailing, decide whether
exemption from payment of such excise duty should be granted and if so, to what
extent. [597F-G; 598B-C]
3.4 Undoubtedly, by reason of sub-section 4
of section 32 of the Finance Act, 1979 and similar provision in the other
Finance Acts, Rule 8(1) would become applicable empowering the Central
Government to grant exemption from payment of special duty of excise, but when
the Central Government exercises this power, it would be doing so under 590
Rule 8(1) read with sub-section 4 of section 32 or other similar provision. The
reference to the source of power in 3333333such a case would not be just to
Rule 8(1), it does not of its own force and on its own language apply to
granting of exemption in respect of special duty of excise, but the reference
would have to be to Rule 8(1) read with sub-section 4 of section 32 or other
similar provision.
Therefore, whether a Notification granting
exemption is issued only under sub-rule (1) of Rule 8 of the Central Excise
Rules 1944 without reference to any other statute making the provisions of the
Central Excise and Salt Act, 1944 and the Rules made there under applicable to
the levy and collection of special, auxiliary or any other kind of excise duty
levied under such statute, the exemption must be read as limited to the duty of
excise payable under the Central Excise and Salt Act, 1944 and cannot cover
such special, auxiliary or other kind of excise. In the instant case, the
Notifications were issued under sub-rule (1) of Rule 8 of the Central Excise
Rules 1944 simpliciter without reference to any other statute. [599C-D; 600D-E]
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
415- 419 of 1983.
From the Judgment and Order dated 6.8.1982 of
the Delhi High Court in C.W.P. Nos. 1773 of 1979, 1517,2156,2410 and 2411 of
1981.
and WRIT PETITION NO. 498 OF 1983 Under
Article 32 of the Constitution of India.
K. Parasaran, Attorney Gen., M.
Chandrasekharan and C.V.S. Rao for the Appellants in C.A. Nos. 415-419 of 1983
and Respondents in Writ Petition No. 498 of 1983.
Soli J. Sorabji, H. Salve, T.M. Ansari and
Ravindra Narain for the Respondent in C.A. Nos. 415-419 of 1983 and for the
Petitioners in Writ Petition No. 498 of 1983.
The Judgment of the Court was delivered by
BHAGWATI, CJ. These appeals and writ petition raise a short question of the
construction of the expression "duty of excise" employed in two
Notifications issued by the Government of India under sub-rule (1) of Rule 8 of
the Central Excise Rules 1944, one bearing No. 123/74-C.E. dated 1st August
1974 and the other bearing No. 27/81-C.E. dated 1st March 1981. The question is
whether this expression is 591 mited in its connotation only to basic duty of
excise levied under the Central Excise and Salt Act 1944 or it also covers
special duty of excise levied under various Finance Bills and Acts, additional
duty of excise levied under the Additional Duty of Excise (goods of special
importance) Act 1957 and any other kind of Duty of excise levied under a
Central enactment. If this question is decided in favour of the assessee and it
is held, accepting the contention of the assessee, that the expression
"duty of excise" in the two Notifications is not confined only to the
basic duty of excise levied under the Central Excise and Salt Act 1944 and but
also comprises special duty of excise, additional duty of excise or any other
kind of duty of excise, a further contention is raised on behalf of the
assessee challenging the constitutional validity of the Central Excise Laws
(Amendment and Validation) Act 1982 by which Parliament sought to lay down
certain statutory rules for interpretation for arriving at the true meaning and
content of the expression "duty of excise" in the Notifications
issued under sub-rule (1) of Rule 8 of the Central Excise Rules 1944 and which
consequentially had the effect of restricting the meaning and connotation of
the expression "duty of excise" in the two Notifications in question
to basic duty of excise levied under the Central Excises and Salt Act 1944. The
facts giving rise to these appeals and writ petition are few and may be briefly
stated as follows:
The assesse in these appeals and writ
petition is a limited company which manufactures tyres. The manufacture of
tyres is subject to duty of excise under the Central Excise and Salt Act 1944.
Section 3 sub-section(i) of this Act provides that there shall be levied and
collected in such manner as may be prescribed by Rules made under the Act
duties of excise on all excisable goods other than Salt which are produced and
manufactured in India as and at the rates Set-Forth in the First Schedule. The
First Schedule enumerates various items of goods which are liable to duty of
excise and also Set-Forth the rate at which the duty of excise shall be charged
on those goods. Item 16 in the First Schedule reads: "Tyres and
Tubes" and the manufactures of tyres is therefore is liable to excise duty
at the rates Set-Forth in the First Schedule. Section 37 of the Act confers
power on the Central Government to make rules for carrying into effect the
purposes of the Act and in exercise of this power the Central Government has
made the Central Excise Rules 1944. Rule 8 of these Rules is material for the
determination of the question of interpretation which arises in these appeals
and writ petition and we may therefore reproduce it in extenso:
"Rule 8. Power to authorise exemption
from duty in spe- 592 cial cases-(1) The Central Government may from time to
time, by notification in the Official Gazette, exempt (subject to such
conditions as may be specified in the notification) any excisable goods from
the whole or any part of duty leviable on such goods.
(2) The (Central Board of Excise and Customs)
may by special order in each case exempt from the payment of duty, under
circumstances of an exceptional nature, any excisable goods." The word
"duty" for the purposes of these Rules is defined in Clause (v) of
Rule 2 to mean "the duty payable under section 3 of the Act" and
obviously therefore the exemption which the Central Government can grant by
issuing Notification under sub-rule (1) of Rule 8 can only be from the whole or
any part of the duty of excise payable under Section 3 of the Central Excise
and Salt Act 1944.
It seems that the Central Government issued
Notifications from time to time under sub-rule (1) of Rule 8 exempting various
categories of excisable goods from the whole or any part of the excise duty
leviable on such goods.
So far as tyres are concerned, a Notification
bearing No. 123/74-C.E. dated 1st August 1974 was issued by the Central
Government exempting tyres for motor vehicles from a part of the excise duty
leviable thereon and since it is this Notification which inter alia falls for
construction, it would be desirable to set it out in full:
Notification No. 123/74-C.E. dated 1st August
1974 "In the exercise of the powers conferred by sub-rule (1) of Rule 8 of
the Central Excise Rules, 1944, the Central Government hereby exempts tyres for
motor vehicles falling under sub-item (1) of Item No. 16 of the First Schedule
to the Central Excises and Salt Act, 1944 (1 of 1944), from so much of duty of
excise leviable thereon as is in excess of fifty-five per cent ad valorem."
Subsequently, another Notification bearing No. 27/81-C.E.
dated 1st March 1981 was issued by the
Central Government in respect of tyres for two-wheeled and three-wheeled motor
vehicles, power cycles, power cycled rickshaws, tractors and trailors exempting
these goods "from so much of the duty of excise leviable thereon as is in
excess of 593 the duty specified in the corresponding entry in Col. 5" of
the Table annexed to this Notification.
Now since 1963 special duty of excise was
levied inter alia on manufacture of tyres from year to year up to 1971 by
various Finance Acts passed from time to time. The levy of special duty of
excise was discontinued from 1972 until 1978 when it was again revived by the
Finance Act 1978.
Thereafter, it continued to be levied from
year to year right up to the period with which we are concerned in the present
appeals and writ petition. The provisions levying special duty of excise in
these various Finance Acts were in almost identical terms and it would
therefore be sufficient if we reproduce the relevant provision in only one of
the Finance Acts. We propose to refer to the Finance Act 1979 since that is the
Finance Act which was in operation when the present controversy in regard to
the interpretation of the expression "duty of excise" arose between
the assessee and the Revenue. Section 32 of the Finance Act 1979 provided as
follows:
32. Special Duties of excise-(1) In the case
of goods chargeable with a duty of excise under the Central Excises Act as
amended from time to time, read with any notification for the time being in
force issued by the Central Government in relation to the duty so chargeable
there shall be levied and collected a special duty of excise equal to five per
cent of the amount so chargeable on such goods.
(2) Sub-Section (1) shall cease to have
effect after the 31st day of March, 1980, except as respects things done or
omitted to be done before such cesser; and Section 6 of the General Clauses
Act, 1897, shall apply upon such ces-ser as if the said sub-section had then
been repealed by a Central Act.
(3) The special duties of excise referred to
in sub-section (1) shall be in addition to any duties of excise chargeable on
such goods under the Central Excises Act, or any other law for the time being
in force.
(4) The provisions of the Central Excises Act
and the rules made thereunder, including those relating to refunds and
exemptions from duties, shall, as far as may be, apply in relation to the levy
and collection of the special duties of 594 excise leviable under this section
in respect of any goods as they apply in relation to the levy and collection of
the duties of excise on such goods under that Act or those rules as the case
may be.
The Finance Acts from 1973 to 1976 also
levied auxiliary excise duty on various categories of excisable goods including
tyres but the levy of auxiliary excise duty was discontinued with effect from
1977 and we are, therefore, not concerned with it so far as the present appeals
and writ petition are concerned.
Prior to 9th November 1979 the assessee
submitted classification l1st in terms of Rule 173 B of the Central Excise Rules,
1944, and paid excise duty on the basis that the Notification dated 1st August
1974 granted partial exemption only in respect of basic excise duty levied
under the Central Excise and Salt Act 1944 and did not claim any such exemption
in respect of special duty of excise.
However, on 9th November 1979 the assessee,
while submitting its classification l1st, contended that by reason of the
Notification dated 1st August 1974 the assessee was exempted from payment not
only in respect of basic excise duty levied under the Central Excise and Salt
Act 1944 but also in respect of special duty of excise levied under the
relevant Finance Acts, because the language used in this Notification was not
restrictive and it referred generally to "duty of excise" without any
qualification and it therefore covered all duties of excise whether levied
under the Central Excise and Salt Act 1944 or under any other Central
enactment. This contention was advanced by the assessee in relation to the
period from 9th November 1979 to October 1982. The Ass1stant Collector of
Excise however, rejected this contention and held that the term "duty of
excise" in the Notification dated 1st August 1974 referred merely to the
basic duty of excise levied under the Central Excise and Salt Act 1944 and the
exemption granted under that Notification was not available in respect of
special duty of excise levied under the Finance Acts. The assessee thereupon
filed a writ petition in the Delhi High Court challenging the order of the Ass1stant
Collector of Excise. During the pendency of this writ petition, the
Notification dated 1st March 1981 was issued by the Central Government and the
assessee was therefore constrained to amend the writ petition so as to bring
the question of interpretation of this Notification also before the court. The
Delhi High Court by a Judgment delivered on 6th August 1982 upheld the
contention of the assessee and took the view that the expression "duty of
excise" in the two Notifications dated 1st August 1974 595 and 1st March
1981 included not merely basic duty of excise levied under the Central Excise
and Salt Act 1944 but also special duty of excise levied under the various
Finance Acts and any other duty or duties of excise levied under Central
enactment. The Central Government was of the view that the Delhi High Court
judgment was erroneous and it accordingly preferred the present appeals after
obtaining special leave from this Court. Meanwhile, Parliament also enacted the
Central Excise Laws (Amendment and Validation) Act 1982 laying down statutory
rules which should guide the court in interpreting Notifications granting
exemption from payment of duty of excise and prescribing the conditions on
which a Notification granting exemption from payment of duty of excise can be
construed as applicable to duty of excise levied under any Central law making
the provisions of the Central Excise and Salt Act 1944 and the Rules made
thereunder applicable to the levy and collection of duty of excise under such
Central Law. Since this enactment had the effect of limiting the interpretation
of the expression "duty of excise" in the two Notifications dated 1st
August 1974 and 1st March 1981 to the basic duty of excise levied under Central
Excise and Salt Act 1944 and excluding from its coverage special duty of excise
levied under various Finance Acts, the assessee filed the present writ petition
challenging the constitutional validity of this enactment.
That is how the present appeals and writ
petition have come up for hearing before us.
The first question that arises for
consideration on these facts is as to what is the true import of the expression
"duty of excise" in the notifications dated 1st August 1974 and 1st
March 1981. It is only if this expression is held to include duties of excise leviable
not only under the Central Excise and Salt Act, 1944 but also under any other
enactments that the question would arise whether the Central Laws (Amendment
and Validation) Act, 1982 is constitutionally invalid. We, therefore, asked the
learned counsel appearing on behalf of the parties to confine their arguments
only to the first question of interpretation of the expression "duty of
excise" in the notifications dated 1st August 1974 and 1st March 1981.
Both these Notifications, as the opening part
shows, are issued under Rule 8(1) of the Central Excise Rules, 1944 and since
the definition of 'duty' in Rule 2, cl. (v) must necessarily be projected in
Rule 8(1) and the expression 'duty of excise' in Rule 8(1) must be read in the
light of that definition, the same expression used in these two Notifications
issued under Rule 8(1) must also be interpreted in the same 596 sense, namely,
duty of excise payable under the Central Excise and Salt Act, 1944 and the
exemption granted under both these Notifications must be regarded as limited
only to such duty of excise. But the respondents contended that the expression
'duty of excise' was one of large amplitude and in the absence of any
restrictive or limitative words indicating that it was intended to refer only
to duty of excise leviable under the Central Excise and Salt Act, 1944, it must
be held to cover all duties of excise whether leviable under the Central Excise
and Salt Act, 1944 or under any other enactment. The respondents sought to
support this contention by pointing out that whenever the Central Government
wanted to confine the exemption granted under a notification to the duty of
excise leviable under the Central Excise and Salt Act, 1944, the Central
Government made its intention abundantly clear by using appropriate words of
limitation such as "duty of excise leviable .....
under section 3 of the Central Excise and
Salt Act, 1944" or "duty of excise leviable ..... under the Central
Excise and Salt Act, 1944" or "duty of excise leviable ..... under the
said Act" as in the Notification No. CER-8(2)/55-C.E. dated 17th September
1955, Notification No. 255/77-C.E. dated 20th July 1977, Notification No.
CER-8(1)/55-C.E. dated 2nd September 1955 Notification No. C.E.R.-8(9)/55-C.E.
dated 31st December 1955, Notification No. 95/61-C.E. dated 1st April 1961,
Notification No. 23/55-C.E. dated 29th April 1955 and similar other
notifications. But, here said the respondents, no such words of limitation are
used in the two Notifications in question and the expression "duty of
excise" must, therefore, be read according to its plain natural meaning as
including all duties of excise, including special duty of excise and auxiliary
duty of excise. Now, it is no doubt true that in these various notifications referred
to above, the Central Government has, while granting exemption under Rule 8(1),
used specific language indicating that the exemption, total or partial, granted
under each such notification is in respect of excise duty leviable under the
Central Excise and Salt Act, 1944. But, merely because, as a matter of
drafting, the Central Government has in some notifications specifically
referred to the excise duty in respect of which exemption is granted as 'duty
of excise' leviable under the Central Excise and Salt Act, 1944, it does not
follow that in the absence of such words of specificity, the expression 'duty
of excise' standing by itself must be read as referring to all duties of
excise. It is not uncommon to find that the legislature sometimes, with a view
to making its inention clear beyond doubt, uses language ex abundanti cautela
though it may not be strictly necessary and even without it the same intention
can be spelt out as a matter of judicial construction and this would be more so
597 in case of subordinate legislation by the Executive. The officer drafting a
particular piece of subordinate legislation in the Executive Department may
employ words with a view to leaving no scope for possible doubt as to its
intention or sometimes even for greater completeness, though these words may
not add anything to the meaning and scope of the subordinate legislation. Here,
in the present Notifications, the words 'duty of excise leviable under the
Central Excise and Salt Act, 1944' do not find a place as in the other Notifications
relied upon by the respondents. But, that does not necessarily lead to the
inference that the expession 'duty of excise' in these Notifications was
intended to refer to all duties of excise including special and auxiliary
duties of excise. The absence of these words does not absolve us from the
obligation to interpret the expression 'duty of excise' in these Notifications.
We have still to construe this expession-what is its meaning and import-and
that has to be done bearing in mind the context in which it occurs. We have
already pointed out that these Notifications having been issued under Rule
8(1), the expression 'duty of excise' in these Notifications must bear the same
meaning which it has in Rule 8(1) and that meaning clearly is-excise duty payable
under the Central Excise and Salt Act, 1944 as envisaged in Rule 2 clause (v).
It cannot in the circumstances bear an extended meaning so as to include
special excise duty and auxiliary excise duty.
Moreover, at the date when the first
Notification was issued, namely, 1st August 1974, there was no special duty of
excise leviable on tyres. It came to be levied on tyres with effect from the
financial year 1978 under various Finance Acts enacted from year to year. It is
therefore difficult to understand how the expression 'duty of excise' in the
Notification dated 1st August 1974 could possibly be read as comprehending
special duty of excise which did not ex1st at the date of this Notification and
came to be levied almost four years later. When special duty of excise was not
in ex1stence at the date of this Notification, how could the Central
Government, in issuing this Notification, have intended to grant exemption from
payment of special excise duty? The presumption is that when a Notification
granting exemption from payment of excise duty is issued by the Central
Government under Rule 8(1), the Central Government would have applied its mind
to the question whether exemption should be granted and if so to what extent.
And obviously that can only be with reference to the duty of excise which is
then leviable. The Central Government could not be presumed to have projected
its mind into the future and granted exemption in respect of excise duty which
may be levied in the future, 598 without considering the nature and extent of
such duty and the object and purpose for which such levy may be made and
without taking into account the situation which may be prevailing then. It is
only when a new duty of excise is levied, whether special duty of excise or
auxiliary duty of excise or any other kind of duty of excise, that a question
could arise whether any particular article should be exempted from payment of
such duty of excise and the Central Government would then have to apply its
mind to this question and having regard to the nature and extent of such duty
of excise and the object and purpose for which it is levied and the economic
situation including supply and demand position then prevailing, decide whether
exemption from payment of such excise duty should be granted and if so, to what
extent. It would be absurd to suggest that by issuing the Notification dated
1st August 1974 the Central Govenment intended to grant exemption not only in
respect of excise duty then prevailing but also in respect of all future duties
of excise which may be levied from time to time.
We have already pointed out, and this is one
of the principal arguments against the contention of the respondents, that by
reason of the definition of "duty" in clause (v) of Rule 2 which must
be read in Rule 8 (1), the expression 'duty of excise' in the notifications
dated 1st August, 1974 and 1st March, 1981 must be construed as duty of excise
payable under the Central Excise and Salt Act, 1944. The respondents sought to
combat this conclusion by relying on sub-section (4) of section 32 of the
Finance Act, 1979-there being an identical provision in each Finance Act
levying special duty of excise-which provided that the provisions of the
Central Excise and Salt Act, 1944 and the rules made thereunder including those
relating to refunds and exemptions from duties shall, as far as may be, apply
in relation to the levy and collection of special duty of excise as they apply
in relation to the levy and collection of the duty of excise under the Central
Excise and Salt Act, 1944. It was urged on behalf of the respondents that by
reason of this provision, Rule 8(1) relating to exemption from duty of excise
became applicable in relation to the levy and collection of special duty of
excise and exemption from payment of special duty of excise could therefore be
granted by the Central Government under Rule 8(1) in the same manner in which
it could be granted in relation to the duty of excise payable under the Central
Excise and Salt Act, 1944. The argument of the respondents based on this
premise was that the reference to Rule 8(1) as the source of the power under
which the notifications dated 1st August, 1974 and 1st March, 1981 were issued
could not therefore be relied upon as indicating that the duty of excise from 599
which exemption was granted under these two notifications was limited only to
the duty of excise payable under the Central Excise and Salt Act, 1944 and the
expression 'duty of excise' in these two notifications could legitimately be
construed as comprehending special duty of excise. This argument is, in our
opinion, not well-founded and cannot be sustained. It is obvious that when a
notification granting exemption from duty of excise is issued by the Central
Government in exercise of the power under Rule 8(1) simpliciter, without
anything more, it must, by reason of the definition of 'duty' contained in Rule
2 clause (v) which according to the well-recognised canons of contruction would
be projected in Rule 8(1), be read as granting exemption only in respect of
duty of excise payable under the Central Excise and Salt Act, 1944.
Undoubtedly, by reason of sub-section (4) of section 32 of the Finance Act,
1979 and similar provision in the other Finance Acts, Rule 8(1) would become
applicable empowering the Central Government to grant exemption from payment of
special duty of excise, but when the Central Government exercises this power,
it would be doing so under Rule 8(1) read with sub- section (4) of section 32
or other similar provision. The reference to the source of power in such a case
would not be just to Rule 8(1), since it does not of its own force and on its
own language apply to granting of exemption in respect of special duty of
excise, but the reference would have to be to Rule 8(1) read with sub-section
(4) of section 32 or other similar provision. It is significant to note that
during all these years, whenever exemption is sought to be granted by the
Central Government from payment of special duty of excise or additional duty of
excise, the recital of the source of power in the notification granting
exemption has invariably been to Rule 8(1) read with the relevant provision of
the statute levying special duty of excise or additional duty of excise, by
which the provisions of the Central Excise and Salt Act, 1944 and the rules
made there under including those relating to exemption from duty are made
applicable. Take for example, the notification bearing No. 63/78 dated 1st
August, 1978 where exemption is granted in respect of certain excisable goods "from
the whole of the special duty of excise leviable thereon under sub-clause (1)
of clause 37 of the Finance Bill, 1978". The source of the power recited
in this notification is "sub- rule (1) of Rule 8 of the Central Excise
Rules, 1944 read with sub-clause (5) of clause 37 of the Finance Bill,
1978".
So also in the notification bearing No. 29/79
dated 1st March, 1979 exempting unmanufactured tobacco "from the whole of
the duty of excise leviable thereon both under the Central Excise and Salt Act,
1944 and Additional Duties of Excise (Goods of Special Importance) Act,
1957", the reference to the source 600 of power mentioned in the opening
part of the notification is "sub-rule (1) of Rule 8 of the Central Excise
Rules, 1944 read with sub-section (3) of section 3 of the Additional Duties of
Excise (Goods of Special Importance) Act, 1957".
The respondents have in fact produced several
notifications granting exemption in respect of special duty of excise or
additional duty of excise and in each of these notifications, wefind that the
source of power is described as sub-rule (1) of Rule 8 of the Central Excise
Rules, 1944 read with the relevant provision of the statute levying special
duty of excise or additional duty of excise by which the provisions of the Central
Excise and Salt Act, 1944 and the Rules made thereunder including those
relating to exemption from duty are made applicable. Moreover the exemption
granted under all these Notifications specifically refers to special duty of
excise or additional duty of excise, as the case may be. It is, therefore,
clear that where a notification granting exemption is issued only under
sub-rule (1) of Rule 8 of the Central Excise Rules 1944 without reference to
any other statute making the provisions of the Central Excise and Salt Act,
1944 and the Rules made thereunder applicable to the levy and collection of
special, auxiliary or any other kind of excise duty levied under such statute,
the exemption must be read as limited to the duty of excise payable under the Central
Excise and Salt Act, 1944 and cannot cover such special, auxiliary or other
kind of duty of excise. The Notifications in the present case were issued under
sub-rule (1) of Rule 8 of the Central Excise Rules 1944 simpliciter without
reference to any other statute and hence the exemption granted under these two
Notifications must be construed as limited only to the duty of excise payable
under the Central Excise and Salt Act, 1944.
We may incidentally mention that in the
appeals a question of interpretation was also raised in regard to the
Notification bearing No. 249/67 dated 8th November 1967 exempting tyres for
tractors from "so much of the duty leviable thereon under item 16 of the
First Schedule to the Central Excise and Salt Act, 1944 as is in excess of
15%".
The argument of the respondents in the
appeals was that the exemption granted under this Notification was not limited
to the duty of excise payable under the Central Excise and Salt Act, 1944 but
it also extended to special duty of excise, additional duty of excise and
auxiliary duty of excise leviable under other enactments. This argument plainly
runs counter to the very language of this Notification. It is obvious that the
exemption granted under this Notification is "in respect of so much of the
duty leviable thereon under item 16 of the First Schedule to the Central Excise
and Salt Act, 1944 as is in excess of 15%" and these 601 words describing
the nature and extent of the exemption on their plain natural construction,
clearly indicate that the exemption is in respect of duty of excise leviable
under the Central Excise and Salt Act, 1944 and does not cover any other kind
of duty of excise. No more discussion is necessary in regard to this question
beyond merely referring to the language of this Notification.
On the above view taken by us, we must hold
that the Central Excise Laws (Amendment and Validation) Act, 1982 is merely
declaratory of the ex1sting law and hence its constitutional validity cannot be
assailed.
We accordingly, allow the appeals and dismiss
the writ petition. We set aside the judgment of the High Court and hold that
under the Notifications dated 8th November, 1967, 1st August, 1974 and 1st
March, 1981 the respondents in the appeals and the petitioners in the writ
petition are entitled to exemption only in respect of the basic duty of excise
leviable under the Central Excise and Salt Act, 1944 and are not entitled to
claim any exemption in respect of special duty of excise or additional duty of
excise or auxiliary duty of excise. The respondents in the appeals and the
petitioners in the writ petition will pay the costs of the Union of India.
S.R. Appeals allowed and Petition dismissed.
Back
