2005 (7) TMI 24 - HC - Central Excise

Exemption notification Department deny the concession in the rate of excise duty imposed on the products manufactured by the appellant After considering all the detail authority allow the concessional rate of duty to the appellant

Summary

Issues Involved:
1. Denial of concessional excise duty.
2. Validity of Condition No. 14A in Excise Notification No. 48/2004.
3. Classification of paper manufacturers with and without wood/bamboo pulp units.
4. Allegation of unreasonable classification and violation of Article 14.
5. Judicial review of exemption notifications.

Issue-wise Detailed Analysis:

1. Denial of Concessional Excise Duty:
The petitioner, a company engaged in manufacturing paper, paperboard, and duplex boards, challenged the denial of concessional excise duty at 12% ad valorem under Excise Notification No. 48/2004. The petitioner argued that Condition No. 14A, which excluded manufacturers with wood or bamboo pulp units from availing the concession, was unjust and unreasonable.

2. Validity of Condition No. 14A in Excise Notification No. 48/2004:
Condition No. 14A stipulated that the exemption would not apply to manufacturers with a plant for making bamboo or wood pulp. The petitioner contended that this condition was arbitrary and violated Article 14 of the Constitution, as it created an unreasonable classification without a valid nexus to the objective of the exemption notification.

3. Classification of Paper Manufacturers with and without Wood/Bamboo Pulp Units:
The notification created two classes of manufacturers: those with and those without wood or bamboo pulp units. The petitioner argued that this classification was invalid and discriminatory. The respondent defended the classification, stating it was based on an intelligible differentia and had a nexus to the objective of encouraging the use of non-conventional raw materials.

4. Allegation of Unreasonable Classification and Violation of Article 14:
The petitioner claimed that the classification violated Article 14 of the Constitution, which prohibits class legislation without reasonable justification. The court examined whether the classification was reasonable and whether it had a nexus to the objective of the legislation, which was to encourage the use of non-conventional raw materials and conserve forest wealth.

5. Judicial Review of Exemption Notifications:
The court acknowledged that exemption notifications, being subordinate legislation, are subject to judicial review. It examined the notification on the grounds of reasonableness, fairness, and non-arbitrariness. The court referred to precedents, including Indian Express Newspapers (Bombay) Pvt. Ltd. v. Union of India and Dai-Ichi Karkaria Ltd. v. Union of India, to establish that such notifications must satisfy constitutional safeguards.

Conclusion:
The court held that the notification of the year 2004, containing Condition No. 14A, was valid and made a reasonable classification between two types of paper and paperboard manufacturers. The classification had a definite nexus with the objective of encouraging the use of non-conventional raw materials. The challenge to the notification failed, and the writ petition was dismissed.