1994 (7) TMI 369 - SC - Central Excise

Issues Involved:
1. Validity of Section 5 of the Opium Act, 1878.
2. Validity of Rules made under Section 5 by the Madhya Pradesh Government.
3. Applicability of the Opium Act, 1878, and the Dangerous Drugs Act, 1930.
4. Levy and collection of export duty on poppy husks by the State of Madhya Pradesh.
5. Competence of the State Government to levy duty under the Opium Act.
6. Excessive delegation of legislative power under Section 5 of the Opium Act.

Detailed Analysis:

1. Validity of Section 5 of the Opium Act, 1878:
The primary issue was whether the State Government could levy and collect 'duty' under Section 5 of the Opium Act, 1878, especially when the export in question was across the customs frontiers of India. Section 5 empowers the State Government to make rules regulating the possession, transport, import, export, and sale of opium subject to the payment of duty or other conditions. The Court held that Section 5 is not a taxing provision but a regulatory measure designed to control and regulate the possession, transport, import/export, and sale of opium. The provision to levy duty is incidental to the primary purpose of regulation.

2. Validity of Rules made under Section 5 by the Madhya Pradesh Government:
The Madhya Pradesh Government framed the Poppy Husks Rules, 1959, under Section 5 of the Opium Act, which included Rule 3(A) prescribing export duty on poppy husks. The Court upheld the validity of these rules, stating that they were within the four corners of Section 5 and were consistent with the regulatory framework intended by the Opium Act.

3. Applicability of the Opium Act, 1878, and the Dangerous Drugs Act, 1930:
The Court clarified that the Opium Act and the Dangerous Drugs Act operate in distinct but complementary fields. The Opium Act deals with the movement of opium within India, while the Dangerous Drugs Act governs the import into and export from India across customs frontiers. The movement of poppy husks from Madhya Pradesh to Bombay Port was considered an export within the meaning of the Opium Act, while the actual export from Bombay to Holland fell under the Dangerous Drugs Act.

4. Levy and Collection of Export Duty on Poppy Husks by the State of Madhya Pradesh:
The appellant contended that the movement of poppy husks from Mandsaur to Bombay for export to Holland was a single integrated transaction and should not attract export duty under the Opium Act. The Court rejected this argument, stating that the movement within India (from Madhya Pradesh to Maharashtra) and the export from India (from Bombay to Holland) are governed by different laws. The export duty levied by the Madhya Pradesh Government under the Opium Act was valid and enforceable.

5. Competence of the State Government to Levy Duty under the Opium Act:
The appellant argued that the Parliament is not competent to levy duty on opium, and only the State Legislature can do so under Entry 51 of List-II. The Court held that Section 5 of the Opium Act is not a taxing provision but a regulatory measure. The duty referred to in Section 5 is an amount collected as a condition for granting permission to possess, transport, import/export, or sell opium. The provision is saved by Article 372 of the Constitution, which continues pre-Constitution laws until altered or repealed by a competent legislature.

6. Excessive Delegation of Legislative Power under Section 5 of the Opium Act:
The appellant contended that Section 5 involves excessive delegation of legislative power as it allows the State Government to levy duty without prescribing minima or maxima. The Court rejected this argument, stating that Section 5 is a regulatory provision, not a taxing one. The guidance for making rules under Section 5 is provided by the scheme of the Opium Act, which aims to control and regulate opium due to its noxious nature. The rule-making power conferred on the State Government is within permissible limits and does not constitute excessive delegation.

Conclusion:
The appeals were dismissed, and the validity of Section 5 of the Opium Act, 1878, and the rules made thereunder by the Madhya Pradesh Government were upheld. The Court affirmed that the levy of export duty on poppy husks by the State of Madhya Pradesh was valid and enforceable. The arguments regarding the competence of the State Government and excessive delegation of legislative power were rejected. The Court emphasized the regulatory nature of Section 5 and the necessity of controlling and regulating opium due to its dangerous and noxious nature.

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