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1985 (5) TMI 53 - SC - Central ExciseWhether these various processes carried out by the petitioner company amount to bringing into existence different and distinct goods, commercially known as such, to attract levy of duty under Section 4 of the Central Excises and Salt Act, 1944? Whether the impugned Act is ultra vires of entry 84 of List I of the Seventh Schedule? Held that - The conclusion that inevitably follows that in view of the amendment made in Section 2(f) of the Central Excises and Salt Act as well as the substitution of new Item 19 I and Item 22(1) in Excise Tariff in place of the original Items, the contentions of the petitioners cannot be accepted. Section 3 of the Central Excises and Salt Act clearly indicates that the object of the entries in the First Schedule is firstly to specify exciable goods and secondly to specify rates at which excise duty will be levied. Reference has already been made to Rule 56A. Under sub-rule (2) of the Rule 56A, it is expressly provided that a manufacturer will be given credit of the duty which is already paid on the articles used in the manufacture subject to certain conditions. It is stated before us that excise duty will be charged on processed printed material. Processors will be given credit for the duty already paid on the grey cloth by the manufacturer of the grey cloth. In this view of the matter we are of the opinion that the views expressed by the Bombay High Court in the case of New Shakti Dye Works Pvt. Ltd. and Mahalakshmi Dyeing and Printing Works v. Union of India and Anr. (1983 (6) TMI 174 - BOMBAY HIGH COURT) are correct. The views expressed by the Gujarat High Court in Vijay Textiles v. Union of India 1979 (1) TMI 101 - HIGH COURT OF GUJRAT AT AHMEDABAD in so far as it held that the processed fabrics could only be taxed under residuary entry and not under Item, 19 I or Item 22 of the First Schedule of the Central Excise Tariff cannot be sustained. Appeal dismissed.
Issues Involved:
1. Whether the processes of bleaching, dyeing, printing, etc., amount to 'manufacture' under the Central Excises and Salt Act, 1944, as it stood prior to the impugned Act of 1980. 2. Whether the levy of excise duty is valid after the impugned Act and if the impugned Act is intra vires entry 84 of List I of the Seventh Schedule to the Constitution or valid under entry 97 of List I of the Seventh Schedule to the Constitution. 3. Whether the impugned Act violates Article 14 or Article 19(1)(g) of the Constitution. Issue-wise Detailed Analysis: 1. Whether the processes of bleaching, dyeing, printing, etc., amount to 'manufacture' under the Central Excises and Salt Act, 1944, as it stood prior to the impugned Act of 1980. The Court examined whether processes such as bleaching, dyeing, and printing of fabrics amount to 'manufacture' under the Central Excises and Salt Act, 1944. The petitioner argued that these processes do not create a new product but merely alter the existing fabric. The Revenue contended that these processes transform the fabric into a commercially different product. The Court referred to various precedents, including the case of Union of India v. Delhi Cloth & General Mills Co. Ltd., which defined 'manufacture' as bringing into existence a new substance with a distinctive name, character, or use. The Court concluded that processes like bleaching, dyeing, and printing do result in a new product, thus amounting to 'manufacture' under the Act. 2. Whether the levy of excise duty is valid after the impugned Act and if the impugned Act is intra vires entry 84 of List I of the Seventh Schedule to the Constitution or valid under entry 97 of List I of the Seventh Schedule to the Constitution. The Court examined the validity of the impugned Act, which amended the definition of 'manufacture' to include processes like bleaching, dyeing, and printing. The petitioners argued that Parliament was incompetent to enact the impugned Act under entry 84 of List I of the Seventh Schedule, as these processes do not constitute 'manufacture.' The Court held that the processes in question are not alien to the concept of 'manufacture' and fall within the scope of entry 84. The Court also stated that even if these processes were not covered under entry 84, they would fall under entry 97 of List I of the Seventh Schedule, which covers any other matter not enumerated in List II or List III. Therefore, the impugned Act is valid and within the legislative competence of Parliament. 3. Whether the impugned Act violates Article 14 or Article 19(1)(g) of the Constitution. The petitioners argued that the retrospective effect of the impugned Act imposes unreasonable restrictions on their fundamental rights under Articles 14 and 19(1)(g) of the Constitution. The Court referred to the Statement of Objects and Reasons of the Act, which justified the retrospective effect to maintain the balance in the textile industry and avoid a windfall to manufacturers at the expense of consumers. The Court held that retrospective taxation is not per se unreasonable and does not impose an unreasonable restriction on the right to carry on business. The Court found no particular feature of the legislation that created an unreasonable restriction or violated Article 14 or Article 19(1)(g). Conclusion: The Court upheld the validity of the impugned Act, stating that the processes of bleaching, dyeing, and printing amount to 'manufacture' under the Central Excises and Salt Act, 1944. The impugned Act is within the legislative competence of Parliament under entry 84 or entry 97 of List I of the Seventh Schedule to the Constitution. The retrospective effect of the Act does not violate Articles 14 or 19(1)(g) of the Constitution. Consequently, the writ petitions and civil appeals challenging the impugned Act were dismissed, and the interim orders were vacated. The arrears of excise duties were ordered to be paid forthwith, and future excise duties were to be paid as and when the goods are cleared.
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