1964 (7) TMI 4 - SC - Central Excise

Cotton fabrics produced on powerlooms by a cooperative society - Interpretation of taxing statute - No room for intendment

Summary

Issues Involved:
1. Applicability of exemption notifications dated July 31, 1959, and April 30, 1960, to the appellant.
2. Liability of the appellant to pay excise duty on cotton fabrics produced by the cooperative society.
3. Interpretation of terms "produced by" and "produced on" in the context of the exemption notifications.
4. Validity of the orders passed by the Assistant Collector of Central Excise and the Collector of Central Excise.

Detailed Analysis:

1. Applicability of Exemption Notifications:
The appellant contended that the cotton fabrics produced by the cooperative society should be exempt from excise duty under the notifications dated July 31, 1959, and April 30, 1960. The notifications exempted cotton fabrics produced by cooperative societies formed of owners of cotton power-looms from excise duty, subject to specific conditions. The appellant argued that the exemption applied irrespective of whether the fabrics were produced by the society itself or on behalf of a third party.

2. Liability of the Appellant to Pay Excise Duty:
The excise authorities issued a notice to the appellant demanding payment of excise duty, alleging that the appellant got the goods manufactured through the society and removed them without paying duty. The Assistant Collector of Central Excise held the appellant liable for excise duty and imposed a penalty. The High Court of Gujarat partially upheld this decision but directed that the appellant be exempt from duty for goods supplied between June 1, 1959, and September 30, 1959.

3. Interpretation of Terms "Produced By" and "Produced On":
The appellant argued that the term "produced by" in the notifications should be interpreted to include fabrics produced on power-looms owned by the cooperative society, regardless of whether the production was for the society itself or a third party. The court agreed with this interpretation, stating that the language of the notifications did not specify that the fabrics must be produced by the society "for itself." The court emphasized that in a taxing statute, the clear meaning of the words must be considered, and any supposed intention of the exempting authority should not be called in aid unless it can be gathered from the language of the notification.

4. Validity of the Orders Passed by the Assistant Collector and the Collector of Central Excise:
The court quashed the orders of the Assistant Collector of Central Excise and the Collector of Central Excise, holding that the appellant was entitled to exemption from excise duty for the periods between October 1, 1959, to April 30, 1960, and from May 1, 1960, to January 3, 1961. The court held that the appellant's case was covered by the language of the two notifications, and the appellant was entitled to the grant of a writ in the nature of certiorari to quash the impugned orders.

Conclusion:
The Supreme Court set aside the judgment of the High Court of Gujarat and allowed the Special Civil Application No. 1054 of 1963, granting a writ in the nature of certiorari to quash the orders of the Assistant Collector of Excise and Customs and the Collector of Excise. The appeal was allowed with costs, and the appellant was held entitled to exemption from excise duty under the notifications dated July 31, 1959, and April 30, 1960.