1982 (8) TMI 53 - HC - Central Excise

Special excise duty - Exemption notification - Canons of interpretation - Duty of excise - Nature and scope - Taxing statute

Issues Involved:

1. Interpretation of notifications granting excise duty relief.
2. Scope of excise duty relief: whether it includes basic duty, special/additional/auxiliary duty.
3. Validity of the Assistant Collector's order regarding excise duty and special duty.
4. Legislative intent and interpretation of exemption notifications.

Issue-wise Detailed Analysis:

1. Interpretation of Notifications Granting Excise Duty Relief:

The petition under Article 226 of the Constitution of India raises a question regarding the interpretation of notifications granting excise duty relief. The main contention is whether the relief in excise duty covers both the basic duty of excise under the Central Excises and Salt Act, 1944 and the special/additional/auxiliary duty of excise under the Special Acts or Finance Acts.

2. Scope of Excise Duty Relief:

The statutory provisions under the Central Excises and Salt Act, 1944, and the Finance Act, 1978 were considered. Section 3 of the Act is the charging section for excise duties. The Central Government has the power to exempt goods from excise duty under Rule 8 of the Central Excise Rules, 1944. Notification No. 123/74-C.E., dated August 1, 1974, exempts tyres for motor vehicles from excise duty in excess of fifty-five percent ad valorem. The Finance Act, 1978 introduced a special duty of excise equal to 5% of the amount chargeable.

The petitioners argued that the notification's relief in excise duty includes both the basic duty and the special duty of excise. The Assistant Collector, however, concluded that the exemptions under Notification No. 123/74-C.E. are only for the duty indicated in the First Schedule to the Act and do not cover the special duty of excise.

3. Validity of the Assistant Collector's Order:

The Assistant Collector's order dated November 23, 1979, stated that the petitioners are liable to pay the basic excise duty as per Notification No. 123/74-C.E., and an additional special duty of 5% as per the Finance Act, 1978. The petitioners contested this, referencing the judgment in "Indian Aluminium Company Ltd. v. Union of India & Others," which held that relief in excise duty covers both basic and auxiliary duties.

4. Legislative Intent and Interpretation of Exemption Notifications:

The court considered the legislative intent behind the exemption notifications. The Solicitor General argued that Rule 8 of the Rules authorizes exemptions only for duties payable under Section 3 of the Act, not for additional duties under other legislative enactments. The court, however, noted that the term "duty of excise" includes various forms of excise duties, such as basic, special, additional, and auxiliary duties.

The court referred to precedents, including "Government of India v. Madras Aluminium Co. Ltd." and "Commissioner of Income-tax v. K. Srinivasan," which supported the interpretation that different forms of excise duties are part of the same duty of excise. The court emphasized that the exemption notifications should be construed in their ordinary and natural meaning, covering all duties of excise.

Conclusion:

The court concluded that the exemption under Notification No. 123/74-C.E. includes both the basic duty of excise and the special duty of excise. The total duty of excise, including the basic duty under the Act and the additional duty under the Finance Act, 1978, should not exceed fifty-five percent ad valorem as specified in the notification. The petition was allowed, and the impugned orders of the Assistant Collector were quashed. The parties were left to bear their own costs.

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