1981 (11) TMI 62 - HC - Central Excise

Summary

Issues:
1. Jurisdiction of the Commission to impose conditions on manufacturers for obtaining a concessional rate under the Central Excise Rules.
2. Legality of the notice issued by the Commission requiring manufacturers to supply their entire production to the Commission.
3. Validity of the circular issued by the Commission directing Cottage Match Units to hand over their entire production to the Commission's procurement centers.

Analysis:

1. The petitioners, who are manufacturers of safety matches, sought a writ of certiorari to challenge the order of the Khadi and Village Industries Commission (the 'Commission') dated 18th December, 1979. The Central Government had exempted matches from excise duty under certain conditions, including being recommended by the Commission as a bona fide cottage unit. The Commission, in this case, imposed conditions on the manufacturers, requiring them to supply their entire production to the Commission. The court held that while such conditions may be in the public interest to prevent evasion of excise duty, the Commission lacked the authority to impose these conditions, as they should be set by the Central Government under the Central Excise Rules.

2. The impugned notice by the Commission directed the petitioners to supply their entire production to the Commission using labels owned by the Commission. The court found that the Commission's action was beyond its jurisdiction, as the conditions for obtaining a concessional rate should be determined by the Central Government under the Central Excise Rules. The court concluded that the notice was illegal, and the Commission had overstepped its authority by imposing such conditions on the manufacturers.

3. A circular issued by the Commission required Certified Cottage Match Units to hand over their entire production to the Commission's procurement centers. The court, in line with its findings in the previous issues, held that the circular was also invalid as it restricted the marketing of matches produced by the units outside the Commission's procurement channel. The court quashed the circular, emphasizing that the Commission did not have the legal basis to enforce such a directive. The order was specified to be effective only until 31st March, 1980, and no costs were awarded in these cases.

In conclusion, the High Court of Madras ruled in favor of the petitioners, declaring the Commission's notice and circular as invalid due to the lack of legal authority for imposing conditions on manufacturers beyond the scope of the Central Excise Rules.