1988 (10) TMI 44 - HC - Central Excise

Issues Involved:
1. Liability to pay excise duty on unbranded biris after affixing labels.
2. Definition and classification of "container" versus "wrapper" under the Central Excises and Salt Act.
3. Constitutionality of the provisos to Notification Nos. 19/75 and 32/79 under Article 14 of the Constitution of India.
4. Laches and unjust enrichment in the context of refund claims.

Issue-wise Detailed Analysis:

1. Liability to Pay Excise Duty on Unbranded Biris After Affixing Labels:
The petitioner argued that he should not be liable for excise duty on unbranded biris purchased from other manufacturers and subsequently labeled with his brand name, "MADRAS MUNIM BEEDIES." The petitioner contended that mere affixing of labels does not constitute a manufacturing process. However, the court held that the definition of "manufacture" under Section 2(f)(ia) of the Central Excises and Salt Act includes labelling or relabelling of containers. Since the petitioner affixed labels on the biris, this activity was deemed a manufacturing process, thereby attracting excise duty.

2. Definition and Classification of "Container" Versus "Wrapper":
The petitioner claimed that labeling the wrapper, which bundles ten or more biris, does not amount to labeling a container and thus should not be considered a manufacturing process. The court examined the definitions and concluded that the term "container" includes wrappers, as supported by various legal definitions and precedents. Therefore, labeling the wrapper containing biris falls within the scope of "manufacture" under Section 2(f)(ia), making the petitioner liable for excise duty.

3. Constitutionality of the Provisos to Notification Nos. 19/75 and 32/79 Under Article 14:
The petitioner argued that the provisos to Notification Nos. 19/75 and 32/79, which exempt unbranded biris from excise duty but not branded ones, were discriminatory and violated Article 14 of the Constitution. The court rejected this argument, stating that the notifications were issued under Rule 8 of the Central Excise Rules, which allows the government to grant exemptions subject to specified conditions. The court held that the government had the discretion to grant exemptions and that the conditions imposed were neither arbitrary nor irrational. The distinction between branded and unbranded biris was deemed a valid exercise of the government's power to grant exemptions.

4. Laches and Unjust Enrichment in the Context of Refund Claims:
The respondents contended that the petitions should be dismissed due to laches, as the petitioner sought a refund for excise duties paid from 1975 to 1982, and that any refund would result in unjust enrichment. The court did not delve deeply into these technical objections, as the primary contentions regarding the manufacturing process and the validity of the notifications had already been resolved against the petitioner. Consequently, the court dismissed the petitions on substantive grounds.

Conclusion:
The court dismissed all the writ petitions filed by the petitioner, holding that the affixing of labels on biris constitutes a manufacturing process under the Central Excises and Salt Act, thereby attracting excise duty. The court also upheld the validity of the provisos to Notification Nos. 19/75 and 32/79, finding no violation of Article 14 of the Constitution. The technical objections of laches and unjust enrichment were noted but not addressed in detail, as the primary issues had already been decided against the petitioner.

← Previous Next →