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Issues Involved:
1. Validity of Notification No. 140 of 1981. 2. Alleged discrimination against non-mechanised sector manufacturers. 3. Reasonableness and arbitrariness of the impugned notification. 4. Policy considerations underlying the notification. 5. Compliance with principles of natural justice. Issue 1: Validity of Notification No. 140 of 1981 The petitioners, manufacturers of matches without the aid of power, challenged Notification No. 140 of 1981, which amended Notification No. 42 of 1981. The amendment denied them concessional rates of excise duty previously available. The court noted that the history of excise duty on matches began in 1934, with classifications evolving over time to address the competitive disadvantages faced by medium-sized and cottage industries. The court examined the processes involved in match manufacturing and the classification of manufacturers into mechanised, semi-mechanised, and non-mechanised sectors. The impugned notification altered the duty rates and conditions for non-mechanised manufacturers, particularly concerning the use of card-board boxes. Issue 2: Alleged Discrimination Against Non-Mechanised Sector Manufacturers The petitioners argued that the impugned notification was discriminatory and violated Article 14 of the Constitution by denying concessional rates to non-mechanised manufacturers using card-board boxes, while mechanised and semi-mechanised sectors continued to receive concessions. They contended that the classification was not based on a rational policy and lacked a nexus to the objective of preserving wood. The court, however, found that the government's policy was based on reasonable conclusions, considering both wood preservation and labour deployment. It held that the non-mechanised sector was not equal to the mechanised sector, and thus, the question of discrimination did not arise. Issue 3: Reasonableness and Arbitrariness of the Impugned Notification The petitioners claimed that the notification was arbitrary and unreasonable, asserting that non-mechanised manufacturers should not be denied concessions for using card-board boxes. They argued that the government's dual policy-extending concessions based on wood preservation and labour deployment-was unjustified. The court rejected this argument, stating that the government's policy was sound and aimed at maintaining sector differences while considering labour potential. The court emphasized that the government's prerogative to prioritize certain principles over others was valid and based on sound reasoning. Issue 4: Policy Considerations Underlying the Notification The court observed that the government's policy was consistent in extending concessions to different sectors in different manners. For the mechanised sector, the focus was on using card-board boxes to avoid deforestation, while for the non-mechanised sector, the emphasis was on labour involvement. The court reiterated that the policy of the government could not be questioned on the grounds of inconsistency, as it was based on various economic factors. The court upheld the government's decision to treat non-mechanised units as semi-mechanised units if they used card-board boxes. Issue 5: Compliance with Principles of Natural Justice The petitioners argued that they were not given sufficient opportunity to present their case. The court found that the principles of natural justice were scrupulously followed. The petitioners were given opportunities to represent their case before the Secretary (Revenue), Ministry of Finance, and their submissions were duly considered. The court noted that the petitioners had withdrawn their Special Leave Petitions before the Supreme Court, which had directed the government to reconsider the wisdom of the notifications. The government's subsequent decision to uphold the notifications was found to be based on a thorough consideration of all relevant factors. Conclusion The court dismissed all the writ petitions, holding that the impugned notifications were valid and based on reasonable policy considerations. The court emphasized that the government's policy was aimed at balancing sector differences and labour involvement, and the petitioners' claims of discrimination and arbitrariness were unfounded. The court also noted that the principles of natural justice were duly followed, and the petitioners had no grounds to challenge the notifications.
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