1995 (7) TMI 79 - HC - Central Excise

Summary

Issues Involved:
1. Constitutionality of the Copra Cess Act, 1979.
2. Legislative competence of Parliament to enact the Copra Cess Act, 1979.
3. Nature of the cess imposed under the Copra Cess Act, 1979.
4. Validity of the cess as a duty of excise.
5. Applicability of Entry 84 of List I and Entry 52 of List II of the Seventh Schedule to the Constitution.
6. Allocation and utilization of the cess collected.

Analysis:

Constitutionality of the Copra Cess Act, 1979:
The petitioner challenged the Copra Cess Act, 1979, arguing it was unconstitutional, illegal, and beyond the competence of Parliament. The Act imposes a cess on copra consumed in any mill in India to produce or manufacture goods. The petitioner contended that the Act was unconstitutional and should be struck down.

Legislative Competence of Parliament:
The petitioner argued that the cess imposed under the Act is a tax on consumption, not a duty of excise, and thus does not fall under Entry 84 of List I of the Seventh Schedule of the Constitution. They contended that only the State Legislature has the power to levy a tax on consumption under Entry 52 of List II. The respondents countered that Entry 84 of List I should be interpreted broadly, allowing Parliament to impose a duty of excise on goods consumed in manufacturing processes.

Nature of the Cess:
The petitioner claimed that the cess is, in effect, a duty of excise and that the petitioner, who only purchases and consumes copra, should not be liable to pay this duty. The respondents argued that the cess is indeed a duty of excise, levied on the manufacture of goods from copra, and not merely on the purchase of copra.

Validity of the Cess as a Duty of Excise:
The court examined the legislative history and provisions of the Copra Cess Act, 1979, the Produce Cess Act, 1966, and the Coconut Committee Act, 1944. It concluded that the cess is a duty of excise on the manufacture of goods from copra, not on the purchase of copra. The court found that the legislative intent was to levy and collect a duty of excise on copra consumed in mills for manufacturing purposes.

Applicability of Entry 84 of List I and Entry 52 of List II:
The court held that the cess falls within the scope of Entry 84 of List I of the Seventh Schedule, which covers duties of excise on goods manufactured or produced in India. The court rejected the petitioner's argument that the cess should be considered a tax on consumption under Entry 52 of List II, which pertains to local taxes like octroi and sales tax.

Allocation and Utilization of the Cess Collected:
The court noted that the cess collected is credited to the Consolidated Fund of India and allocated to the Coconut Development Board as needed. The court found no evidence that the excess amount in the Consolidated Fund would be used for purposes other than those specified in the Act.

Conclusion:
The court dismissed the writ petition, upholding the constitutional validity of the Copra Cess Act, 1979. It concluded that the cess is a duty of excise on the manufacture of goods from copra, falling within the legislative competence of Parliament under Entry 84 of List I of the Seventh Schedule. The court found no merit in the petitioner's arguments and ruled that the Act is constitutionally valid and enforceable.