1997 (7) TMI 164 - HC - Central Excise

Summary

Issues:
Challenge to the legality of the proviso to Central Excise Notification No. 253/82-C.E., dated 8-11-1982.

Analysis:
The petitioner sought a declaration that the proviso to the Central Excise Notification is illegal, arbitrary, void, unconstitutional, and unenforceable as it affects them. The impugned notification exempts cotton fabrics from excise duty under certain conditions. The petitioner specifically challenged the proviso to the notification. The petitioner argued that the proviso unreasonably and arbitrarily denied the exemption provided under the notification. The petitioner requested a writ of Declaration to address this grievance.

Analysis:
The respondents argued, citing a Division Bench judgment of the Bombay High Court, that the proviso was justified. The Bombay High Court judgment highlighted the process of fabric manufacturing and the conditions for exemption under the notification. The judgment emphasized that splitting a factory into two units to avail exemptions was not permissible. The court noted that the proviso was a policy decision, and judicial review could not question the wisdom of the government's policy.

Analysis:
The court considered the submissions of both parties and referred to a Supreme Court decision emphasizing the government's power to regulate the economy through taxation laws. The court agreed that it could not question the wisdom of the government's policy decisions. However, the court acknowledged that setting up two units did not prejudice the government's revenue or taxation powers. Therefore, the petitioner was allowed to make a representation to the authorities to relax the proviso and grant the exemption if the authorities found merit in the case.

Analysis:
The court dismissed the writ petition but permitted the petitioner to make a representation to the authorities for relief from the proviso. The authorities were directed to consider and dispose of the representation within three months. No costs were awarded in the judgment.