1975 (12) TMI 83 - SC - Central Excise

Whether the Khadi and Village Industries Commission was not competent to make any recommendation as contemplated in sub-clause (d). Held that - Section 15 of the Khadi and Village Industries Commission Act, 1956 which speaks of the functions of the Commission states in Clauses (c), (d), (f), (g) and (h) that the Commission may take steps to provide for the sale and marketing of Khadi or of products of village industries, to encourage and promote research in the development of village industries, to undertake, assist or encourage the development of village industries, to promote and encourage cooperative efforts among manufacturers of Khadi and persons engaged in village industries. Section 15(h) specifically states that the Commission may take steps for ensuring the genuineness of, and for granting certificates to producers of, or dealers in, Khadi or the products of any village industry. These provisions indicate that the Khadi and Village Industries Commission is competent to grant certificates recommending village industries for exemption under Clause (d) of the Notification dated 4 September, 1967. The appeals are accepted. The orders of the High Court are set aside and the petitions are dismissed

Summary

Issues:
1. Interpretation of Notification dated 4 September, 1967 regarding concessional rate of Excise duty.
2. Validity of fixing 4 September, 1967 as a cut-off date for availing concessional rate of duty.
3. Competency of Khadi and Village Industries Commission to recommend exemptions under the Notification dated 4 September, 1967.

Analysis:
1. The appeals involved the interpretation of the Notification dated 4 September, 1967, which provided a concessional rate of duty for small manufacturers of matches. The respondents in the High Court sought a writ of prohibition against collecting duty exceeding Rs. 3.75 per gross, claiming entitlement under the Notification. The respondents argued that fixing a specific date for eligibility created unreasonable discrimination among manufacturers. The High Court initially ruled in favor of the respondents, but the appellants challenged this decision.

2. The Supreme Court referred to a previous judgment in M/s. Parameswaran Match Works case, which clarified the purpose of the Notification dated 4 September, 1967. The Court held that the date was chosen to prevent larger units from splitting into smaller ones to avail of the concessional rate of duty. The classification based on the date was deemed reasonable to protect smaller units from unfair competition. The Court emphasized that the purpose was to benefit bona fide small manufacturers who made timely declarations, ensuring fairness in the industry.

3. Another issue raised was the competency of the Khadi and Village Industries Commission to recommend exemptions under the Notification. The respondents argued that the Commission lacked authority for such recommendations. However, the Court analyzed the relevant provisions of the Khadi and Village Industries Commission Act, 1956, which empowered the Commission to grant certificates and recommend village industries for exemptions under the Notification. The Court concluded that the Commission was indeed competent for such recommendations.

In conclusion, the Supreme Court accepted the appeals, setting aside the High Court's orders and dismissing the petitions. The Court upheld the validity of the Notification dated 4 September, 1967, emphasizing its purpose to support genuine small manufacturers and prevent unfair advantages for larger units. The judgment clarified the eligibility criteria and the role of the Khadi and Village Industries Commission in recommending exemptions under the Notification.