1991 (9) TMI 164 - HC - Central Excise

Summary

Issues:
Challenge to the constitutionality of a proviso in an Excise Exemption Notification and discrimination between manufacturers based on excise duty rates.

Analysis:
The High Court of Bombay heard an appeal where the issue revolved around a proviso in an Excise Exemption Notification. The Single Judge had declared the proviso unconstitutional, illegal, and void, leading to the direction for a refund of excise duty collected. The petitioners argued that the proviso created discrimination between manufacturers based on the excise duty paid on raw materials, resulting in differential duty rates for finished products. This classification was deemed arbitrary and discriminatory by the Single Judge.

The Union Government and Excise authorities appealed this decision, contending that the proviso did not create any classification or arbitrary discrimination. They argued that the exemption notification was workable and rational without the proviso, and judicial decisions allowed for the expansion of exemption benefits through court orders. The petitioners maintained that the proviso was arbitrary, causing discrimination among manufacturers based on the excise duty rates of raw materials acquired.

The exemption notification exempted specified aluminum products from excess excise duty, with the proviso requiring satisfaction of excise duty payment rates for certain finished products manufactured from specific aluminum inputs. The Court noted that all manufacturers were subject to excise duty based on the date of purchase of aluminum inputs, without any discriminatory classification between the petitioners and other manufacturers.

The Court rejected the argument of discrimination based on the petitioners' stock of aluminum inputs on a specific date, stating that such stock levels were typical for manufacturers. As there was no evidence of classification or discrimination, the Court found no basis for the petition. Consequently, the appeal was allowed, setting aside the Single Judge's decision and awarding costs to the appellants. Additionally, a direction was given to refrain from recovering any refunded excise duty for a specified period, and certified copies of the order were to be provided promptly to both parties.