1963 (3) TMI 58 - HC - Central Excise

Summary

Issues Involved:

1. Legality of the demand for excise duty on stoneware jars.
2. Interpretation of the term "chinaware" in the context of the Finance Bill, 1961.
3. Applicability of the Provisional Collection of Taxes Act, 1931.
4. Retrospective effect of the Finance Act, 1961.

Issue-wise Detailed Analysis:

1. Legality of the demand for excise duty on stoneware jars:

The petitioner challenged the demand made by the third respondent under Ext. P-1, dated 23rd May 1961, for a sum of Rs. 3669.94 towards excise duty on stoneware jars removed from the factory from 1-3-1961 to 30-4-1961. The demand was based on the Finance Bill, 1961, which sought to levy excise duty on chinaware and porcelainware. The petitioner contended that their stoneware glazed jars did not fall under the category of chinaware or porcelainware.

2. Interpretation of the term "chinaware" in the context of the Finance Bill, 1961:

The Finance Bill, 1961, introduced excise duty on chinaware and porcelainware. The petitioner argued that their stoneware glazed jars were distinct from chinaware and porcelainware, both technically and commercially. They emphasized that chinaware and porcelainware are made from china clay, whereas their jars were made from ball clay. The court noted that the term "chinaware" in the Finance Bill did not include an explanation that was later added in the Finance Act, 1961, which clarified that chinaware includes all glazed clayware but excludes terracotta. The court concluded that the term "chinaware" in the Finance Bill should be understood in its technical sense in Ceramic Science, which does not include stoneware jars.

3. Applicability of the Provisional Collection of Taxes Act, 1931:

The Finance Bill, 1961, included a declaration under the Provisional Collection of Taxes Act, 1931, which allowed certain provisions to have immediate effect. The court examined the provisions of the Provisional Collection of Taxes Act, particularly Section 4, which states that a declared provision has the force of law immediately upon the introduction of the Bill and ceases to have force when it becomes an enactment. The court noted that the declared provisions in the Finance Bill ceased to have force on 29-4-1961, when the Finance Act, 1961, was enacted.

4. Retrospective effect of the Finance Act, 1961:

The Finance Act, 1961, received presidential assent on 29th April 1961 and included an explanation that chinaware includes all glazed clayware but excludes terracotta. The court observed that this explanation was not present in the Finance Bill, 1961. The demand under Ext. P-1 was for a period before the Finance Act came into force, specifically from 1-3-1961 to 30-4-1961. The court held that the term "chinaware" in the Finance Bill should be interpreted in its technical sense, which does not include stoneware jars. Consequently, the demand for excise duty under Ext. P-1 could not be sustained for the period covered by the Finance Bill.

Conclusion:

The court concluded that the demand for excise duty on stoneware jars under Ext. P-1 could not be sustained as the term "chinaware" in the Finance Bill, 1961, did not include stoneware jars. The court quashed the demand and allowed the writ petition. The C.M.P. was dismissed, and parties were directed to bear their own costs.