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TMI Blog1995 (1) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... se duty levied or leviable on the tyre cord fabrics produced and sold by the applicant? 4.. Whether, on the facts and circumstances of the case and true and correct interpretation of the notification dated April 30, 1975, issued under rule 8(1) of the Central Excise Rules, 1944 was the Tribunal correct in law in holding that no duty is levied or leviable under the Additional Duties of Excise (Goods of Special Importance) Act of 1957?" 2.. The material facts of the case giving rise to this reference, briefly stated, are as follows: The assessee, Nirlon Synthetic Fibres and Chemicals Ltd., is a dealer registered under the Bombay Sales Tax Act, 1959 ("the Act"). It manufactures in its plant at Goregaon, among other things, nylon tyre cord fabrics and sells the same in the State of Maharashtra. On August 28, 1980, the assessee filed an application before the Commissioner of Sales Tax under section 52(1)(e) of the Act seeking determination of the rate of tax applicable to the sale of nylon tyre cord fabrics made by it to one M/s. Bombay Tyre International of Bombay vide invoice No. 100-D-0032 dated June 28, 1980. The case of the assessee before the Commissioner was that nylon tyre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee did not find favour with the Tribunal. The Tribunal held that once a particular item is exempted from the whole of the duty by a notification under rule 8(1) of the Central Excise Rules, no duty can be said to be leviable thereon under the Additional Duties of Excise Act. Accordingly, the Tribunal held that nylon tyre cord fabrics sold by the assessee did not fall within the purview of the exemption entry, entry 41 of Schedule A to the Act and that it would fall under entry 10A of Schedule C to the Act and sales thereof would be taxable at the rates specified against the said entry. Hence, this reference at the instance of the assessee. 4. For the purpose of appreciation of the controversy raised in the questions referred to us by the Tribunal, it may be expedient to set out the relevant entries of Schedule A and Schedule C to the Bombay Sales Tax Act. Schedule A to the Bombay Sales Tax Act contains the list of goods, the sale or purchase of which is free from all taxes. The State Government has the power to amend the Schedule by adding to or enlarging any entry in the said Schedule or relaxing or omitting any condition or exemption specified therein by a notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces that necessitated the above amendments with retrospective effect from June 17, 1972 and the object thereof. The circumstances are: In consequence to determination order made by the Commissioner on June 17, 1972, under section 52 of the Act, since that date "rayon or artificial silk cord fabrics" or "cotton tyre cord fabrics" were being treated as rayon or artificial silk yarn or cotton yarn for the purpose of levy of tax. But the Tribunal, as an appellate authority, by its order dated October 29, 1976, held that rayon or artificial silk tyre cord fabrics were rayon or artificial silk fabrics as defined in the First Schedule to the Central Excises and Salt Act, 1944 and therefore fall under entry 41 of Schedule A to the Bombay Sales Tax Act. As a result of the above order of the Tribunal, rayon or artificial silk tyre cord fabrics and cotton tyre cord fabrics were not liable to any tax under the Act. The State Government was thus faced, not only with recurring loss of revenue by way of sales tax, but also with the liability for refund of all taxes collected by it under the Act since June 17, 1972. To get out of this situation, the Bombay Sales Tax (Amendment and Validating Prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and exemption granted by a notification issued under the Act or the Rules by the Government. According to the counsel for the assessee, leviability of duty can be affected only by statutory exemption and not by exemption granted by the Government or the delegated authority by a notification issued under the Act or the Rules. 7.. We have given our careful considerations to the above submissions. We however find it difficult to accept the same. The distinction sought to be drawn between exemption granted by the Legislature and exemption granted by a notification made by the delegated authority in exercise of the power conferred upon it by the statute, in our opinion, is wholly misconceived, because it is wellsettled that a notification made in accordance with the power conferred by the statute has statutory force and validity. Exemption under a notification is as if it were contained in the Act itself. Section 37(1) of the Central Excise Act empowers the Central Government to make rules to carry into effect the purposes of the said Act. Clause (xvii) of sub-section (2) of section 37, specifically provides that the rules so framed may "exempt any goods from the whole or any part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Excises and Salt Act, 1944, and the rules made thereunder, including those relating to refunds and exemptions from duty, shall, so far as may be, apply in relation to the levy and collection of the additional duties as they apply in relation to the levy and collection of the duties of excise on the goods specified in sub-section (1)." 9.. It is clear from a plain reading of the above section that while subsection (1) provides for levy and collection of duties of excise in respect of the goods specified therein at the rates specified in the First Schedule, sub-section (3) makes the provisions of the Central Excises and Salt Act and the rules made thereunder including those relating to "exemptions from duty" applicable to the levy and collection of duties of excise on the goods specified in sub-section (1). Obviously, sub-sections (1) and (3) have to be read together as a part of the integral whole and as being inter-dependent and not in isolation. A notification issued under rule 8 of the Central Excise Rules read with sub-section (3) above, would have effect as if enacted in the Act itself. Sub-section (1) of section 3 of the Act therefore would have to be read along w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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