9911796707
TMI Blog1978 (2) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... C.E., dated 16-6-1976] was issued under Rule 8 (l) to give 25% exemption from the payment of excise duty on the articles listed in the table at the end of the said notification. Tyres and tubes are Items 18 and l9 in the said schedule. Exemption is in the following terms : 3. The Government exempts the goods listed in the Table and cleared from one or more factories in excess of the base clearances by or on behalf of a manufacturer from so much of the duty of excise leviable thereon as is in excess of 75% of such duty. The base clearance is the clearance of excisable goods, which is liable to payment of full excise duty. The exemption of 25% is available only on that clearance which is in excess of the base clearance. The period during which the base clearance is liable to the payment of full excise duty and in which the excess of the clearance over the base clearance is entitled to the benefit of the 25% exemption of excise duty is called the base period. Where the clearance of goods is calculated in terms of weight, number or volume of the goods than the excess over the base clearance is found out merely by comparing the actual clearance of the goods with its base clearance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the specified goods were or are cleared from a factory for the first time on or after the 1st day of April, 1976, the base period shall be the year 1975-76, and the base clearance shall be nil. (b) Where the specified goods were cleared from a factory for the first time on or after the 1st day of April, 1973, but not later than the 31st day of March, 1976, the base period shall be the three financial years, namely, 1973-74, 1974-75 and 1975-76 and the base clearance shall be one/third of the aggregate of the clearances of such base period. (c) Where the specified goods were cleared from the factory for the first time earlier than the I st day of April, 1973, the base period shall be the year in which the aggregate of the clearances of such goods during any of the financial years 1973-74, 1974-75 and 1975-76 was the highest and the clearances during such base period shall be the base clearances." 4. Paragraph 5 of the notification states that 'base period and base clearances' mean the base period and the base clearances as determined in the manner specified in paragraph 2. 5. The petitioner started manufacturing tyres and tubes after the 1st day of April, 1973; t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted value under section 4 of the Act. The Trade Notice No. 41/76, dated 25th June, 1976, at Annexure K of the writ petition, does not single out those factories which fall under category (b) of sub-paragraph 2(1)(b). On the contrary, it does not make any distinction between categories (b) and (c) of sub-paragraph (2)(i) for the purpose of application of the method of value adjustment in finding out the base clearances during the base period. 7. When, therefore, the writ petition challenged the show cause notices issued to the petitioner on the ground that they are contrary to the fundamental provisions of the notification, the questions considered at the time of the admission of the petition was whether the petitioner should not be asked first to avail itself of the remedy of appeal under section 35 of the Act before the writ petition could be entertained in view of clause (3) of the amended Article 226 of the Constitution. In Dhulabhai and Others v. The State of Madhya Pradesh and another (1968) 2 S.C.R. 662, the Supreme Court held that administrative action which is contrary to the fundamental provision of a statute would be without jurisdiction and a suit to invalidate su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a collateral attack by a writ petition alleging infringement of a fundamental right in view of the seven Judges Bench decision on Ujjam Bai v. State of Madhya Pradesh & another, AIR 1962 S.C. 1621. On the contrary, administrative action which is without jurisdiction, though purported to be in accordance with the Constitution, and a sales tax statute, can be challenged as an infringement of a fundamental right without having recourse to the alternative statutory remedy as was held in Coffee Board Bangalore v. Joint Commercial Officer, Madras & Another, AIR 1971 S.C. 870, where Ujjam Bai's case was considered at pages 875-876. 10. The present writ petition was admitted and is being decided on merits because demands for excise duty from the petitioner without giving it the benefit of the exemption under notification, dated 16th June, 1976, was opposed to the fundamental provisions of the said notification, which is "law". The action being totally without jurisdiction was nullity. It can, therefore, be redressed by relief granted to the writ petitioner under sub-clause (a) of Article 226 (1) of the Constitution. 11. For the first time the reason why the Excise Authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds. Reading the Act with the Schedule, it would appear that while the duty is imposed by the statute on the goods as they are produced, the assessment of the quantum of the duty is made in the Schedule. The value of the goods is not the only criterion for such assessment. Even the value may be either the normal wholesale price or a fixed tariff value and different tariff value may be fixed for different articles as is made clear by section 3 itself. Section 3 itself does not refer to the clearance of the goods from the factory. The time and the manner of payment of duty is stated by Rule 9 and it is there that it is stated that no excisable goods shall be removed from a factory or godown of a factory until excise duty thereon has been paid in such a manner as is prescribed in the Rules. The contention of the respondents that the effective rate of duty is chargeable only on value of the goods at the time of the clearance of the goods from the factory does not, therefore, fix the point of the incident of the duty. It only fixes the point of the assessment of the duty. It is true that section 4 of the Act refers to the value of the goods which is the normal selling price of the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teel Co. Ltd., AIR 1976 S.C. 599. 16. It was argued by Mr. Lokur for the respondents that paragraph 2(1) (b) was concerned with the determination of the base period and not of the base clearances. lt is true that para 2(1) starts with the words "for the purpose of determining the base period". But base period itself is determined only by the fixation of the base clearances. In fact, base period has no meaning except in relation to base clearances. The base is of clearance and not of any period. The base period simply means the period for which the clearance is to be taken as the base clearances. It is because this is taken as the base clearances, the time to which the base clearance extends is simply called the base period. Once this is realised the meaning of paragraph 2(1)(b) becomes clear. It is wholly devoted to the modification of the value of the goods found under section 4 of the Act, by adjustment of the said value with the wholesale price index number. It is because such adjustment is not contemplated in section 4 that paragraph 2(1)(b) of the notification was enacted. The exemption of duty is, therefore, to be given not on the value found under section 4, but after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of determining the base clearances. For, the base period has no meaning, unless the base clearance is known. The base clearance is to be one-third of the aggregate of the clearances of the goods during the three years which constitute the base period. The base clearance are not mere volume of production. They are to be determined in terms of value. The value under section 4 has to be adjusted under paragraph 2(1)(b) of the notification. Howsoever the notification be read, it cannot be made to mean that the adjustment required by paragraph 2(1)(b) is to be applied only to category (c) of paragraph 2(2), but not to category (b). 19. In fact, the contention of the Government that the benefit of the duty rebate would be available to a manufacturer who passes on the benefit to the consumer is contrary to the argument that the adjustment of duty under paragraph 2(1)(b) is not to be made in respect of assessment of duty on goods cleared from the factories covered by category (b) of para 2(2). The pleadings and the clarification issued by the Government is that it is for the individual manufacturer to decide whether he would pass on the benefit of the duty rebate to the consumer. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty leviable was calculated in the first instance. Having arrived at this assessable value, if the duty is then to be calculated it would not be the same as before and in this manner the calculation would keep on changing. Such a procedure would lead to an absurd situation. 22. That this could not be the intention underlying the notification would also be clear from the fact that in cases where duty is calculated on the basis of fixed tariff values or weight or number, the benefit of the rebate of duty is not required to be passed on to the customer. If so, it is not understandable why the benefit of the rebate of the duty is required to be passed on to the consumers only in cases where the duty is to be calculated on the basis of the assessable value determined under section 4 of the Act. 23. Giving different interpretations to the said notification in respect of goods subjected, on the one hand, to ad valorem duty and, on the other hand, duty on the basis of tariff values or weight or number, would lead to discrimination which cannot be justified on the basis of any reasonable classification between the two and would be contrary to Article 14 of the Constitution. We a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the pricing policy. We also looked around in vain for an explanation as to why, when the industry failed to pass the benefit to the consumer, steps were not taken to either modify the language of the notification or to withdraw the benefit altogether. Was the departure in the frame of the notification the result of a mere slip or gross negligence or something worse? If the language of the notification was a deliberate act, was it intended to give an unconditional gift to the industry with a mere pious wish that the benefit would be passed on, as if by a religious duty, by the industry to the consumer? Would there be a justification, a substantial benefit was passed on to the industry with an illusory one to the consumer as a mere eye wash? We have decided the Petition, but these questions still remain unanswered, our pointed questioning of the Government counsel notwithstanding. It is not for us to suggest as to whether the circumstances in which the notification was issued and in the way it was framed would call for appropriate administrative action, but there is little doubt in our mind that the matter would deserve attention and even an appropriate inquiry, if for no other reas ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
