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TMI Blog1984 (9) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... pulp making plant attached to the mill. 3. Thereafter under Notification No. 128 of 1977 dated 18th June, 1977 the earlier Notification of 1973 was superseded. Under the Notification No. 128 of 1977 certain types of papers was exempted from so much of the duty of excise leviable thereon as specified in the table set out in the notification on condition that the paper mill did not have a plant attached to it for making bamboo wood pulp and the paper mill manufactured paper out of pulp. The material part of the notification is as follows : "In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944............... the Central Government hereby exempts paper other than..................manufactured and cleared from a paper mill of the type described in the table below, from so much of the duty of excise leviable thereon as is specified in the corresponding entry in column (3) of the said Table. TABLE Sr. No. Description of paper mill Extent of Exemption 1. Paper Mill whose annual installed capacity in respect of all varieties of paper and paper boards does not exceed 2,000 tonnes. Seventy-five per cent of the duty leviable. 2. Paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntimated to the petitioners that under the first notification of 1973 the petitioners were required to pass on the benefit of exemption from excise duty to their customers. If the said benefit was not passed on to the customers, the assessable value of paper as declared by the company in its price list would have to be revised by including the quantum of benefit retained by the company (under the first notification of 1973) in the value of the goods for calculation of excise duty. Accordingly a show cause notice dated 9/15 March 1977 was issued by the Superintendent of Central Excise calling upon the petitioners to show cause why an amount of ₹ 26,968.77 alleged to be short levied should not be recovered from the company under Rule 10 of the Central Excise Rules in respect of its clearance of paper from 16th March 1976 to 30th June 1976. The petitioners replied to the show cause notice. Ultimately an order was passed against the petitioners by the Assistant Collector on 8th October 1977. 7. Being aggrieved by the order of 8th October 1977 the petitioners preferred an appeal to the Appellate Collector of Central Excise. The Appellate Collector, by his order dated 2lst Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced rate of duty) In other words the assessable value of goods under Section 4 was proportionately increased and the duty collected proportionately reduced to reflect the correct reduced percentage of duty. The total price, of course, remained the same. 9. The petitioners have challenged the orders of 21st June 1979 and 6th November 1979 as well as the revision of assessable value of the goods as per these orders. In order to adjudge upon the contentions raised by the petitioners it is necessary to examine the scheme of the Central Excises and Salt Act, 1944. 10. Under entry 84 of list 1 of the 7th Schedule to the Constitution, Union Government has the power to levy duties of excise on goods manufactured or produced in India. Entry 45 in list 1 of the 7th Schedule to the Government of India Act, 1935, under which the Central Excises and Salt Act, 1944 was originally enacted is also in similar terms. The duty of excise is therefore levied on goods which are manufactured or produced in India. It is levied on goods and is collected from the manufacturer. Excise being an indirect tax, however, the ultimate burden of such duty falls on the customer. Since excise can be lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emsp; ... .... ...... " Section 4. Valuation of excisable goods for purposes of charging of duty of excise- (1) Whereunder this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value shall, subject to the other provisions of this section, be deemed to be- (a) the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sols consideration for the sale; Provided that- (i) where ... .... ...... .. .... ...... " such goods are sold by the assessee at different prices to different buyers etc. ... .... (ii) where such goods are sold by the assessee in the course of wholesale trade for delivery at the time and place of removal at a price fixed under any law for the time being in force or at a price, being the maximum, fixed under any such law, then, notwithstanding anything contained in clause (iii) of this pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where a notification or order providing for any exemption (not being an exemption for giving credit with respect to, or reduction of any duty of excise on such goods equal to, any duty of excise already paid on the raw material or component parts used in the production or manufacture of such goods) from the duty of excise under such Act is for the time being in force, the duty of excise computed with reference to the rate specified in such Act in respect of such goods as reduced so as to give full and complete effect to such exemption; and (ii) ... ... ... ... ... ... Section 4 envisages a method of collecting tax at the point of the first sale effected by the manufacturer. Under the present Section 4(1)(a), the value of excisable goods is deemed to be the normal price thereof i.e., the price at which such goods are ordinarily sold by the asseessee to a buyer in the course of wholesale trade, for delivery at the time and place of removal. [I am not here concerned with the other provisions of Section 4(1) ]. Normal price, therefore, in the present case is required to be determined with reference to such a sale. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise payable on such goods must have a reference to the duty payable on such goods by the assessee. Excise duty payable by the assessee, therefore, may or may not be determinable only with reference to the tariff entry. If there is any exemption notification which applies either to the type of goods manufactured by the assessee or to the assessee by virtue of his being the type of manufacturer covered by the exemption, the duty of excise payable has to be computed with reference to such exemption notification also. The amount covered by Section 4 (4)(d)(ii) is the amount of excise duty which is payable by the assessee on the goods in question. It necessarily refers to the actual quantum of excise duty payable on the goods in question by the assessee. In my view Section 4(4)(d)(ii) does not refer to the duty leviable under the relevant tariff entry without a reference to any exemption notification that may be in existence in connection with that entry as contended by the petitioners. 16. This position is now made clear by virtue of an "explanation" which has been added to Section 4(4)(d)(ii) with retrospective effect from 1st October 1975 under Section 47 of the Finance Act of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rate of duty in this manner. The three columns in the table are (1) Serial No. (2) description of paper mill, and (3) extent of exemption. Under the column "extent of exemption" the percentage of the duty leviable which is exempted is set out. According to the petitioners the notification does not reduce the rate of duty leviable and hence the explanation does not apply to the present notification. 18. This contention is based upon a wrong interpretation of the explanation. It is undoubtedly true that whenever in a statute or a statutory instrument, there is a departure from the language previously used, one should presume that the use of different words is intended to convey a different idea. A change in wording denotes a change in meaning. (See Maxwell on The Interpretation of Statutes, 12th Edition, page 282). But when the words used in the notification expressly provide for an exemption from the payment of excise duty, there can be no question of any different interpretation being put on these words based on a difference in language. As a result of the notification, the paper mills of the description set out in the notification and in the table forming part of it, are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration the exemption granted under the notification because it was neither intended by the notification, nor was it practicable, that the assessable value should be determined after giving effect to the relief under the exemption. The High Court observed, "If the price to the customer inclusive of duty remains the same and the duty leviable thereon is calculated and thereafter the relief permissible under the notification is reduced, as the Government intends to do, then...... .......... the assessable value would thereafter have to be recalculated and it would be higher than the assessable value in which the excise duty leviable was calculated in the first instance. Having arrived at the 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." 21. With due respect to the Delhi High Court, this part of its reasoning is a result of a mistake in the method of calculation. The reduced rate of duty is not required to be calculated on the selling price inclusive of the duty of excise leviable as per the original tariff entry. To calculat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Excise, Cuttack and others reported in 1982 E.L.T. 109 (Ori.) and for the same reasons set out earlier I respectfully differ from these observations. 23. In the case of Andhra Pradesh Paper Mills Ltd. v. Assistant Collector of Central Excise, reported in 1980 E.L.T. 210 (A.P.) Andhra Pradesh High Court considered the scope of new Section 4(4)(d)(ii) of the Central Excises and Salt Act. In the case before the Andhra Pradesh High Court also there was an exemption notification whose benefit was not passed on by the manufacturer to the customer. The Andhra Pradesh High Court held that if the exemption notification does not contain a condition that its benefit should be passed on to the customer, the manufacturer can retain the benefit of exemption. In the course of its judgment the court considered the scope of Section 4(4)(d)(ii). It said that this clause merely reiterates the principle that excise duty is leviable on manufacturing cost and manufacturing profit. Hence Section 4(4)(d)(ii) excludes the amount of excise duties, sales tax and other charges as also the trade discount while arriving at the excisable value of goods under Section 4. The learned Judge went on to obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther additional sum that is not lawfully due to it. Similarly in the case of Mohan Meakin Breweries Ltd and others v. Excise Inspector-in-Charge and others reported in 1979 E.L.T. (J 7), the Allahabad High Court observed that if some one has collected anything from the customer which is not authorised by the taxing law, that is a matter between him and the purchaser and the Government cannot recover it unless the money so collected is due as a tax. In other words the Excise Department can only recover from the assessee the duty of excise recoverable in law. It cannot recover any amount in excess of the duty so recoverable, on the basis that such amount has been collected by the assessee from the customer. In the present case, however, the Excise Department is merely seeking to compute the value of assessable goods on the basis of Section 4 read with Section 4(4)(d)(ii) and the explanation. There is therefore no question of their not being entitled to so compute the value of the assessable goods. 25. In the present case the petitioners have also challenged the retrospective amendment to Section 4 which has been made by the Finance Act of 1982. As a result of such retrospective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 944. Under Section 11A of the Central Excises and Salt Act, for example, it is provided that when any duty of excise has not been levied or paid or has been short levied or short paid, or erroneously refunded, a Central Excise Officer may within six months from the relevant date service notice as prescribed in that section. The section prescribes the time-limit within which such duty can be recovered. The provisions of Section 11A are not overruled by the Amending Act or by making the amendment retrospective. (The Division Bench of this Court in the case of New Shakti Dye Works Pvt. Ltd. has left this question open.). 27. In the case of J.K. Cotton Spinning and Weaving Mills and another v. Union of India and others reported in 1983 E.L.T. 239 (Del ) a Division Bench of the Delhi High Court, considered another amendment made in the Central Excises and Salt Act, 1944 by the same Act, namely, the Finance Act of 1982. ò The amendment which was required to be considered by the Delhi High Court also contained in the Amendment Act a saving clause with a sub-section identical with sub-section 2(d) in the saving clause to Section 47 of the Finance Act, 1982. The Delhi High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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