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TMI Blog2016 (2) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 as under: The petitioners are small scale industrial units and are engaged in the manufacture of ceramic and pottery items. The Government of India issued the said notification on 01.03.2003 granting exemption to first clearances of specified goods up to the value of Rs. 150 lakhs and full exemption to captive consumption for manufacturers having clearances not exceeding Rs. 4 crores in the preceding financial year. Under such notification, the Government of India exempted clearances specified in column (2) of the Table contained therein for home consumption of excisable goods of the description specified in the annexure appended to the notification from so much of the aggregate of the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985, and the special duty of excise specified thereon in the Second Schedule to the said Central Excise Tariff Act, 1985 as is in excess of the amount calculated at the rate specified in the corresponding entry in Column (3) of the said Table. Relevant portion of this notification reads as under: "....In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944) (h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces shall not be taken into account, namely, - (a) clearances, which are exempt from the whole of the excise duty leviable thereon (other than an exemption based on quantity or value of clearances) under any other notification or on which no excise duty is payable for any other reason; (b) clearances bearing the brand name or trade name of another person, which are ineligible for the grant of this exemption in terms of paragraph 4; (c) clearances of the specified goods which are used as inputs for further manufacture of any specified goods within the factory of production of the specified goods......" ..... ..... ..... "Explanation,- For the purposes of this notification, ..... ..... ..... "(G) "Clearances for home consumption", wherever referred to in this notification, shall include clearances for export to Bhutan and Nepal....." In terms of the said notification, thus, an SSI Unit will be exempt from payment of excise duty upto clearances of Rs. 150 lakhs, subject to the conditions mentioned therein. As per para 3 of the said notification, for the purpose of determining the first clearances upto the said value of Rs. 150 lakhs, the clearances which are exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment to grant rebate of duty paid on such excisable goods or duty paid on materials used in such goods. Rebate would be granted subject to the limits as may be notified. Likewise, Rule 19 of the Central Excise Rules, 2002 pertains to exports without payment of duty and envisages exports on furnishing bonds. 5. The Government of India had issued notification No.19/2004 dated 06.09.2004 laying down the procedure for rebate of duty on export of goods which would cover exports to all countries except Nepal and Bhutan. The notification provided rebate of excise duty paid on exported goods subject to the conditions and limits contained therein. However, the notification would apply to goods exported to any country other than Nepal and Bhutan. Likewise, the Government of India had also issued notification No.42/2001 dated 26.6.2000 under Rule 19 laying down the procedure for export of goods on furnishing bonds. The preamble of this notification itself provides that in exercise of powers conferred by sub-rule (3) of Rule 19 of the Central Excise Rules, 2001, the Central Board of Excise and Customs hereby notifies the conditions and procedures for export of "all excisable goods, excep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... example, Notification No.24/2011 dated 05.12.2011 reads as under: "Rebate of duty on export of goods to all countries other than Bhutan w.e.f. 1.3.2012 - Amendment to Notification No.19-2004-C.E.(N.T)- In exercise of the powers conferred by rule 18 of the Central Excise Rules, 2002, the Central Government hereby makes the following further amendment in the Ministry of Finance, Department of Revenue, notification number 19/2004-Central Excise (N.T.) dated the 6th September, 2004, namely:- 2. In the said notification, in the opening paragraph, for the words "other than Nepal and Bhutan", the words "other than Bhutan" shall be substituted. 3. This notification shall come into force on 1st March, 2012." 9. As per this notification, therefore, in the earlier notification No.19 of 2004 issued under Rule 18 of the Rules, there would be an amendment by which the expression "other than Nepal and Bhutan" would be substituted by "other than Bhutan". Thus, exclusion of Nepal would be deleted and would survive only with respect to exports to Bhutan. In other words, for the purpose of granting rebate under Rule 18, exports made to Nepal would be treated on par with exports to other cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The condition in the notification is restricting the benefit to the Small Scale Manufacturers to the extent of clearances made to Nepal. Clarification is needed in view of the change in the treatment given to Exports to Nepal w.e.f.1.3.2012. Discussion & Decision The conference agreed that it was a valid suggestion and there was a need to amend notification No.8/2003- C.E.dated 1.3.2003 to bring parity in the exports to Nepal under various notifications. The conference recommended that Board my examine the same. However, it was also agreed that till the necessary amendments in SSI exemption are made, the present dispensation of treating exports to Nepal as domestic consumption shall continue to apply." 11. Thus, even high level Customs officials recognized the need for amendment of SSI notification No.8/2003 so that the mischief of including exports to Nepal within the exemption limit of Rs. 1.50 crore after changes in bilateral treaties can be remedied. Instead of making suitable changes in the said notification, the Government of India persisted with the original format and would, post 1.3.2012 also, include in the exemption limit of an SSI unit exports made to Nepal. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id to be discriminatory. 15. The facts are not seriously in dispute. Till 01.03.2012, in view of the bilateral trade treaty between the Government of India and the Government of Nepal, on all goods exported to Nepal the Government of India would recover excise duty and the same would be surrendered to the Government of Nepal. All exports to Nepal were therefore treated on par with home consumption. However, this regime was dismantled. Exports made to Nepal are now treated on par with exports to any other country. No rebate of excise duty was permitted on such exports, and the facility of export on furnishing bond was available. It was precisely because of this reason that several notifications issued by the Government of India under Rules 18 and 19 of the said Rules which till now excluded exports to Nepal were suitably amended. 16. Logically, therefore, even the SSI notification No.8/2003 should have been amended. This was also recognized during the conference of Commissioners where this issue came up for consideration and suitable recommendations were made. Despite such clear facts, the Government of India did not act and rescind reference to the exports to Nepal in the SSI not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertake the scrutiny as to whether the notification results in invidious discrimination between two persons though they belong to the same class. The Supreme Court, while still recognizing the wide discretion conferred on the legislature in tax and economic matters, held that, exemption notification is not immune to challenge on the ground of discrimination under Article 14 of the Constitution. It was further observed, as under:- "12. The judgment of this Court in Kasinka Trading's case, no doubt, lays down the principle that there is wide discretion available to the Government in the matter of granting, curtailing, withholding, modifying or repealing the exemptions granted by earlier Notifications. It is also correct that the Government is not bound to grant exemption to anyone to which it so desires. When the duty is payable under the provisions of the Act, grant of exemption from payment of the said duty to particular class of persons or products etc. is entirely within the discretion of the Government. This discretion rests on various factors which are to be considered by the Government as these are policy decisions. In the present case, however, the issue is not of gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a person. Rate of entertainment tax is determined on the basis of the amount collected from the visitor of a cinema theatre in terms of the entry fee charged from a viewer by the owner thereof. 13. It is, thus, beyond any pale of doubt that the justiciability of particular Notification can be tested on the touchstone of Article 14 of the Constitution. Article 14, which is treated as basic feature of the Constitution, ensures equality before the law or equal protection of laws. Equal protection means the right to equal treatment in similar circumstances, both in the priviliges conferred and in the liabilities imposed. Therefore, if the two persons or two sets of persons are similarly situated/placed, they have to be treated equally. At the same time, the principle of equality does not mean that every law must have universal application for all persons who are not by nature, attainment or circumstances in the same position. It would mean that the State has the power to classify persons for legitimate purposes. The legislature is competent to exercise its discretion and make classification. Thus, every classification is in some degree likely to produce some inequality but mere p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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