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TMI Blog1980 (7) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... l Excise, New Delhi. By order dated 17th May, 1978, the appeal was dismissed by the director. By this petition under art. 226 of the Constitution, the petitioner challenges these orders of the Central authority and the director. Section 280ZD of the Act provides for the grant of a tax credit certificate in relation to increased production of certain goods. The certificates can be granted for the financial years 1965-66 to 1969-70. The base year for determining increased production is the financial year 1964-65. If in any financial year between 1965-66 and 1969-70, a person manufactures or produces any goods he can be granted a tax credit certificate for an amount calculated at a rate not exceeding twenty-five per cent. of the amount of the duty of excise payable by him on that quantum of the goods cleared by him which exceeds the quantum of the goods cleared by him during the base year. The goods in respect of which a tax credit certificate can be granted and the rate at which the amount of such certificate is to be calculated are specified in the Scheme by the Central Govt. Section 280ZD(1) reads as follows: " 280ZD. (1) Subject to the provisions of this section, a person, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " printing and writing paper, packing and wrapping paper, strawboard and pulp board, including grey board, corrugated board, duplex and triplex boards, other sorts ". Rule 8 of the Rules framed under the Act authorises the Central Govt., by notification in the Official Gazette, to exempt, subject to such conditions as may be specified in the notification, any excisable goods from the whole of any part of the duty leviable on such, goods. By notification dated 21st July, 1967, the Central Govt. exempted all paper containing mechanical wood-pulp amounting to not less than 50 per cent. of the fibre falling under item No. 17(3) of the First Schedule " from the whole of the duty of excise leviable thereon. There is a proviso to this exemption in the notification which has the effect of limiting the exemption in those cases where it is proved to the satisfaction of the proper officer, as defined in the Rules, that such paper is intended for use in the printing of newspapers, text books or other books of general interest. " The Central authority, in disposing of the petitioner's application, divided the newsprint cleared by the petitioner in the base year and in the financial year 1969- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 280ZD of the I.T. Act " for an amount calculated at a rate not exceeding 25 per cent. of the amount of duty of excise payable by him on that quantity of goods cleared by him during the relevant financial year which exceeds the quantum of the goods cleared by him during the base year ". A reading of this provision makes it clear that the first condition for the entitlement to a tax credit certificate is that the clearance of the goods manufactured or produced should have exceeded in the relevant financial year as compared to the clearance in the base year. The second condition is that the duty of excise must be payable on the goods cleared during the relevant financial year, for, the tax credit certificate is linked with the amount of the duty of excise payable on the excess quantity of the goods cleared in the relevant financial year. If the excise duty on the goods is exempt in the relevant financial year, it would be difficult to hold that any duty of excise is payable. We are unable to agree with the argument of the learned counsel for the petitioner that for determining whether any duty of excise is payable on the goods we have only to see s. 3 of the Central Excises and Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Excises and Salt Act clubs together printing and writing paper, packing and wrapping paper, strawboard and pulp board including grey board, corrugated boards, duplex and triplex boards, other sorts for purposes of duty, but the different kinds of paper mentioned in this item have to be treated separately for finding out the amount of tax credit certificate to which a person is entitled under s. 280ZD. The test to find out whether the goods manufactured or produced by a person fall under different categories and have to be treated separately, i.e., as different kinds of goods, would be to see whether in commercial sense they are understood as different goods. In this connection, we may refer to the decision of the Calcutta High Court in Union of India v. Titaghur Paper Mills Co. [1978] 112 ITR 100, where it is observed that the term " goods " can be understood to mean an article which is ordinarily bought and sold in the market and that different varieties of paper manufactured or produced by a paper mill cannot be considered to be one and the same goods, for, they are bought and sold as distinct varieties in the market. The petitioner is a manufacturer of newsprint and wrapper u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to find out why newsprint which was not sold to or used for newspapers was treated separately. It is true that newsprint intended for use in the printing of newspapers was exempt from duty. But from this alone it cannot be said that newsprint which was not sold to newspapers and which did not qualify for exemption was paper of a different variety. The variety; of paper does not change because of its use. If commercially newsprint sold to newspapers and newsprint sold to others were of the same variety, they have to be treated as one class of goods for purposes of calculating the amount of tax credit certificate and they cannot be treated as different and distinct goods. Neither the Central authority nor the director has examined the case from this point of view. If the petitioner is correct in its submission that newsprint sold to newspapers and newsprint sold to others were of the same variety, then there would be no justification for treating them separately as was done by the Central authority in the chart annexed to its order and they would have to be treated as one for determining increase in clearance in the relevant financial year. It is true that even then the petitioner wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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