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TMI Blog1981 (8) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... lk Mfg. (Wvg.) Co. Ltd., the second respondent herein. The petitioners have filed this petition under the provisions of Order 1 Rule 8 of the Code of Civil Procedure in a representative capacity on behalf of themselves and on behalf of other Textile Mills mentioned in the Schedule to the petition. The list consists of 44 Textile Mills who are all manufacturers of yarn and fabric made of yarn and what is challenged in these proceedings is the validity of the two notifications issued by the Government. They are the notifications of January 5, 1979 and October 30, 1979 and during the pendency of these Special Civil Applications a further notification was issued by the Government of India on June 19, 1980 which is also challenged on the same grounds as the challenge to the earlier two notifications of January 5, 1979 and October 30, 1979. 3. In order to appreciate the contentions involved in these cases it is necessary to refer to a few legal provisions in this connection. Under the Central Excises and Salt Act, 1944, by virtue of Section 3 which is the charging Section, there shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereon. Under sub-section (2) if the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case, exempt from the payment of duty, under circumstances of an exceptional nature to be stated in such order, any goods on which duty is leviable. We are not concerned with exceptional cases covered by sub-section (2) of section 25. We are concerned with section 25(1) of.the Customs Act, 1962. The Customs Tariff Act, 1975 repealed the Indian Tariff Act, 1934 and the Indian Tariff (Amendment) Act, 1949 and it repealed and replaced these two Acts and by section 13 it has been provided that in the Customs Act, 1962, in sub-section (1) of section 12 and in sub-section (1) of section 14, for the words and figures 'Indian Tariff Act, 1934', the words and figures 'Customs Tariff Act, 1975' be substituted. Therefore, for the purpose of the Customs Act, 1962 we have now to read the provisions of Customs Tariff Act, 1975. 5. The Customs Tariff Act, 1975 is an Act to consolidate and amend the law relating to customs duties. Under section 2 the rates at which duties of customs shall be levied under the Customs Act, 1962, are specified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same nature as, or similar to those, used in the production or manufacture of such article, it may, by notification in the Official Gazette direct that such imported article shall, in addition, be liable to an additional duty representing such portion of the excise duty leviable on such raw materials, components and ingredients as, in either case. may be determined by rules made by the Central Government in this behalf." Under sub-section (4)- "In making any rules for the purposes of sub-section (3), the Central Government shall have regard to the average quantum of the excise duty payable on the raw materials, components or ingredients used in the production or manufacture of such like article." and the duty chargeable under section 3 is in addition to any other duty imported under the Act or under any other law for the time being in force. Sub-section (6) provides- "The provisions of the Customs Act, 1962, and the rules and regulations made thereunder, including those relating to drawbacks, refunds and exemption from duties, shall, so far as may be, apply to the duty chargeable under this section as they apply in relation to the duties leviable under that Act." 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actured in India. 7. The learned Advocate for the petitioners contended that till some years ago, only two manufacturers of cellulosic fibre in India were manufacturing viscose staple fibre and they were Gwalior Rayon, the second respondent herein and South India Viscose Limited but overwhelming portion of the total manufacture was by Gwalior Rayon. Gwalior Rayon was at the relevant time manufacturing 78,000 tonnes of Viscose staple fibre whereas South India Viscose Limited was manufacturing 10,000 tonnes per annum. It has been contended in special civil application No. 3176 of 1979 that Kalol Textile Mills was using Viscose staple fibre for blending with cotton and that they were using Viscose fibre of Gwalior Rayon for this purpose and the third petitioner was purely a spinning mill and was manufacturing 100 per cent. Viscose Fibre yarn and was receiving its supplies of Viscose fibre from Gwalior Rayon Co. It has been pointed out that there are 347 spinning mills in India and 290 composite mills whereas in Gujarat there are 19 spinning Mills and 91 composite mills. Composite mill in this connection means a textile mill which has both a manufacturing section and a weaving sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry 5, 1979 the Central Excise duty composing of basic duty and special duty came to Rs. 2 6S per kg. and the effective rate of duty came to Rs. 3.05 kg. whereas so far as additional duty leviable under the Customs Tariff Act, was concerned, it was only Rs. 1.32 ps. per kg. On October 30, 1979, the second notification which has been impugned in these proceedings was issued and as a result of that notification excise duty was increased to Rs. 4.60 but the additional excise duty was not correspondingly increased. It was increased to Rs. 2.38. The petitioners contend that in view of the provisions of section 3(1)of the Customs Tariff Act, the Government of India was bound to recover additional duty or countervailing duty of Rs. 4.60 per kg. on imported staple fibre so as to counter-balance or compensate for the excise duty of Rs. 4.60 per kg. which was being collected after October 30, 1979 on indigenous staple fibre. It was contended that if the Government of India did not propose to levy and collect Rs. 4.60 per kg. as and by way of additional duty or countervailing duty on imported staple fibre but only Rs. 2.37 per kg. as a result of the notification of October 30, 1979, the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se fibre and manufacturers of yarn from imported fibre were necessary parties. In these petitions they were not joined. It may be pointed out that the relief clause (b) in Special Civil Application No. 3176 of 1979 is to the effect that respondent No. 1, their agents and servants may be directed to collect additional duty under Section 3(1) of the Customs Tariff Act, 1975 equivalent to the excise duty payable by the manufacturers of the indigenous staple fibre of cellulosic origin. The first prayer (a) was for a declaration that the impugned notifications dated January 5 1979 and October 30, 1979 are illegal, void, beyond the authority, jurisdiction and powers of the Government of India and are violative of Articles 14, 19(1)(g) and 265 of the Constitution and the respondent No. 1, their servants and agents, be directed by a writ restraining respondent No. 1, from collecting the excise duty raised under the impugned Notifications and direct them to refund, the excess excise duty collected by respondent No. 1 under the impugned notifications (Annex. 'A' Collectively) in excess of the pre-existing excise duty prior to January 5, 1979. Now so far as the question of locus stand is conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... what the petitioners challenge is the action of the Government in not levying additional duty under Section 3(1) of the Customs Tariff Act at the same rate as the rate of excise duty and what they want the Court is to compel the Government to carry out what they contend to be its legal obligation under Section 3(1) of the Customs Tariff Act, 1975. 13. As regards the demand for justice and denial thereof, it may be borne in mind that the pre-requisite or representation or demand for justice and denial thereof applies only to the writ of mandamus strictly so called but not to any other writ and in these two cases what the petitioners challenge is delegated legislation and not a specific remedy for themselves. Though representations appear to have been made by Spinning Mills and Handloom and Powerloom industry, yet no relief was granted to them so far as the question of additional duty on imported Viscose staple fibre was concerned. It is true that the excise duty is a duty on manufacture as distinguished from duty on sales but the excise duty can always be passed on under the provisions of law to the purchaser by the manufacturer and the purchaser is, therefore, as much interested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, it would be violative of Article 14. In this connection we may mention that all the relevant authorities have been discussed in Rahimbhai Karimbhai Nagriwala v. B.B. Patel. - (1974) 4 97 ITR 660. There the challenge was to Section 271(1)(a)(i) of the Income-tax Act, 1961 on the ground of violation of, Article 14 and Article 19(1) (f) of the Constitution and it was pointed out that in view of the wide discretion which is available to the State in selecting persons or subjects it would tax, it cannot be said that any taxation statute is open to attack on the ground that it taxes some persons and objects and not others. Once this constitutional position is recognised as emerging from the decisions of the Supreme Court mentioned by the Division Bench of this Court in Rahimbhai Karimbhai Nagriwala's Case, it follows that the challenge on the ground of Article 14 of the Constitution must fail. 16. As regards challenge on the ground of Article 19(1)(g) of the Constitution, under that Article all citizens have the right to practise any profession, or to carry on any occupation, trade or business. Under sub article (6) nothing in sub-clause (g) of Article 19(1) shall effect the operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erned as pointed out earlier, under Section 25 if the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in that Official Gazette, exempt generally either wholly or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon. 19. It was emphasised on behalf of the petitioners in the present case that whereas the requirement of satisfaction of the Central Government regarding the necessity in the public interest to grant exemption from customs duty is laid down in Section 25(1) of the Customs Act, Rule 8 of the Central Excise Rules does not lay down any such requirement. 20. The power to exempt from additional duty leviable under Section 3(1) of the Customs Tariff Act is not specifically provided in the Customs Tariff Act itself. However, sub-section (6) of Section 3 provides that the provisions of the Customs Act, 1962, and the rules and regulations made thereunder, including those relating to drawbacks, refunds and exemption from duties, shall, so far as may be, apply to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates of duty are protective" and the rest are "other rates of duty", that is, duty levied on normal revenue purposes. Ordinarily, whatever protection is offered to the indigenous industry cannot be allowed to be taken away by excise duty being raised without raising the customs duty equivalent. However, since both of these duties are measures resorted to by the Government of India to meet with the day to day situations as they emerge from time to time, it cannot be said that the obligation under Section 3(1) of the Customs Act has to be read irrespective of the power to exempt which has to be read into Section 3 by way of sub-section (6) of Section 3 and Section 25 of the Customs Act, 1962. What the legislature has stated in sub-section (6) of Section 3 of the Customs Tariff Act is very clear, namely, that the same power which exists for granting exemption from customs duty also exists so far as the power to grant exemption from additional duty leviable under Section 3(1) of the Customs Tariff Act is concerned. There is no other nearing which can be attributed to Section 3(6) of the Act and once the power to grant exemption from additional duty also exists, it is for the Central Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d run counter to the basic approach of making the viscose fibre freely available to the textile industry and it would stop the import of Viscose staple fibre. This would not be in the interest of the clothing needs of the country, since it will be desirable to keep the import window open so that in a period of cotton shortage or the shortage of any other fibre imports of Viscose staple fibre would provide the industry with a substitute for material. As may be pointed out that after the changes were made in January, 1979, imports which were earlier at the rate of about 7500/8000 tonnes per month clamped to only 3000 tonnes per month, owing mainly to the increase in the final price of imported fibre. So, it has been pointed out in the affidavit-in-reply that conditions in the international market of Viscose fibre and the prices at which cloth can be sold to the consumers in India are some of the different factors which are to be borne in mind by the decision-makers when deciding to levy the excise duty or to levy the additional duty and fixing the rates at which the excise duty and the additional duty are to be levied. 21. It was urged on behalf of the petitioners that no responsib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Government under section 25 of the Customs Act read with section 3(6) of the Customs Tariff Act, then the impugned notifications must be held to be valid. It is not for the courts to pronounce on the wisdom of the Government policy and to pronounce on the propriety or otherwise of the decision taken in the economic field and, therefore, while considering the challenge to the impugned notifications, all that we are concerned with is whether the power to issue the impugned notification exists and if there is such power, whether the exercise of power is bona fide or malafide. No other aspect of the case is required to be considered and hence we have confined ourselves only to considering the constitutional validity and to the question of the existence of power and seeing that the necessary pre-requisites to be satisfied by the Central Government can be said to exist. 25. Under these circumstances the challenge to the three impugned notification must fail. Both the petitions are, therefore, dismissed. In view of the special circumstances there will he no order as to costs. 26. The learned Advocate on behalf of the petitioners applies for leave to appeal to Supreme Court under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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