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TMI Blog1979 (5) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... carries on the business, inter alia, of manufacturing and selling aluminium and its allied products. For the purpose of the said business the company owns three aluminium smelting plants at Hirakund in the State of Orissa, at Alupuram in the State of Kerala and at Belgaum in the State of Karnataka. By virtue of the Aluminium (Control) Order, 1970, promulgated under Section 3 of the Essential Commodities Act, 1955, the Central Government has been given the power to regulate the sale of aluminium to specified persons or companies and to control and fix the sale price thereof. By reason of the orders and/or directions issued by the Central Government under the said order, the company is obliged to sell 50 per cent of its total production of aluminium to specified customers at fixed prices (such aluminium is hereinafter referred to as levy aluminium). Aluminium manufactured by the company is an excisable commodity and falls under Item No. 27 of the First Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act). The dispute in this writ petition relates to the two financial year, namely, 1976-77 (1st April, 1976 to 31st March, 1977) and 1977-78 (1st April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . At the time of presentation of the Central Budget for 1976-77, the Finance Minister of India made an announcement to the effect that the Central Government would introduce what was called a "Production Incentive Scheme" to encourage higher industrial production by, inter alia, providing for certain reliefs in excise duty. Consequently, and with a view to give effect to the said Production Incentive Scheme, the Central Government published a Notification No. 198/76-C.E. dated June 16, 1976 (hereinafter referred to as the main notification) under rule 8(1) by virtue of which the Central Government exempted excisable goods of the description specified in column (3) of the table annexed to the said notification and falling under such item number of the First Schedule to the Act as was specified in the corresponding entry in column (2) of the said 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 under the said item (read with any relevant notification under Rule 8(1) in force for the time being), as was in excess of 75 per cent of such duty, subject to the conditions men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise duty leviable on clearance of their manufacture which were in excess of the clearances in the base period, that it is for the manufacturer to decide whether the benefit of the duty exemption earned by him should be retained by him or not. It was stated that it may be noted that in the event of the manufacturer not passing on the benefit in whole or in part to the buyer, the assessable value of the goods will have to be adjusted accordingly and the duty computed on the assessable value so adjusted. A formula was specified for working out the assessable value. After the issue of said press note the respondents took the stand that the assessable value at the time of removal of the goods has to be determined by deducting the amount of duty from the whole-sale price and thus purported to levy and/or collect and/or threatened to levy and/or collect excise duty on the exempted goods for the relevant period on the basis of the said press note ; the details of which I will refer while considering the question of relief in this writ petition. 9. Three of the questions raised in the writ petition are : (i) Whether in the matter of interpretation and of granting relief under an excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that the petitioners there would not be entitled to the benefit of the rebate as it would not reduce the price appropriately to the reduction in duty, so as to pass on the benefit of the reduction of the duty to the purchasers of the tyres and tubes there. For the reasons recorded in the judgment of the Division Bench dated February 8, 1978, with which I am in respectful agreement, it is not understandable why the benefit of the rebate in the duty is required to be passed on to the consumers and which could form the foundation of levy and/or collection of excise duty and/or rejection of the claim of the petitioners for the refund of the duty, when there is no specific condition to that effect laid down in the statutory notification. It is not open to the Board in its administrative capacity to issue, directives to various subordinate authorities exercising quasi-judicial functions to interpret excise notifications in a particular manner and to restrict relief thereunder. Since the impugned levy and/or collection of excise duty and/or demands in show cause notices gives effect to the direction of the Board, the same is illegal and void. 11. Mr. Talwar pleads the bar of altern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lling profit. The value of the goods for the purpose of excise must take into account only the manufacturing cost and the manufacturing profit and it must not be loaded with post-manufacturing cost or profit arising from post manufacturing operation." It is clear from the statement of the Finance Minister and the main notification that the whole object was to encourage higher industrial production by providing relief to the concerned manufacturers. The statutory notification does not specify in any manner as to whether the benefit of the exemption should be passed on to the consumer or not. If the object of the Government in granting an exemption is to benefit the consumer, then the Government notification should say so, as was done on earlier occasions. If the notifications does not say so, then such a condition cannot be imposed by a press note. The impugned press note is merely an administrative direction and as it affects the rate of excise duty, it is ultra vires and void. [See Modi Rubber Ltd. v. The Board of Central Excise and Customs - ILR 1978 (ii) Delhi 352) = 1978 E.L.T. (J 127)]. The company is entitled to relief in respect of clearances in excess of the base clearanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hargeable on the goods under the Act. When sum total of the duty of excise chargeable on the goods is considered, then auxiliary duty of excise constitutes one of its elements. Auxiliary duty of excise cannot be apart from or distinct from duty of excise. 14. The main notification is issued in exercise of the powers conferred by sub-rule (1) of rule 8 exempting the excisable goods of description specified in column (3) of the Table thereto annexed and falling under such item number of the First Schedule to the Act, as are specified in the corresponding entry in column (2) of the said Table and cleared from one or more of the factories in excess of the base clearances by and on behalf of a manufacturer, from so much of the duty of excise leviable thereon under the said item, as is in excess of seventy five per cent of such duty, subject to the specified conditions. Aluminium is at serial No. 26. Item No. of the First Schedule of the Act is given as 27(a)(i). Para 3 of the main notification reads as follows :- "Notwithstanding the exemption granted by this notification, in respect of the excisable goods of the description specified against serial numbers 23, 25 and 26 of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption is "from so much of the duty of excise leviable thereon" as is in excess of 75% of such duty. It would include the auxiliary duty of excise and there is nothing in the language to restrict its scope of application only to the basic duty of excise. The exemption notification must be interpreted in a way so that the remedy provided by the legislature may be availed of by the tax-payer. The Finance Minister's statement is to the effect that the Central Government would introduce what was called a "Production Incentive Scheme" to encourage higher industrial production by providing relief in excise duty. The main notification was to give effect to the policy statement. The relief in excise duty is intended to cover in its scope both the basic duty of excise and the auxiliary duty of excise. For these reasons, I am inclined to hold that the exemption under the main notification covered the auxiliary duty of excise leviable under Section 36 of the Finance Act, 1976. 15. The notification No. C R 192 (E) dated 16th March, 1976 exempted aluminium from so much of the auxiliary duty leviable thereon as was in excess of 33-1/3% of the duty leviable under the Act. The auxiliary duty w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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