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TMI Blog1981 (1) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... after referred to as 'the rules'), copy of which is Annexure 1. Thereafter by a notification dated 18th June, 1977, under rule 8(1) of the Rules (copy of which is Annexure 2) the Government of India exempted goods falling under item 68 of the First Schedule, if to be utilised for home consumption and if the total value of all excisable goods in the preceding financial year does not exceed Rupees thirty lakhs. The petitioner claims that under the aforesaid notification the total value of Maida manufactured by it in the preceding financial year could not be included in determining the exemption. The Assistant Collector of Central Excise (respondent no. 3), however, asserts that the value of Maida cleared in the previous financial year shall be taken into account for determining the exemption under the aforesaid notification. Hence this application. 3. The Excise Act, under section 2(d), defines excisable goods, and section 3 is the charging section which provides that there shall be levied and collected in such manner as may be prescribed, duties of excise on all excisable goods other than salt, which are produced or manufactured at the rates set forth in the First Schedule, and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chedule. Copy of this letter is Annexure 5. The mills did not accept the interpretation to annexure 2 and submitted in reply that the C.E. authorities were wrong in refusing to give the exemption, whereupon the mills have been served with an order of the Assistant Collector, Central Excise, Patna (respondent no. 3) stating that the petitioners were liable for the financial year 1976-77 to Central Excise Duty at the rate of 2% ad valorem on goods manufactured by them under item 68; copy of the communication is annexure 6. 5. A counter affidavit has been filed on behalf of the respondents stating that the exemption granted by annexure 2 would not exempt the liability of the mills from paying the duty upon goods, under the head, item no. 68, manufactured by them, inasmuch as the value of Maida produced in the previous financial year had to be taken into account. It is not necessary to refer in detail to the counter affidavit as the facts are not in dispute. 6. Before proceeding to consider the merits of the rival claims made, a preliminary point raised on behalf of the respondents by the learned Standing Counsel for the Union of India has to be disposed of. It was submitted that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ministry of Finance, Department of Revenue has advised all the Collectors of Central Excise in India that in computing the sum of Rupees thirty lakhs as per the proviso to the notification copy of which is annexure 2, the value of all excisable goods whether exempted or not exempted, should be taken into account, and in that view of the advice, the remedy before any of the superior officers of the Department would be futile. In the counter-affidavit filed by the respondents in paragraph 21 it is stated that the aforesaid statement is not admitted and that the decision of respondent no. 3 is based upon a correct interpretation of the notification. If there be such a communication as mentioned above, it is obvious, any appeal or revision to the authorities as contemplated in sections 35, 35A and 36 would be of no avail. 8. In support of this application on merits, Mr. S.B. Sanyal has made two submissions; namely, that Maida having been exempted from excise duty was not "excisable goods" the value of which could be taken into account for the annual turnover. The second submission is that even after Maida has been exempted from the excise duty, it cannot be included in the expressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the meaning and effect of the proviso thereafter, which says that the exemption shall not be available to a manufacturer if the total value in the preceding financial year of "all excisable goods cleared by him" had exceeded Rupees Thirty lakhs. Obviously in calculating the amount of Rupees Thirty lakhs the goods manufactured by the mills under item 52 has got to be included. The question is whether, in computing this amount of Rupees Thirty lakhs, Maida manufactured and sold during the period by the mill will be included or not. According to Mr. Sanyal, the word "cleared" in the Rules and Notifications issued thereunder is used only for those "excisable goods" on which excise duty is actually paid and as no excise duty has to be paid on Maida, it would not be included in the expression "all excisable goods cleared". Learned Counsel says that even if Maida in spite of the exemption, is "excisable goods" as defined in Section 2 (d) of the Excise Act, it cannot be referred as excisable goods cleared. "Cleared" in the context means, free from obstruction or to free from obligation or encumbrance. Therefore, excisable goods cleared will only mean those excisable goods on which exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be removed for export. It has, therefore, been urged before us that the word "cleared" as used in the notification signifies the removal of an obstruction which is in the way on account of the imposition of excise duty and which obstruction is removed when the excise duty has been paid. 12. The learned Standing Counsel on the other hand contends that the word "cleared" used in the notification has no special or particular meaning. It refers to all excisable goods which are moved out. According to him "all excisable goods "cleared" in the proviso would mean all such goods removed irrespective of the consideration whether excise duty has been paid or such duty is exempted. In other words, Standing Counsel submits that if Maida comes within the definition of "exacisable goods" then even if payment of excise duty is exempted, its value would be included in computing the amount of Rupees Thirty Lakhs. He further emphasises that the word "cleared" as used in the proviso could not relate to excise duty actually paid as the expression used in the proviso is "all excisable goods cleared by him". It is said that the clearance refers to the clearance by the manufacturer and, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that even if there are goods in the First Schedule which are subject to a duty of excise, such duty, at times, is exempted under rule 8(1) of the Rules. Therefore, excisable goods not only refer to goods specified in the First Schedule but those goods must also be subject to duty of excise and where either of the conditions is missing, it is not excisable goods. In support of this contention, reliance is placed on a Single Judge decision of the Delhi High Court in the case of Sulekh Ram and Sons v. Union of India and others 1978 E.L.T. (J 525) (Del.) = (1972 Tax Law Reports 1771). This report was not available here but a copy of the judgment was given to us where it was observed : "On this observation, it is arguable that the goods manufactured by the petitioner ceased to be "excisable goods" after they were exempted from payment of duty, for the exemption notification was entitled to be regarded as part of the Act itself. If the Act and the Notification are read together, the effect is the goods exempted were not "excisable goods" within the meaning of Section 2(d) of the Act." 15. The Standing Counsel, on the other hand, submitted that the expression "as being subject to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The notification (Annexure 2) has been erroneously interpreted by the authority and the impugned order must, therefore, be held to be without jurisdiction. This Court, therefore, should not decline to give to the petitioner the relief under Article 226 of the Constitution. He also cited a number of decisions in support of his argument. 20. Mr. Sanyal advanced a further argument that as the writ application was admitted by this Court, it should not be dismissed on the basis of the preliminary objection now. He placed reliance on the decisions in L. Hirday Narain v. Income Tax Officer, Bareilly (A.I.R. 1971 Supreme Court 33), Loba Kant v. State (1976 B.B.C. J. 1) and Durlabhkumar v. The District Judge, Indore and another (A.I.R. 1973 Madhya Pradesh 175). 21. The appellant in Hirday Narain Singh v. Income Tax Officer (supra) was aggrieved by the assessment order passed under the Income Tax Act and applied for rectification of a mistake in the order of assessment which he claimed, was apparent from the record. The Income Tax Officer declined to grant any relief and the assessee moved the Allahabad High Court under Article 226 of the Constitution challenging the order of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ragraphs 9 to 12 of his judgment. 25. I wish to express my opinion on the first question raised on behalf of the petitioners also as formulated in paragraph 3 of the judgment of my learned Brother. 26. The expression, "excisable goods" has been defined in section 2 (d) in the following terms : "Excisable goods means goods specified in the First Schedule as being subject to a duty of excise and includes salt". Mr. Sanyal contended that after exemption was granted with respect to Maida by Annexure 1, the article ceased to be subject to a duty of excise and consequently cannot be assumed 10 be covered by the expression. The factual position in this case admittedly is that if the sale of Maida in the preceding financial year is taken into account, the total turnover would exceed Rs. 30 lakhs but if Maida be excluded, the turnover will be below that figure, and consequently the first proviso in annexure 2 would have no application at all. The question to be answered, therefore, is as to whether Maida continued to be excisable goods even after Annexure 1. According to the petitioner, the liability in regard to the payment of excise duty is an essential condition for bringing an a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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