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TMI Blog1987 (7) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... m No. 27 of the first Schedule, so much of the duty of excise leviable thereon as was in excess of 40% ad valorem. By another exemption notification also dated December 3, 1981 bearing No. 193/81-C.E., the Central Government exempted aluminium of the description specified in the table annexed to the said notification from so much of the duty of excise leviable thereon as is in excess of the duty specified in the corresponding entry in column No. 4 of the said table. A copy of the said notification is annexed to this petition at Ex. B and it reads as follows : NOTIFICATION No. 193/81-Central Excises G.S.R. NO. In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts aluminium of the description specified in column (3) of the Table hereto annexed and falling under the sub-items, specified in the corresponding entry in column (2) of the said Table, of Item No. 27 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) from so much of the duty of excise leviable thereon as is in excess of the duty specified in the corresponding entry in column (4) of the said Table. Sr.No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose of this notification the expression "primary producer" - means any person licensed or registered under the Industries (Development and Regulation) Act, 1951 (65 of 1951) who produces aluminium from bauxite or alumina." 3. This notification will show that aluminium in any crude form has been exempted from duty in excess of 20% ad valorem. Further, aluminium pipes and tubes other than extruded pipes, tubes and sections including extruded pipes and tubes and containers, plain, lacquered or printed or lacquered and printed have been exempted from duty in excess of 26% ad valorem. So far so good. But we are really concerned with the proviso to the notification. This proviso, in terms, says that exemption contained in this notification in respect of finished items as mentioned therein shall apply only if an Officer not below the rank of an Assistant Collector of Central Excise, is satisfied that in respect of the raw material the duty was paid as mentioned at Serial No. 1 of this notification. In other words, if a manufacturer had aluminium in any crude form, in respect of which he had paid the duty at 20% pursuant to this notification, only such manufacturer on manufacturing fini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these 1000 numbers would be approximately Rs. 350/-. The duty on these ointment tubes at the rate of 44% of Rs. 350/- would be Rs. 154.00. In the case of the petitioners, the proforma duty would be 44% on input aluminium and, therefore, that becomes deductible by way of proforma credit (therefore 44% of Rs. 22/- would work out to Rs. 9.68). Therefore, the net excise duty payable by the petitioners on the finished product viz. Ointment tubes, would work out to Rs. 144.32. This was the position before December 3, 1981. But, in the case of the petitioners, the same position would continue and, therefore, they would be liable to pay a duty of Rs. 144.32 as aforesaid. However, in the case of the competitors of the petitioners, the situation after December 3, 1981 would be as follows : that is to say, the excise duty on ointment tubes at the rate of 28.6% of Rs. 350/- would work out to Rs. 100.10 less the excise duty paid at the rate of 28.6% on the input aluminium deductible by way of proforma credit (28.6% of Rs. 22/-) would work out to Rs. 6.29. Thus, the net excise duty payable by the petitioners' competitors on the same product would be Rs. 93.81. Thus, as a result of this impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articular factory and the Court said (at page 72) as follows : "In fact it runs counter to the object of the categorisation of the factories based on their output. Any such imposition of a higher duty on factories which fall within category 'D' but which have not cleared any matches during the financial year 1964-65 would actually amount to the levy of a penalty for non-production of the matches which is not the object of the Act or even the Notification. The Notification merely contemplates imposition of duty based on the output during the Financial year 1964-65 and does not contemplate the levy of any penalty. But in actual working the factories which did not clear any matches during the Financial year 1964-65 though belonging to category 'D' would have to pay a higher duty than the other factories falling under the same category : they have to pay Rs. 4.40 per gross as against Rs. 3.75 per gross. The discrimination between the factories similarly placed is violative of Article 14 of the Constitution of India and must therefore be struck down as void." 8. Mr. Sethna sought to justify this proviso. He firstly submitted that there has to be normally a parity of duty between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... again my reaction is that if this proviso is a condition, the condition creates a class, and that class has to be justified. Per se, the Government is unable to justify this classification at all. It is beyond all reasonable comprehension. Therefore, if there is no rational principle in this classification at all, the proviso must necessarily go. Mr. Sethna sought to submit that assuming that this results in any classification, there is a nexus between the classification and the object. He said that the nexus is the relation of the proforma credit that is available. I cannot understand as to what Mr. Sethna wants to convey thereby. But what is the object? To me, it seems nothing but discrimination. The principle of proforma credit is the same to every manufactured That cannot be a criterion for introducing a classification. 12. In the affidavit-in-reply the respondents have stated that there was no obligation, statutory or otherwise on the part of the petitioners to store 1000 metric tonnes. .Perhaps, the respondents wanted to suggest that if the petitioners have stored 1000 metric tonnes they have done so on their own and at their own risk. Here again, I could have appreciated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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