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TMI Blog1980 (7) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Appellate Authority, i.e. the Director of Inspection, Customs and Central Excise, New Delhi. By order, dated 17th May, 1978 the appeal was dismissed by the Director. By this petition under Article 226 of the Constitution the petitioner challenges these Orders of the Central Authority and the Director. 2. Section 280ZD of the Act provides for grant of a tax credit certificate in relation to increased production of certain goods. The certificate 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 Same by the Central Government. 3. Section 280ZD(1) read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii), in particular, empowers the Central Government to "exempt any goods from the whole or any part of the duty imposed by the Act." Item No. 17 in the Schedule to the Act deals with paper of all sorts. Clause (3) of this item refers to "printing and writing paper, packing and wrapping paper, straw board 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 Government 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 or any part of duty leviable on such goods. By notification, dated 21st July, 1967 the Central Government exempted "all paper containing mechanical wood pulp amount to not less than 50 per cent of the fibre content, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se paid". On this basis, it is submitted by the learned counsel that tax credit certificate should have also been granted in respect of that category of newsprint which was sold to newspapers. 8. A person is entitled to a tax credit certificate under Section 280ZD of the Income-tax 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 entitlement of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used in Section 280ZD have not been defined in the section or in the Scheme. It, however, stands to reason that different varieties of goods have to be considered separately for the purpose of grant of tax credit certificate. For example, Item No. 17(3) in the Schedule to the Central Excises and Salt Act clubs together printing and writing paper, packing and wrapping paper, straw board and pulp board including greyboard, 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 Section 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. Titagarh Paper Mills Co., 112 ITR 100 at p. 108, where it is observed that the term "goods" can be understood to mean an article which is ordinaril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioner as wrapper is thicker, it has to be held that it is a paper of a different variety and the Central Authority was, therefore right in treating the wrapper separately for calculating the amount for which tax credit certificate was to be issued. There is, however, no material 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 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, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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