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TMI Blog1988 (11) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... M.N. Chowdhary, M.D. Chowdhary, N. Das Gupta, Rajesh Chibber, K.K. Bhaduri, Ranjiv Dutta, E.C. Agarwala, Harjinder Singh, R.K. Nambiar, P. Parameshwaran, Ms. Bina Gupta, K. Swami and V.N. Ganpule. for the parties. Senior Advocates: Soli J. Sorabji, A.J. Rana, A.K. Sen, Dr. Y.S. Chitale, S.K. Dholakia, Hari Swarup, Dr. V.C. Mahajan and A.K. Ganguli, for the parties. Attorney-General, K. Parasaran, for the parties. -------------------------------------------------- The judgment of R.S. PATHAK, C.J.I. and S. NATARAJAN and M.N. VENKATACHALIAH, JJ., was delivered by M.N. VENKATACHALIAH, J. SABYASACHI MUKHARJI and S. RANGANATHAN, JJ., delivered separate concurring judgments.] SABYASACHI MUKHARJI, J.- I have had the advantage of reading in draft the judgment proposed to be delivered by my learned brother Venkatachaliah, J. I respectfully agree with him. There is, however, one aspect of the matter in respect of which I would like to say a few words. Contention (e), as noted by my learned brother in his judgment, deals with the determination of the assessable value. The processors in the cases before us say that they have filed classification lists under rule 173B of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... independent processes, whether on their own account or on job charges basis, the value for the purposes of assessment under section 4 of the Central Excise Act will not be the processing charges alone but the intrinsic value of the processed fabrics which is the price at which such fabrics are sold for the first time in the wholesale market. That is the effect of section 4 of the Act. The value would naturally include the value of grey fabrics supplied to the independent processors for the processing. However, excise duty, if any, paid on the grey fabrics will be given pro forma credit to the independent processors to be utilised for the payment on the processed fabrics in accordance with the relevant rules. In Ujagar Prints v. Union of India [1987] 66 STC 403 (SC); [1987] 167 ITR 904 (SC); [1987] 62 Comp Cas 548 (SC); [1986] Supp SCC 652, Bhagwati, C.J., held that the processes of bleaching, dyeing, printing, mercerising, etc., carried on by a processor on job-work basis in respect of grey cotton fabrics and man-made fabrics belonging to the customer and entrusted by him for processing amount to "manufacture" within the meaning of the Act prior to its amendment so as to attract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment of excise. But the price received by the wholesale dealer who purchases the goods from the manufacturer and in his turn sells the same in wholesale to other dealers, would be irrelevant for determination of the value of the goods and the goods would not be charged on that basis. This has been explained in Atic Industries Ltd. v. H.H. Dave, Assistant Collector of Central Excise [1975] 3 SCR 563. This has also been explained in Union of India v. Bombay Tyre International Ltd. [1986] 59 Comp Cas 460 at 482 (SC); [1984] 1 SCR 347 at 375. It has to be reiterated that the valuation must be on the basis of wholesale cash price at the time when the manufactured goods enter into the open market. See in this connection the ratio of this Court in Union of India v. Cibatul Ltd. [1985] Supp 3 SCR 95 and the Joint Secretary to the Government of India v. Food Specialities Ltd. [1985] Supp 3 SCR 165. It was emphasised in Union of India v. Cibatul [1985] Supp 3 SCR 95 that the value of the trade marks was not to be taken into account in computing the assessable value as the affixation of the trade marks of a particular brand was extraneous to manufacture. The value of such extraneous or addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the first time in the whole- sale market. The rules are clear on the computation of that value. If the valuation is made according to the rules as adumbrated in Empire Industries case [1987] 64 STC 42 (SC); [1986] 162 ITR 846 (SC); [1985] Supp 1 SCR 292 and as clarified by my learned brother in this judgment no difficulty should arise. [Judgment per : Venkatachaliah J. and for C.J.I. and Natarajan, J.]. - These appeals, by Special Leave, preferred against the Judgments of the High Court of Gujarat and the High Court of Bombay and the batch of writ-petitions under Article 32 of the Constitution of India are heard together and disposed of by this common judgment as they all involve questions - common to them - concerning the validity of the levy of duties of excise under Tariff Items 19 and 22 of the Schedule to the Central Excises and Salt Act, 1944 ("Central-Excise-Act") as amended by the Central Excise and Salt Additional Duties of Excise (Amendment) Act, 1980 ("Amending Act") treating as "Manufacture" the process of Bleaching, Dyeing, Printing, Sizing, Mercerising, Water-proofing, rubberising, Shrink-proofing, Organdie, Processing, etc. done by the processor who carry o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 183 of 1985 (M/s. Ujagar Prints v. Union of India and Others) in which the petitioner has challenged the levy by a petition under Article 32 of the Constitution are typical and representative of all other similar cases. The petitioner is a firm of partners with its Head Office at 51, Sheikh Memon Street, Bombay. It has a factory at Sunder Bang, Deonar, Bombay, which is equipped with machinery and plants for processing of man-made grey-fabric. The machinery and equipment installed in the petitioners' factory, it is averred - and that is not disputed either - are suited for and appropriate to the processing of Grey-fabric and are not capable of manufacturing Grey-fabric. The man-made grey-fabric such as Art Silk Grey-fabric, it is stated, is manufactured in mills and on poweriooms and that latter is exempt from excise duty on its manufacture. Petitioners further aver that the Art Silk Grey-fabrics which are processed in the petitioners' factory are those manufactured on poweriooms and not by the mills and that the Art Silk Grey-fabric received do not come from the manufacturers of the grey-fabric through the manufacturing-stream but from the various traders through the sales-stream. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese cases amounts to "manufacture", whether the provisions of Section 2 of the Amending Act which impart an artificial-dimension to the concept of "manufacture" is ultra-vires Entry 84 List 1; whether, at all events, the imposition of a tax on such 'processing' is referable to Entry 97 List I; and if the impost on the processors is justified under tariff-items 19 and 22, according as whether the Grey-fabric is cotton or 'man-made', what should be the assessable value for purposes of levy of duty so far as processors are concerned. 4. Prior to the Amending Act of 1980, the levy on the processors was challenged before the Gujarat High Court. The Gujarat High Court by its judgment dated 24.1.1979 in the cases of Vijaya Textiles Mills v. Union of India and Real Honest Textiles v. Union of India [Since reported In 1979 (4) ELT (J 181) (Guj.) (D.B.)] held that the processes that the processing-houses imparted to the Grey-fabric did not amount to 'manufacture' and did not attract ad valorem duty under Tariff Items 19 and 22, and that processors were liable to pay duty under Tariff Entry 68 only on the value added by the processing. Following this judgment a large number of similar cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 of 1979) - subsequently replaced by Central Act VI of 1980 of the same name with retrospective effect form 24.2.1979 - amending Section 2(f) of the Central Excise Act and Tariff Items 19(1) and 22(1). The relevant entries in the Schedule to the 'Additional Duties Act, were also amended. So far as amendment to Section 2(f) was concerned, Section 2 of the Amending Act introduced three sub-items in the definition of 'manufacture'. Two of them are material for the present purpose : "(v) in relation to goods comprised in Item No. 19(1) of the First Schedule, includes bleaching, mercerising, dyeing, printing, water-proofing, rubberising, shrink-proofing, organdie processing or any other process or any one or more of these processes." "(vii) in relation to goods comprised in Item No.22(1) of the First Schedule, includes bleaching, dyeing, printing, shrink-proofing, tenteririg, heat-setting, crease resistant processing or any other process or any one or more of these processes." Similarly, amendments were effected by Section 3 of the Amendment Act which amended the original Tariff Items 19 and 22 by substituting the following provisions in their respective places: "1. Cotton fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported to have been levied assessed or collected before the date of commencement of this Act, on - (i) "cloth", "cotton cloth" and "cotton fabrics" subjected to any process, (ii) "woollen fabrics" subjected to any process, (iii) "rayon or artificial silk fabrics" and "man-made fabrics" subjected to any process, under any such Central Act shall be deemed to be, and shall be deemed always to have been, as validly levied, assessed or collected as if the provisions of this section had been in force on and from the appointed day; (b) no suit or other proceeding shall be maintained or continued in any court for the refund of, and no enforcement shall be made by any court of any decree or order directing the refund of, any such duties of excise which have been collected and which would have been validly collected if the provisions of this section had been in force on and from the appointed day; (c) .. (d) ... 8. Indeed, the correctness of the judgment of the Gujarat High Court in the cases of Vijaya Textiles and Real Honest Textiles were considered by a Bench consisting of three judges of this court in Empire Industries v. Union of India 1985 (20) ELT 179 (S.C.) = (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Act subsequent to the amendment and the processed fabrics are liable to be assessed to excise duty in the hands of what may be called 'jobbers'. Since this was a decision given by a Bench of three judges, the petitioners and appellants who are carrying on business of processing on job work basis could not contend that these processes do not amount to manufacture and that the processed fabrics are not liable to be assessed to excise duty in the hands of the jobbers. But, it was the second question which provoked serious controversy before us...." It is only on the second question touching valuation that it expressed some doubts. Nevertheless, in para 6 of the order, the Referring Bench made a further observation to this effect: "..... Of Course, when these writ petitions and appeals are referred to the larger Bench it will be open to the larger Bench to consider not only the question of determination of the assessable value but also the other question, namely, whether processing of grey fabric by a processor on job-work basis constitutes manufacture, because the judgment in Empire Industries case which has decided this question in favour of the revenue and against the proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the value of the job-work done but it must be determined by reference to the wholesale cash price of the processed fabric at the gate of the factory of the processor..." The Referring Bench was of the view that the correct assessable-value should be : "....Thus in the example given above the assessable value of the processed fabric must be taken to be Rs. 20+5 that is Rs. 25 and the profit of Rs. 5 which the trader may make by selling the processed fabric cannot be included in the assessable value. The element of selling profit of the trader would be entirely an extraneous element and it cannot be taken into account for the purpose of determining the assessable value of the processed fabric which would comprise the value of the grey cloth and the job-work charges but exclude the profit at which the trader may subsequently sell the processed fabric." 11. We have heard Sri A.K. Sen, Sri Soli J. Sorabjee, Dr. Chitale and Sri Dholakia, learned Senior Advocates in the appeals and writ-petitions preferred by the processors; and Sri K. Parasaran, learned Attorney-General and Sri A.K. Ganguli, learned Senior Advocate for the Union of India and its authorities. On the contentions u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distinctive character emerges. A number of authorities of this court and of the High Courts were cited. Particular reference was made to Union of India v. Delhi Cloth General Mills [1977 (1) ELT (J 199) (S.C.)] = [1963 Supp. (1) SCR 586 at 597]; Tungabhadra Industries Ltd. v. Commercial Officer Kurnool [1961 (2) SCR 14]; Deputy Commissioner of Sales Tax v. Pio Food Packers [1980 (6) ELT 343 (S.C.)] = [1980 (3) SCR 1271 at 1275]; Sterling Foods v. State of Karnataka [1986 (26) ELT 3 (S.C.)] = ^986 (3) SCC 469 at 475 476]; Kailash Nath v. State of U.P. [8 STC 358]; Deputy Commissioner Sales Tax v. Sadasivan [42 STC 201 (Kerala)]; Swastic Products Baroda v. Superintendent of Central Excise [1980 ELT 164 (Gujarat)]; Swan Bangle Stores v. Assistant Sales Tax Officer [25 STC 122 (Allahabad)]; State ofAndhra Pradesh v. Sri Durga Hardware Stores [32 STC 322 (Andhra Pradesh)]; Extrusion Process Pvt. Ltd. v. N.R. Jadhav. Superintendent of Central Excise [1979 ELT 380 (Gujarat)]. 13. The following observations of this court in Union of India v. Delhi Cloth and General Mills [1977 (1) E.L.T. (J 199) (S.C.) = [AIR 1963 SC p. 791 at 794)] were emphasised: "According to the learned coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loth and General Mills' [AIR 1963 SC p. 791 at 795] case was referred to: "Manufacture implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use." Further, learned counsel placed reliance upon Tungabhadra Industries case where it was held that ground-nut oil after the process of hydrogenation which improved its keeping-qualities and shelf life yet remained basically ground-nut oil and that the quality of the oil had been improved by the processes it was subjected to, did not detract from its continuing identity as ground-nut oil. The change brought about in the oil, it was observed by this Court, rendered it more acceptable to the customers by improving its quality, but did not render the oil a commodity other than ground-oil which still continued to be "ground-nut oil" notwithstanding the processing which was merely for the purpose of rendering the oil more stable thus improving its keeping qualities for those who desire to consume ground-nut oil. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inct and new article that has emerged as a result of the processes. The principles are clear. But difficulties arise in their application in individual cases. There might be border-line cases where either conclusion with equal justification be reached. Insistence on any sharp or intrinsic distinction between 'processing' and 'manufacture', we are afraid, results in an over simplification of both and tends to blur their interdependence in cases such as the present one. The correctness of the view in the Empire Industries case cannot be tested in the light of material - in the form of affidavit expressing the opinion of persons said to be engaged in or connected with the textile-trade as to the commercial identity of the commodities before and after the processing-placed before the court in a subsequent case. These opinions are, of course, relevant and would be amongst the various factors to be taken into account in deciding the question. 16. On a consideration of the matter, we are persuaded to think that the view taken in the Empire Industries case that 'Grey-fabric' after they undergo the various processes of bleaching, dyeing, sizing, printing, finishing etc. emerges as a comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 'manufacture' that they could not come within that concept. Entries to the legislative lists, it must be recalled, are not sources of the legislative power but are merely topics or fields of legislation and must receive a liberal construction inspired by a broad and generous spirit and not in a narrow pedantic sense. The expression "with respect to" in Article 246 brings-in the doctrine of "Pith and Substance" in the understanding of the exertion of the legislative power and wherever the question of legislative-competence is raised the test is whether the legislation, looked at as a whole, is substantially 'with respect to' the particular topic of legislation. If the legislation has a substantial and not merely a remote connection with the entry, the matter may well be taken to be legislation on the topic. In Empire Industries case, it was held: "As has been noted, processes of the type which have been incorporated by the impugned Act were not so alien or foreign to the concept of "manufacture" that these could not come within that concept. 19. At all events, even if the impost on process is not one under Entry 84, List I, but is an impost on "processing" distinct from "m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defending the validity of a law questioned on ground of legislative-incompetence, the State can always show that the law was supportable under any other entry within the competence of the legislature. Indeed in supporting a legislation sustenance could be drawn and had from a number of entries. The legislation could be a composite legislation drawing upon several entries. Such a "rag-bag" legislation is particularly familiar in taxation. Bennion in his "Statutory I nterpretation" (at page 644) refers such a composite legislation, though the observations must be understood in the context of the supremacy of the British Parliament and one of unlimited powers and which is, under no inhibitions unlike a federal polity, of distribution of legislative powers. Learned author refer to: " 'Ragbag' Acts : Some Acts are 'ragbag' Acts, covering many areas. The annual Finance Act is an extreme example. It is divided into parts, dealing respectively with customs and excise duty, value added tax. income tax, capital gains tax, stamp duty, capital transfer tax and so on. Even within a part of a Finance Act the various provisions have quite different aims....." In Hart Krishna Bhargav v. Uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it is no sound principle of construction to interpret expressions used in one Act with reference to their use in another Act...." Again, the observations in Macbeth Co. v. Chislett (1910 AC 220 at 224) referred to with approval by this court In Commissioner of Sales Tax, Madhya Pradesh v. Jaswant Singh Charan Singh [1967 (2) SCR 720 at 725-726] were relied upon: "...... 'it would be a new terror in the construction Acts of Parliament if we were required to limit a word to an unnatural sense because in some Act which is not incorporated or referred to such an interpretation is given to it for the purposes of that Act alone'......" It is further contended that a mere amendment of the Schedules to the 'Additional Duties Act' purported by Section 4 of the Amending Act VI of 1980 would be inadequate to serve the purpose of a valid levy on the activity of processing. It was also urged that Section 3(3) of the 'Additional Duties Act' which provides that the provisions of 'Central Excise Act' and the rules made thereunder shall, so far as may be, apply in relation to the "levy and collection" of the Additional Duties would not also enable the wider definition of 'manufacture' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1th Ed. p. 156): "....... if an enactment in a Schedule contradicts an earlier clause it prevails against it." Bennion (in Bennion's Statutory Interpretation, p. 568-569) referring to the place of Schedules in statutes observes : 'The Schedule is an extension of the section which induces it. Material is put into a Schedule because it is too lengthy or detailed to be conveniently accommodated in a section,....." "A Schedule must be attached to the body of the Act by words in one of the sections (known as inducing words). It was formerly the practice for the inducing words to say that the Schedule was to be construed and have effect as part of the Act. (See, e.g., Ballot Act, 1872 s 28.) This is no longer done, being regarded as unnecessary. If by mischance the inducing words were omitted, the Schedule would still form part of the Act if that was the apparent intention." "....... The Schedule is as much a part of the statute, and is as much an enactment, as any other part'. [See also, to the like effect, Flower Freight Co. Ltd. v. Hammond (1963) 1 QB 275; R. v. Legal Aid Committee No. 1 (London) Legal Aid Area, exp Rondel (1967) 2 QB 482; Metropolitan Police Commr. v. Curra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statute struck-down by courts for certain defects; the period of such retroactivity, and the degree and extent of any unforeseen or unforeseeable financial burden imposed for the past period etc. Having regard to all the circumstances of the present case, this court in Empire Industries' case held that the retroactivity of the Amending provisions was not such as to incur any infirmity under Article 19(1)(g). We are in respectful agreement with that view. There is no merit in contention (d) either. 26. Re : Contention (e) This concerns the question of the correctness of the determination of the assessable-value. The processors say that they have filed classification lists under Rule 173B of the Central Excises and Salt Rules, 1944 as they had no other choice and that if the proper principles of determination of the assessable-value do not legally justify the consequence flowing from the classification, it is open to them to contend against the validity of the determination and they are not estopped from doing so. Duties of excise are imposed on the production or manufacture of goods and are levied upon the manufacturer or the producer in respect of the commodity taxed. The q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with the Rules 56A or 96 D of the Central Excise Rules, as the case may be." Even the Referring Bench did not doubt the correctness of the inclusion in the assessable-value the cost of the Grey-fabric and the processing charges. The Referring Bench held: "We cannot accept the contention of the learned counsel on behalf of the petitioners and the appellants that the value of the grey cloth which is processed by the processor should not be included in the assessable value of the processed fabric...." 29. In the argument, as presented, that the assessable-value would include what is referred to as the "post-manufacturing profits", there is an obvious fallacy. In Atic Industries Ltd. v. H.H. Dave, Asstt. Collector of Central Excise and Others [1975 (3) SCR p. 563] Bhagwati J. speaking for the Court said: 'The value of the goods for the purpose of excise must take into account only the manufacuring cost and the manufacturing profit and it must not be loaded with post-manufacturing cost or profit arising from post-manufacturing operation...." ".....It may be noted that wholesale market in a particular type of goods may be in several tiers and the goods may reach t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asure by which the tax is assessed. The standard adopted as the measure of assessment may throw light on the nature of the levy but is not determinative of it. When a statutory measure for assessment of the tax is contemplated, it "need not contour along the lines which spell out the levy itself.", and "a broader based standard of reference may be adopted for the purposes of determining the measure of the levy." Any statutory standard which maintains a nexus with the essential character of the levy can be regarded as a valid basis for assessing the measure of the tax. 30. In the case of processing-houses, they become liable to pay excise duty not because they are the owners of the goods but because they cause the 'manufacture' of the goods. The dimensions of the Section 4(1) (a) and (b) are fully explored in a number of decisions of this Court. Reference may be made to the case of Bombay Tyres International. Consistent with the provisions of Section 4 and the Central Excise (Valuation) Rules, 1975, framed under Section 37 of the Act, it cannot be said that the assessable-value of the processed fabric should comprise only of the processing-charges. This extreme contention if acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, be no orders as to costs in the appeals and the writ petitions. The Union of India and its authorities shall be entitled to recover the amounts due by way of arrears of excise duty and shall be entitled to take necessary steps to seek the enforcement of the bank guarantees, if any, for the recovery of the arrears. 33. [Judgment per : Sabyasachi Mukharji, J. agreeing with CJI, M.N. Venkatachaliah and S. Natarajan, JJ.]. - I have had the advantage of reading in draft the judgment proposed to be delivered by my learned brother Venkatachaliah, J. I respectfully agree with him. There is, however, one aspect of the matter in respect of which I would like to say a few words. Contention (e) as noted by my learned brother in his judgment deals with the determination of the assessable-value. The processors in the cases before us say that they have filed classification lists under Rule 173B of the Central Excises and Salt Rules, 1944, as they had no other choice and that if the proper principles of determination of the assessable-value do not legally justify the consequences flowing from the classification it is open to them to contend against the validity of the determination and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at which such fabrics are sold for the first time in the wholesale market. That is the effect of Section 4 of the Act. The value would naturally include the value of grey fabrics supplied to the independent processors for the processing. However, excise duty, if any, paid on the grey fabrics will be given proforma credit to the independent processors to be utilised for the payment on the processed fabrics in accordance with the relevant rules. 35. In M/s. Ujagar Prints v. Union of India [1987 (27) ELT 567 (S.C.) = 1986 Suppl. S.C.C. 652], Bhagwati C.J. held that the processes of bleaching, dyeing, printing, mercerising etc. carried on by a processor on job-work basis in respect of grey cotton fabrics and man-made fabrics belonging to the customer and entrusted by him for processing amount to 'manufacture' within the meaning of the Act prior to its amendment so as to attract levy of excise duty on the processed fabrics and in any event, after the Amendment Act, these processes amount to manufacture and excise duty is leviable on the processed fabrics. The learned Chief Justice also dealt with the other question, namely, what is the value of the processed fabrics liable to be asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bay Tyre International Ltd., etc. etc. (1984 1 S.C.R. 347 at 375). It has to be reiterated that the valuation must be on the basis of wholesale cash price at the time when the manufactured goods enter into the open market. See in this connection the ratio of this Court in Union of India and Others v. CibatuI Ltd. (1985 Suppl. 3 SCR 95) and the Joint Secy. to the Govt. of India and Others v. Food Specialities Ltd. (1985 Suppl. 3 SCR 165). It was emphasised in Union of India and Others v. Cibatul (supra) that the value of the trade-marks was not to be taken into account in computing the assessable value as the affixation of the trade-marks of a particular brand was extraneous to manufacture. The values of such extraneous or additional factors do not enter into the computation of assessable value and as such the wholesale cash price at which the goods enter into the wholesale market would be independent of the value of the trade-marks. So that cannot be taken into the computation of the assessable value. Similarly, in the case of Joint Secretary to the Govt. of India and Others v. Food Specialities Ltd. (supra), it was held that the value of Nestle's trade marks could not be to the wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore us. 39. First, I would like to clarify the nature of the decision in Hindustan Milkfood Manufacturers Ltd. v. Union (the HMM case) 1980 ELT 480 (to which I was a party), since learned counsel for the petitioners sought to rely on my judgment in that case as supporting his contention that the Union cannot seek to uphold the amendment presently in question by reference to Entry 97 of List I in the Seventh Schedule to the Constitution. In that case, the Delhi High Court was concerned with the interpretation of the amendment to S. 4 of the Central Excises and Salt Act, 1944 by Act 22 of 1975. The pre-amendment section postulated the determination of excise duty on the basis of the wholesale cash price of the excisable goods at "the factory gate"; and, an explanation provided that, in determining this price, no abatement or deduction shall be allowed in respect of trade discount and the amount of duty payable at the time of the removal of the goods from the factory. The post-amendment section made certain changes in the concept of sale at the factory gate by excluding therefrom sales effected in favour of a category of persons defined as "related persons" with which we are not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in view of Entry 97 in the Union List under the Constitution, it is open to and competent for the legislature to expand or even modify the nature of the levy. The question, however, will be whether it has done so." It was concluded, after referring to the previous position as well as the statement of objects and reasons for the amendment, that there was nothing to show that the legislature had intended to make any change and that the rule against a presumption of implicit alteration of the law should be invoked in the context. In other words, the HMM decision was based not on the scope of legislative Entry 97 in List I but on the language and scope of the amendment actually effected. It was considered not necessary or possible to stretch the language of the definition in S. 4 beyond the ambit of the provision as delineated in the earlier decisions. The question decided was not that the legislature could not, but that it did not, make any radical change in the nature of the levy. 40. The position considered in the HMM case may be illustrated by an analogy. Entry 82 in List I of the Seventh Schedule to the Constitution permits the enactment, by the Union Legislature, of a la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion cannot be fitted into that entry. Nevertheless the specific statutory definition cannot be ignored and if it cannot be held valid by reference to Entry 84, its validity has to be considered with reference to the residuary Entry 97. The definition being what it is it cannot be read down or restricted only to the process of manufacture in a limited sense. it explicitly enlarges the scope of the levy of excise duty and, If it is not permissible to bring It within the scope of Entry 84, a resort to Entry 97 cannot be ruled out. In my view, therefore, there is nothing in the decision in the HMM case that supports the contention of the petitioners here that the amendment of the definition of "manufacture" cannot be sustained by reference to Entry 97 of List I in the Seventh Schedule to the Constitution of India, if it cannot be upheld as falling under the purview of Entry 84. 42. The second point, on which I feel inclined to add a few words is in regard to the contention on behalf of the petitioners that the definition of the term "manufacture" enacted in the Central Excises and Salt Act, 1944 as enlarged by Amendment Act 6/80, cannot be read into the provisions of the Additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the stages of assessment and collection concerned with the procedure for quantification and recovery of a duty that has already been imposed. The first stage of "charge", according to counsel, has already been dealt with in the first sub-section of S. 3, which has fastened a charge on the production of manufacture of specified goods. The third sub-section, it is said, only relates to the quantification or recovery of the charge imposed under S. 3(1). I do not see any force in this argument. 43. In the first place, even S. 3(1) which, according to the counsel, is the charging section, uses the same words "levied and collected". These are the same as the words used in Article 265 of the Constitution, which have been interpreted as comprehending the entire process of taxation commencing from the imposition of the tax by enacting a statute to the actual taking away of money from the pocket of a citizen. They take in every stage in the entire process of taxation. The words "levied" is a wide and generic expression. One can say with as much appropriateness that the Income-tax Act levies a tax on income as that the Income-tax Officer levies the tax in accordance with the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds and exemptions from duty, shall, so far as may be, apply in relation to the levy and collection of the duty of excise leviable under this section in respect of any goods as they apply in relation to the levy and collection of the duties of excise on such goods under that Act or rules." Section 280ZD of the Income Tax Act, 1961 enabled an assessee, in certain circumstances, to obtain a "tax credit" certificate in respect of a percentage of the amount of "duty of excise payable by him". "Duty of excise" was defined by the section to mean "the duty of excise leviable under the Central Excises and Salt Act". The question was whether the tax credit could also be given in respect of the amount of the special duty of excise levied and collected under the Finance Act. This Court held that, obviously, the special duty levied under S. 80 could not be regarded as having been levied under the Central Excise Act. It said : "It is true that the expression 'leviable' is an expression of wide import and includes stages of quantification and recovery of the duty but in the context in which that expression has been used in Clause (b) of sub-section (6) of S. 280 ZD, it is clear that it has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned to ad valorem rates. Now the assessable value is to be determined on the basis of which the special duty will have to be worked out cannot be found out from the 1957 Act which contains no definition or indication in this regard. The statute cannot be worked atleast in respect of goods where an ad valorem rate is prescribed unless S. 3(1) is read with S. 3(3) and the definition of "assessable value" in S. 4 of the 1944 Act is read with the Finance Act. In like manner, I think, the content of aspect (a) cannot be understood differently from, or independently of, the definition in the main enactment. Having regard to the nature and content of the levy indicated in S. 3(1), it is obvious that S. 3(3) has to have the effect of attracting not only the purely procedural and machinery provisions of the 1944 Act but also some of its charging provisions. It is, therefore, difficult to consider Section 3(1) of the 1957 Act - in contrast to the Finance Act of 1965 - as covering the entire ambit of the charge imposed. In short, the language of S. 3(3) has to be given a wider meaning than under the Finance Act, 1965.1 have referred to the fact that a provision similar to that in S. 80 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in inter-state trade and commerce. S. 14 of the Central Sales Tax Act, 1956, enumerates various items of goods among which are the six items specified in S. 3(1) of the 1957 Act and this list further specifies that they shall have the same meaning as is attached to the respective items in the First Schedule to the Central Excises and Salt Act, 1944 vide Items (ii-a), (vii), (viii), (ix), (x) and (xi). Thus, it was always clear that the specified goods have to be understood in the way they were defined in the Central Excises and Salt Act, 1944. The idea in 1956 was to restrict the powers of the States to levy sales tax in respect of such goods and other goods. I n 1958, the idea was conceived of the Centre levying an additional excise duty on these goods and distributing the same to the States subject to the condition specified in Schedule II that such States did not impose any sale or purchase tax on these commodities. Subsequently, perhaps, it was realised that S. 7 served no specific purpose under the Act except that of the definitions which was an aspect already covered by S. 2(c). In these circumstances, not much significance need be attached to S. 2(c) much less can it be con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s case any modification, repeal or re-enactment of the earlier statute will also be carried into in the later, for here, the idea is that certain provisions of an earlier statute which become applicable in certain circumstances are to be made use of for the purpose of the latter Act also. Examples of this type of legislation are to be seen in Collector of Customs v. Nathella Sampathu Chetty (1962 3 SCR 786), New Central Jute Mills Co. Ltd. v. Assistant Collector [1978 ELT (J 393) (S.C.) =1971 2 SCR 92], and Special Land Acquisition Officer v. City Improvement Trust (1977 1 SCR 569). Whether a particular statute falls into the first or second category is always a question of construction. In the present case, in my view, the legislation falls into the second category. S. 3(3) of the 1957 Act does not incorporate into the 1957 Act any specific provisions of the 1944 Act. It only declares generally that the provisions of the 1944 Act shall apply "so far as may be", that is, to the extent necessary and practical, for the purposes of the 1957 Act as well. 48. That apart, it has been held, even when a specific provision is incorporated and the case apparently falls in the first of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the earlier legislation, in so far as they are not clearly inconsistent with the later one should not be extended to the later legislation as well. As has been pointed out earlier, the Finance Acts which levied special or regular or additional excise duties contained in themselves all the elements of charge of duty. The goods were mentioned and the duty as to be levied either at a percentage of the normal excise duty payable under the 1944 Act or at a percentage of the value of the assessable goods as determined under the 1944 Act. All that was further needed was the applicability of the procedural provisions of the 1944 Act. Here, however, the 1957 Act is incomplete as to the basis of the charge and its provisions would become totally unworkable unless the concepts of "manufacture" and "assessable value" as determined under the 1944 Act are carried into it. 50. In the circumstances, I agree that we should give full and literal effect to the language of S 3(3) and hold that it has the effect not only of attracting the procedural provisions of the 1944 Act but also all its other provisions, including those containing the definition. ORDER January 27, 1989: In respect of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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