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TMI Blog1991 (4) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1944") as in force at the relevant time. On October 3,1978 the Additional Duties of Excise (Textiles and Textile Articles) Ordinance, 1978 was promulgated which became an Act called the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978. This Act was passed on December 6, 1978, but it was given effect from the date on which the Ordinance came into force, i.e. October 4,1978. The Ordinance as well as the Act of 1978 provided for levy and collection of additional duty of excise equal to 10% of the total amount of central excise duty chargeable on 9 textile commodities enumerated in Schedule to the Act of 1978. 3. The petitioner contends that the Act of 1978 would not be applicable to the goods manufactured prior to midnight of October 3/4,1978. Since 'manufacture' is the taxing event, as far as the duty of excise is concerned, no duty of excise can be levied on the goods which were already manufactured when the Act of 1978 came into force. In his submission, whether goods were removed or not from the factory's store-room or other permissible premises is not material. If the goods were already manufactured at the time when the Act of 1978 came into force, addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidise the production of controlled cloth for weaker sections of the society. Therefore, the Ordinance of 1978 and subsequently the Act of 1978 'with a view to provide for the levy and collection of additional duties of excise on certain textiles and textile articles' (See preamble to the Act of 1978 and the statement of objects and reasons). 7. Section 3 of the Act of 1978 is relevant. Hence it is reproduced hereinbelow: "3. (1) When goods of the description mentioned in the Schedule chargeable with a duty of excise under the Central Excises and Salt Act, 1944, read with any notification for the time being in force issued by the Central Government in relation to the duty so chargeable, are assessed to duty, there shall be levied and collected a duty of excise equal to ten per cent of the total amount so chargeable on such goods. (2) The duties of excise referred to in sub-section (1) in respect of the goods specified in the Schedule shall be in addition to the duties of excise chargeable on such goods under the Central Excises and Salt Act, 1944 or any other law for the time being in force and shall be levied for the purposes of the Union and the proceeds thereof shall not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and collected on the goods which were already manufactured by that time, for the reason that the taxing event 'manufacture' of the goods had already taken place by that time. The submission may be examined. It is true that as far as the levy of excise duty is concerned, taxable event is manufacture or production of goods. Even so, the duty can be levied and collected at a later stage for administrative convenience. The only condition is that there should be nexus with the taxing event, i.e. manufacture and the levy and collection of the duty. 10. It is well recognised principle of interpretation of statutes that language of the Act has to be given effect unless it is shown that the intention of the legislature was to the contrary. If the language of the statute is clear and unambiguous, the court need not, rather should not, go elsewhere in search of the intention of the legislature. The Act of 1978 has been enacted with an object to provide for levy and collection of additional duties of excise on certain textiles and textile articles (see preamble to the Act of 1978). Section 3(1) of the Act of 1978 indicates the point of time at which the duty is to be levied and collected. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel for the petitioner submitted that if this interpretation is given, levy of additional duty would be retrospective in its operation inasmuch as the taxing event for excise duty is manufacture. Manufacture of the product having been completed prior to the Act coming into force, the Act of 1978 would not apply to the goods which were already manufactured before the Act came into force. The submission takes within its sweep misconception as regards the term 'retrospective'. If the 'misconception' is cleared, the submission will not survive, because the very basis of the submission is the misconception or lack of clarity as regards the meaning of the term 'retrospective'. Therefore let us examine what does the term 'retrospective' mean? 13. Meaning of "Retrospective": In CRAIES ON STATUTE LAW (Seventh Edition, page 387) meaning of the term 'retrospective' is stated as follows: "A statute is to be deemed to be retrospective, which takes away or impairs any vested right acquired under existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability in respect of transactions or considerations already past. But a statute "is not properly called a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retrospective in its operation. Except the fact that the goods were manufactured prior to the time of the Act coming into force, no other ground is advanced in support of the contention that the Act is retrospective. As indicated by the Supreme Court in the case of D.G. Gouse Co., (supra), simply because there was no liability of tax prior to the Act coming into force, it does not create vested right, under any existing law that it shall not be levied in future with effect from a date anterior to the passing of the Act. No existing right, much less vested right, has been pointed out by the learned counsel for the petitioner and the intervenors, as having been acquired by the manufacturers that when the goods were manufactured there was no tax liability and therefore in future the goods cannot be taxed. A manufacturer cannot say that the goods manufactured by him shall not be subjected to excise duty after they are manufactured. If such imposition retains the essential characteristics of excise duty, there is nothing in law to say that by imposition of excise duty on goods already manufactured any right of the manufacturer is adversely affected or impaired. 15. Duty of excise is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and that the rational connection between the manufacture and the impost of duty is snapped. If the duty is imposed at the stage of removal of the goods manufactured, it would not be correct to say that the taxing event would be shifted from manufacture to removal. At the stage of removal of the goods from the store room of the factory or from other permissible place, if the tax is levied and collected, the character of the excise duty that it is imposed on manufacture is not in any way changed or diluted. Therefore, there is nothing to show that any of the rights, either existing or vested, of a manufacturer is affected or impaired by the provisions of the Act of 1978. 18. Moreover, if the tax is levied and collected at the stage of removal of the goods, no new obligation or disability has been attached in respect of any earlier transaction or consideration. Provision for increase or decrease of the purchase price of goods by reason of the imposition, increase, or remission of customs or excise duty has been made by the legislature by insertion of Section 64A in the Indian Sale of Goods Act, 1930. This amendment has been made in the year 1940. Therefore, even if there be any c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the manufacturers and the traders for payment of the excise duty on account of the provisions of Section 64A of the Indian Sale of Goods Act, 1930 which inter alia provides for recovery by the seller of the amount of the increase in duty from the purchaser where the increase of tax is effected subsequent to the contract. In order to check manipulation of stocks by the manufacturers and the traders the revenue will have to take several measures to prevent such manipulations. On the other hand it would create so many difficulties in the way of the manufacturers and traders inasmuch as an honest manufacturer or trader also will have to undergo the difficulties of preparing statements and getting the same certified by chartered accountants. While giving ordinary and usual meaning to the language employed by the legislature, if retrospectively can be inferred by necessary implication the same has got to be inferred to avoid uncertainty, complexity and also to avoid possible dishonesty and corrupt devices, for the reason that the legislature never intends to breed corruption. However, we do not wish to elaborate on this aspect of retrospectively of the Act of 1978 to certain extent by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which have been cleared. In short it is submitted that it has been the practice of the Department not to apply the provisions of the Act to the goods which are already manufactured at the point of time when the Act came into force. There is no material on record of the petition to show that such is the practice of the Department. Even assuming for a moment that there is such practice then even-such practice does not become law. 25. In case such is the practice, the correct position of law as regards the meaning of the term 'retrospective' needs to be taken into account by the persons responsible for implementing the laws. if there is such practice, it appears that the same may be on account of some erroneous impression about the correct position of law. We are not sure for what reasons the aforesaid practice is adopted. If it is on account .of the erroneous understanding of the law, we hope and trust that the persons responsible to implement the law correctly will take suitable measures so that inequitable results are avoided and unnecessary uncertainty and complexity are not introduced in the manner and method of collection of the excise duty. 26. Duty as defined under Rule 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of the Act cannot be interpreted by first reading the provisions of Rule framed under the Act. In the instant case it was contended that it would amount to adopting inverse logic if the provisions of Rule 9A and Rule 49 of the Central Excise Rules, 1944 are read first in order to arrive at the correct interpretation of the provisions of the Act of 1978. It was submitted that because certain provisions for assessment and collection of duty at the stage of removal of the goods are made under Rule 9A of the rules, the provisions of Section 3(1) of the Act of 1978 cannot be read so as to shift the taxing event from manufacture to the stage of removal of the goods. And it was argued that Section 3 of the Act of 1944 and Section 3 of the Act of 1978 was a charging section as far as additional duty of excise is concerned. The charging section should be read first without having recourse to the provisions of the rule. Provisions of the rule may be read only with a view to elucidate what is stated in the provisions of the Act, but by reading the provisions of the rule the provisions of the Act cannot be interpreted. 30. Basic fallacy as regards charging section The contention base ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ? Valuation as made by whom? How? Then the levy would become a dead letter - an impotent paper levy. It cannot be made workable unless Section 4 is read conjointly as constituting another part of a complete Code made up of Sections 3 and 4. It will otherwise be a part of a zig-zag puzzle; unless all the parts are put together it will not be in a piece and the picture of the levy will not emerge. There is therefore no escape from the conclusion that though separate number are given in fact the two sections are two incomplete parts of the whole charging section composed of Section 3 and 4 read in a conjoint manner as two supplementary parts of a complete code. In the same para it is further observed that: Excise duty is payable on 'manufacture' (at the time of clearance, since the rules so provide and yet is linked to manufacture of the article" If the misconception as regards the charging section and machinery section is cleared, the fallacy in the argument that the provisions of Section 3 of the Act of 1978 are sought to be interpreted by referring to the provisions of Rule 9A and Rule 49 has no basis. On the contrary it is the other way round. It is on account of the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Mihir Textiles Ltd. v. Union of India and others, 29(1) GLR 654, a Division Bench of this High Court has taken a similar view. In that case, on account of notification issued on November 26,1987 superseding the earlier notification dated 1st March, 1987 the basis for grant of exemption was changed in respect of certain man-made fabrics. The net effect of the change was an increase in the additional duty of excise on the specified goods. The question arose : whether the goods manufactured before Notification No. 254 of 1987 dated November 26,1987 came into effect, but not removed from the factory premises, would be covered by the said notification or the earlier Notification No. 60 of 1987 which was in operation till then? Applying the provisions of Rule 9A of the Central Excise Rules, 1944 the Division Bench held that the rate of duty and tariff valuation if any applicable to any classified goods shall be the rate and valuation in force, in case of goods removed from the factory or warehouse, on the date on which the duty is assessed. 35. The same logic and principle would apply in the instant case also, both for the reasons of language of Rule 9A of the Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f excise' is required to be construed in the context in which it occurred. Therein the Supreme Court held that the phrase 'duty of excise' referred to in the notification will be confined to the basic duty of excise and would not cover special excise duty also. The observations made by the Supreme Court in the course of the judgment while deciding the aforesaid question are of no help to the petitioner, for it is well settled law that a decision is an authority for the question which it actually decides. In the case of Modi (supra) the Supreme Court has decided the meaning of the phrase 'duty of excise' occurring in two notifications and that too for the purpose of deciding the extent of exemption granted. It has not laid down any principle which would be helpful for interpreting the provisions of the Act of 1978. 39. The case of D.R. Kohli and Others v. Atul Products Ltd., reported in 1985 (20) E.L.T. 212 (SC), provides an example as to how the department can be enticed (or "inveigled" as stated by Supreme Court) to receive the amount of excise duty and thereafter how one may attempt to escape the payment of excise duty at a higher rate. By Finance Act 1961, Item 14-D was added ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were manufactured and cleared." Thus the question which arose for determination in this case was altogether different. Therefore the observations made while deciding this question have to be read in the proper context. Observations made as regards non-excitability of the goods manufactured prior to the introduction of Item 14-D in the First Schedule to the Act of 1944 have no relevance to the question raised in this petition. Therefore this decision is also of no help to the petitioner. 41. Learned counsel for the intervenor has referred to a decision of the CEGAT in the case of Vazir Sultan Tobacco Company Limited v. Collector of Central Excise, Hyderabad, reported in 1985 (21) E.L.T. 757 (Tribunal). Therein the majority members of the Tribunal (CEGAT) have interpreted the provisions of the Finance Act, 1978 by which special excise duty was imposed. It is true that the majority of the members of the Tribunal have taken the view which supports the petitioner. However, with respect, in our opinion the learned members of the Tribunal have been influenced by the observations made by the Supreme Court in certain decisions which did not decide the question at issue. In our opinion f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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