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TMI Blog1993 (12) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... ultra vires the provisions of the Act and that it offends Art. 14 of the Constitution. In a few writ petitions, petitioners further contend that the 2nd Notification is not applicable to them and therefore denial of the exemption is not warranted. 4. The relevant parts of the first Notification read as follows : "Notification No. 175/86-C.E., dated 1-3-1986. - In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 85/85-Central Excise, dated the 17th March, 1985, the Central Government hereby exempts the excisable goods of the description specified in the Annexure below and falling under the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), (hereinafter referred to as the 'specified goods'), and cleared for home consumption on or after the 1st day of April in any financial year, by a manufacturer from one or more factories, - (a) in the case of the first clearance of the specified goods upto an aggregate value not exceeding rupees seven and a half lakhs, (i), (ii), (b) (c) xx xx (omitted as unnecessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no power to add to, amend, vary or rescind the notification. Sec. 21 of the General Clauses Act was referred to, which discloses that when a power is conferred by any Act or Regulation, to issue notifications, orders, rules or bye-laws, said conferment of power includes a power exercisable to add to, amend, vary etc., of the said notification, order, rule or bye-laws. It was argued that Sec. 21 governs only an Act or a Regulation. When a power is conferred by a rule to issue a notification, no power is granted to amend the said notification. Sec. 21 of General Clauses Act refer to the power granted under an Act or Regulation and not powers created elsewhere. Sec. 6 of General Clauses Act was referred, which also provided for the aftermath of a repeal of any Act or Regulation; the Supreme Court held in Rayala Corporation (P) Ltd. v. The Director of Enforcement [AIR 1970 SC 494] that Sec. 6 applies only when the repeal is of a Central Act or Regulation and not of a Rule. It was contended that by the same analogy it should be held that Sec. 21 also does not apply to a Rule conferring a power to issue a notification. 6.1 The contention, though looks attractive, ignores the basic d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Excise Traiff Act, 1985. This Act, read with Sec. 3 of the Central Excises and Salt Act makes it clear that levy is on excisable goods which are specified. If so, the exemption from the levy also shall have to be with reference to the specified goods. Exclusion from the operation of the exemption depending upon the manufacturer's States is wholly outside the purview of the above two Acts. It was argued that even under Rule 8, notification to be issued is to exempt any excisable goods and therefore the conditions permitted to be imposed for the exemption and referred to in Rule 8, are to be conditions governing those goods and not the manufacturer of goods. The second notification has excluded the manufacturer of the goods from the benefit of exemption, which is ultra vires Rule 8. 7.1 This contention, again, is misconceived. There is always a difference between a taxable event/ subject of the tax and the person liable to pay the tax. Ultimately, it is the person liable to pay the tax, who has to shoulder the burden. If the subject matter is exempted from the levy, the benefit is derived not by the subject (which has no soul), but by the person who is charged with the liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (J 211)] was relied. In the said case, the impugned Explanation categorically deemed the brand name holder as the manufacturer of goods, even though, as a fact, he was not the manufacturer. It was held by the Patna High Court that it was not competent for the Government to treat a non-manufacturer as a manufacturer, in the exercise of its powers under Rule 8. By such a deeming provision, tax is levied on a person, not charged with the liability to the tax by Sections 3 and 4 of the Central Excises and Salt Act. At para 24 the Court held : "On a reference to the Explanation contained in the notification (Annexure 4) it is manifest that a footwear, manufactured by an exempted manufacturer, if affixed with the brand or trade name of another manufacturer, or purchased by another manufacturer, shall be deemed to have been manufactured by the manufacturer whose brand or trade name has been affixed or who has purchased the same. This is characterised to be changing the character of impost of excise duty from a manufacturer of a footwear to one who is not the manufacturer of the same, under the deeming clause in the explanation, in the wake of granting exemption to the real manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not an abstract concept. Realities of life, practicality of administration, convenience of the public and requirement of simplicity of procedure are some of the factors to be considered as relevant in testing a complaint of discrimination". Again at page 2481: "When a tax levy is attacked as discriminatory, the harsh realities of discrimination its oppressiveness and palpable injustice or hostility by such a levy has to be clearly brought out by the petitioners who attacks the levy as discriminatory. In such a situation the entire global picture of expenditure, income capital outlay, normal returns, the affectation of the impugned tax, are to be pleaded and proved. Levy cannot be struck down on an application of any abstract formula." At page 2484, while concluding the alleged discrimination passed on concession, the Bench held: "In a recent decision in Sri Krishna Das v. Town Area Committee, Chirgaon [1990 (3) SCC 645] levy of tax referred as weighing dues was challenged as discriminatory, in view of the exemptions granted to a few of the products. The observations of the Supreme Court found at page 654 are: 'The contention that the tax is discriminatory in view of the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plea based on discrimination. 9.3 SSI Units using brand names of others are class by themselves, because the goods produced by them have certain advantages in the market. Therefore, it cannot be held that the classification is arbitrary and based on irrelevant considerations. Concession is granted obviously to SSI Units who has to struggle hard to earn a good market for their goods and to prevent brand name holders adopting the device of manufacturing those goods through SSI Units - Contention is accordingly rejected. Further contentions raised in W.P. No. 7204 and 3805 of 1989 require to be considered: Re. W.F. No. 7204/1989 : 10. The writ petition is against the order dated 26-12-1988 made by the first respondent, upholding the demand for differential duty after rejecting petitioner's explanation to the show cause notice. 10.1 The petitioner manufactures stainless steel items like wash-hand sink, lavatory pans, wall protectors etc., for being supplied to the Indian Railways, exclusively, in accordance with the purchase orders and the drawings furnished by the Railways. Drawing number is indicated in every item along with the identification mark of the Railways as requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfying other conditions of the notification". Subsequently, Explanation VIII was added to Notification 223/87, thus : "Brand name" or 'trade name' shall mean a brand name or trade name, whether registered or not, that is to say a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that person." 10.3 Though the question raised looks to be a question of law, I am of the view that it should be properly agitated before the statutory authorities, having regard to the scheme of the Act. The Act provides a hierarchy of forums to decide the question arising under the Act. The order of first respondent is appealable. There is a provision for further appeal and thereafter the question may still be agitated by seeking reference to the High Court or a further appeal to the Supreme Court directly. Hence I keep open the question, with liberty to the petitioner to raise the same in appeal. The appeal ag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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