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TMI Blog1969 (8) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... made and a coercive process to be employed in the event of failure to make the payment. That is done by Rule 33D alone from which it would be reasonable to conclude that under the rules it is only the manufacturers who are liable to pay the amount of duty. The rules can, therefore, be said to make a definite provision with regard to the category of persons from whom the collection of the duty is to be made, namely, the manufacturers. Appeal dismissed. - 1220 of 1966 - - - Dated:- 25-8-1969 - J.C. Shah, V. Ramaswami and A.N. Grover, JJ. [Judgment per : A.N. Grover, J.]. - This is an appeal by special leave from a judgment of the Pubjab High Court (Circuit Bench) Delhi in which the validity and legality of the levy of cess by way of excise duty on the rubber used by manufacturers of chappals under the provisions of the Rubber Act, 1947, (Act XXIV of 1947) as amended, hereinafter called the Act, have been assailed. 2.M/s. Jullundur Rubber Goods Manufacturers' Association is an association of rubber chappal manufacturers at Jullundur in the State of Punjab. Its members, who manufacture chappals, are stated to use about 15 to 20% of rubber in the process of their manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bber cess. Under Section 14 no person could sell or otherwise dispose of or buy or otherwise acquire rubber except in accordance with the terms of general or special license issued by the Board. The Central Government was given the over-all control over the acts of the Board by Section 22. Section 25 empowered the Central Government to make Rules. Prior to the amendment made by the Rubber (Amendment) Act of 1960 (Act XXI of 1960) the duty of excise was payable under Section 12(2) by the owners of the estates on which rubber was produced and it was to be paid by them to the Board within one month from the date on which they received a notice of demand. By Act XXI of 1960 an important change was made which affected the manufacturers and the duty could be collected by the Board either from the owners of the estates or from the manufacturers by whom the rubber is used. 5. At this stage the relevant provisions of the Act with which we are concerned may be reproduced :- "Section 3(e) "manufacturer" means any person engaged in the manufacture of any article in the making of which rubber is used;" (h) "rubber" means — (i) ................... (ii) ................... (iii) latex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t sub-section (2) cannot alter the substantive provision in the charging sub-section (1) and since the Parliament has employed the words "duty of excise" which have a well understood meaning the incidence of tax would fall only on the actual producers. Once the incidence of tax was shifted to the users the tax would cease to be one which would fall within Entry 84. In re : the Central Provinces and Berar Act No. XIV of 1938 - (1939) F.C.R. 18, 40-41, Gwyer, C.J. described "excise duty" thus : "But its primary and fundamental meaning in English is still that of a tax on articles produced or manufactured in the taxing country and intended for home consumption". The learned Chief Justice, however, proceeded to add that there could be no reason in theory why such duty should not be imposed even on the retail sale of an article if the taxing Act so provided. It could obviously be imposed at the stage which was found to be most convenient and lucrative as that was a matter of the machinery of collection and did not affect the essential nature of the tax. Referring to this decision of the Federal Court and several other cases it was observed in R.C. Jall v. Union of India - (1962) Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e legislative competence under Entry 97 of List I in the Seventh Schedule read with Article 248 of the Constitution. 7.We may next deal with the question whether Section 12(2) suffers from the vice of excessive delegation and whether there has been violation of Article 14 as uncontrolled and unbridled discretion has been conferred on the Board to levy and collect the tax from either the producer or the manufacturer (the user of rubber). It is pointed out that there is no guiding principle or policy laid down in the Act to enable the Board to make a choice between the two categories. The principles governing such questions have been laid down in several decisions of this Court. It is well established that essential legislative functions consist of the determination of the legislative policy and its formulation as a binding rule of conduct and cannot be delegated by the legislature. What can be delegated is the task of subordinate legislation necessary for implementing the purpose and objects of an enactment. Where legislative policy is enunciated with sufficient clearness or a standard is laid down the Courts will not interfere. It will depend on consideration of the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain the challenge on the ground of excessive delegation. The policy of the Act has been enunciated with sufficient clarity and the guidance has been furnished by the provisions to which reference has been made as to how the Board should exercise its powers in the matter of levy and collection of tax. There is also another important safeguard which is contained in Section 22 of the Act. All acts of the Board by virtue of that section shall be subject to the control of the Central Government which may cancel, suspend or modify any action taken by the Board. 9.The provision in Section 12(2) that the Board shall levy and collect the duty in accordance with the Rules is another important safeguard against the Board acting arbitrarily in the matter of collection of duty from the owners of the rubber estates or the manufacturers. These Rules are to be framed by the Central Government under Section 25(1)(xxa) which is to the following effect :- "the cases and circumstances in which the duty of excise under Section 12 shall be payable by the owner and the manufacturers respectively, the manner in which the duty may be assessed, paid or collected, the regulation of the production, manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs could be vitally affected by rendering illegal a contract which was perfectly legal when it was entered into. This Court referred to the Report of the Expert Committee on the Bill which became an Act, dealing with the economic implications of forward trading and for the necessity of regulating such contracts in particular goods. It was observed that the suitability of a commodity for forward trading depended on factors which were far from static and which were subject to variations over a period of time. A continuous assessment was required of all elements which would necessitate regulation. All this could not be specified in a statute. It was for that reason that a Forward Markets Commission had been constituted on whom the duty had been cast of advising the Government on the situation as it existed from time to time. The following observations are pertinent and may be reproduced :- "In our opinion, the selection of the commodity for the regulation of forward trading in it or of prohibition of such trading can only be left to the Government and the purpose for which the power is to be used and the machinery created for the investigation furnish sufficient guidance as to precl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be left to the rule-making authority to indicate the cases and the circumstances in which the duty of excise was to be collected from the owners or the manufacturer respectively. It was open to the rule making authority to vary the rules according to the changing circumstances and conditions. The Board which was a high powered body was mainly responsible for collection of the duty and the rules would naturally be made in consultation with it from time to time. We are unable to see how the challenge on the ground of discrimination under Article 14 can be sustained in view of all these reasons. It does not appear that the Board can discriminate in an arbitrary manner between owners of rubber estates and the manufacturers or between persons inter se of the same category. 12.The Central Government has framed rules pursuant to the power conferred by Section 25 of the Act. Unfortunately the rules relating to furnishing of returns and collection of duties are not properly worded and suffer from lack of clarity. Under Rule 33 the Board can call for information and documents from owners of rubber estates or any licensed dealer or manufacturer relating to the stock of rubber held and sal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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