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TMI Blog2002 (5) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... to companies existed thence, which were seven in number. Purported to attract new investment for setting up new tyres industries as also to encourage investment in the existing tyre industries, the Government of India introduced an integrated excise relief Scheme. Pursuant to and in furtherance of the said scheme a Notification bearing No. 198/76 was issued, in terms whereof, tyres were being exempted from payment of so much of excise duty leviable thereon as was in excess of 75% thereof. Relying on and on the basis of the said purported representation the petitioner established a factory. The Scheme was modified by another Notification No. 142/78, in terms whereof, the Central Government granted permission for payment of excise duty in respect of tyres to the extent mentioned therein and subject to the terms and conditions laid down therefor. By reason of the said scheme, those who made substantial investment by way of setting up of a new plant and/or plant of additional capacity became entitled to the benefit thereof. Yet again by reason of the Notification No. l07/81-C.E., dated 24th April 1981, it was provided that the excise relief would be available not only to the new indust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned notification. 8.The petitioner wrote a letter on 5th May, 1981 requesting the Assistant Collector of Central Excise/respondent No. 4 to permit it to avail of the relief under Notification No. 107/81. Permission was granted to the petitioner on 6th May, 1981 by the Assistant Collector to clear tyres under Notification No. 107/81 on provisional basis. The DGTD issued a certificate, to the petitioner on 13th May, 1981 certifying that the petitioner had made a capital investment of the face value of Rs. 3590.44 lacs as on 31st March, 1981 on the plant and machinery for manufacture of tyres. The Assistant Collector passed fresh order for provisional clearance under Rule 9B on 19th May, 1981 and required the petitioner to submit DGTD certificate in original. The petitioner on 21st May, 1981 submitted B-13 bond supported by bank guarantee, pursuant to an order of the Assistant Collector passed in this behalf on 19th May, 1981. However, on 21st May, 1981 the Assistant Collector sent a telegram to the petitioner directing the petitioner to stop clearances under Notification No. 107/81. Assistant Collector on 22nd May, 1981 issued a formal order revoking the provisional clearance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. According to the petitioner, they have no other factory, wherefor licence had been granted under Section 13 of the IDR Act other than the said Factory-III. Separate factory licence had also been granted in respect of the said Factory-III. The first classification as also clearances were made from the said Factory-III on 29th March, 1984. 14.A Notification No. 88/84 was issued on 6th April, 1984. By reason of the said notification, the earlier Notification No. 268/82 was substituted on 13th November, 1982. 15.The petitioner claimed exemption in respect of Factory-III in terms of the above said notification. Furthermore, the petitioner had categorically stated that by reason of the letter dated 27th August, 1984 the Commissioner (TR), New Delhi addressed to Shri S.K. Malhi purported to have communicated the views of the Central Government, that, as per sub-clause (2) of the third proviso to the said notification, the industrial undertaking referred to was the petitioner's industry and time-limit for computing the period of availability or the exemption would run from 20th December, 1976. The Collector, Central Excise, Jaipur was requested to issue suitable clarification to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o amend the writ petition in the year 1985. In such a situation, in our opinion, it is not desirable to relegate the petitioners to alternative remedy at this stage. 20.The question, as to whether this Court in exercise of its discretionary jurisdiction under Article 226 of the Constitution of India would refuse to entertain a writ petition and relegate the parties to avail alternative remedy, would depend upon the facts and circumstances of each case. There is no proposition of law that in no case, despite existence of an alternative remedy, the writ petition cannot be entertained. Such a course is not normally taken recourse to by the High Court as a matter of prudence and self-restraint. In the instant case, however, the petitioner has questioned the jurisdiction of the authorities, in so far as, it refused to give benefit of the said notifications to them. The jurisdiction of the appropriate authorities would be dependent on the interpretation of the notifications, having regard to the admitted facts. It may be that there exists certain disputed arena as regards the actual amount of excise duty, which the petitioners are liable to pay even if the said notifications are direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cases are to be remitted back for calculation purposes but we do not see any reason as to why the petitioner should be relegated to an alternative remedy, particularly, when this Court has heard the matters on merits on several dates. 24.The first contention raised by Mr. Maninder Singh, learned Counsel appearing for the respondent/UOI, therefore, is rejected. Re : Territorial25. Jurisdiction It is not in dispute that the petitioner herein had earlier filed a writ petition before the Rajasthan High Court, which was marked as CWP 2012/85 since reported in 1986 Rajasthan L.R. 831 claiming exemption. 26.A learned Single Judge of the Rajasthan High Court held that the Government was bound by the principles of promissory estoppel, and on the basis of the said finding, Notification No. l59/85-C.E., dated 15th July, 1986 was quashed. Union of India preferred an appeal there against and the decision of the Division Bench in Union of India v. J.K. Industries Ltd. since reported in 1990 (49) E.L.T. 511 (Raj.). The Division Bench formulated two questions, which are : (1) Whether the Central Government could not have issued Notification No. 159 of 1985 dated 16th July, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, maintainable." 32.Yet again in Vareli Weaves Pvt. Ltd. v. Union of India reported in 1996 (83) E.L.T. 255 (S.C.) the Apex Court observed that the circulars upon the basis of which the duty was levied, having been issued in Delhi, the Delhi High Court had the jurisdiction to entertain the writ petition. Re :33. Applicability of Notification No. 107/81, dated 24th April, 1981 Notification No. 107/81-C.E., dated 24th April, 1981 read thus :- "In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts tyres (excluding tubes and flaps), falling under sub-items I and II of Item No. 16 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) (hereinafter referred to as the specified goods), from so much of the duty of excise leviable thereon as is in excess of the duty calculated at the rate of seventy-five per cent of the rate of duty leviable on the specified goods read with any relevant notification issued under sub-rule (1) of Rule 8 of the said rules and in force for the time being : Provided that the specified goods are manufactured in a factory from which the clearances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation III. - For the purposes of this notification, the "amount of exemption" shall be the difference between the amount of duty payable (including special duty of excise, if any, payable thereon) but for this notification or the aforesaid Notification No. 198/76-Central Excises, or No. 142/78-Central Excises, as the case may be, and the amount of duty paid (including special duty prescribed under this notification or the aforesaid Notification No. 198/76-Central Excises, or No. 142/78-Central Excises, as the case may be, respectively. Explanation IV. - The "amount of duty payable" in Explanation III shall be the amount calculated by applying the rate of excise duty leviable on the specified goods, but for this notification or the aforesaid Notification No. 198/76-Central Excises or No. 142/78-Central Excises, as the case may be, to the assessable value of the specified goods as approved by the proper officer for the purposes of this notification or the aforesaid Notification No. 198/76-Central Excises or No. 142/78-Central Excises, as the case may be, respectively. Explanation V. - The expression "assessable value" in Explanation IV means the value as determined in accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anation added to a statutory provision is not a substantive provision in any sense of the term but as the plain meaning of the word itself shows it is merely meant to explain or clarify certain ambiguities which may have crept in the statutory provision. The object of an explanation to a statutory provision is - "(a) to explain the meaning and intendment of the Act itself, (b) where there is any obscurity or vagueness in the main enactment to clarify the same so as to make it consistent with the dominant object which it seems to subserve, (c) to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful, (d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and (e) it cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to whether when a clearance has been made so as to apply a particular notification laid down the quantum of excise duty may be relevant, in our opinion, the same takes a back seat when the Central Government intended to grant only one time benefit. 38.By using the expression "first clearance" in several provisos it is merely postulated that the application of the impugned notification in relation to the conditions specified therein and the same by no stretch of imagination cannot said to have expanded the scope and purport of the notification. By reason of the Explanation VI, in terms whereof, sum-total of the value of the capital investment made on plant and machinery for the manufacture of the specified goods are to be computed on the face value of the capital investment at the time when such investment was made only are required to be taken into account but the value of the investment made on plant and machinery which have been removed permanently or rendered unfit for use prior to the date of the first clearance of the specified goods, shall be excluded. But what is therefore to be excluded, is the sum-total of the value of the capital investment minus the value of plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Excise, Cochin reported in [1987 (28) E.L.T. 58 (S.C.) = (1987) 1 SCC 697] the Apex Court observed : "The notification dated July 14, 1978, it is to be noticed, has superadded the words "read with any relevant notification issued under the said sub-rule (1) of Rule 8 and in force for the time being". These superadded words show conclusively that the notification dealing with exemption to the extent of the duty paid on the inputs, which was already in force, had to be given effect before giving effect to the notification dated July 14, 1978." 44.In Union of India v. Wood Papers Ltd. reported in 1990 (47) E.L.T. 500 (S.C.) the law has been laid down in the following terms : "Literally exemption is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially in a growing economy. For instance tax holiday to new units, concessional rate of tax to goods or persons for limited period or with the specific objective etc. That is why its construction, unlike charging provision, has to be tested on different touchstone. In fact an exemption provision is like an exception and on normal principle of interpretation of statutes it is construed strictly eithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es applicable no rule or principle requires it to be construed strictly. Truly speaking liberal and strict construction of an exemption provisions are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in the nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction. Therefore, the first exercise that has to be undertaken is if the production of packing and wrapping material in the factory as it existed prior to 1964 is covered in the notification." 47.Yet again in Collector of Customs v. Presto Industries reported in [2001 (128) E.L.T. 321 (S.C.) = (2001) 3 SCC 6] it was held : "The onus of proof of fulfilment of condition subject to which an exemption may be admissible lies on the assessee or upon a party claiming benefit under the notification as also held in the case of Motiram Tolaram v. Union of India reported in (1999) 6 SCC 375. So far as the question of construing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is anything repugnant to the subject or context the word singular shall include plural and vice versa. The Tribunal interpreted the word 'machine' to be 'machines' and, in our opinion, rightly so. It seems by this restrictive interpretation the very purpose of this notification since completely diluted which led into clarification/modification by the Government through the aforesaid letter." 51.The said decision again cannot be said to have any application in the instant case. We, therefore, are of the opinion that the contention of the petitioner as regards the interpretation of the Notification 107/81 cannot be accepted. Re :52. Notification No. 88, dated 6th April, 1984 Notification No. 88/84-C.E., dated 6th April, 1984 reads as follows : "In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts tyres (excluding tubes and flaps) falling under Item No. 76 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from so much of the duty of excise leviable thereon under Section 3 of the said Act as is in excess of the amount calculated at the rate of eighty per cent of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer of the Directorate General of Technical Development or the General Manager of the Industrial Development Bank of India; or (ii) as are effected after the expiry of a period of seven years from the date of the said first clearance of tyres from the said factory : Provided also that where such tyres are manufactured in a factory which is an industrial undertaking licensed under Section 13 of the Industries (Development and Regulation) Act, 1951 (65 of 1951) (hereinafter referred to in this proviso as such factory), the exemption contained in this notification shall not apply to such of the clearances of tyres - (i) as are in excess of the clearances of tyres in respect of which the aggregate of the amount of exemption under this notification and the amount of exemption, if any, availed in respect of clearances of tyres, under all or any of the notifications of the Government of India in the Department of Revenue and Banking No. 198/76-Central Excises, dated the 16th June, 1976, or in the Ministry of Finance (Department of Revenue) No. 142/78-Central Excises, dated the 14th July, 1978, or in the Ministry of Finance (Department of Revenue) No. 107/81-Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , or No. 268/82-Central Excises, as the case may be, to the assessable value of the tyres as approved by the proper officer for the purposes of this notification or the aforesaid Notification No. 198/76-Central Excises, or No. 142/78-Central Excises, or No. 107/81-Central Excises, or No. 268/82-Central Excises, as the case may be, respectively; and (ii) in the case of tyres where the rate of excise duty is chargeable under the Central Excises and Salt Act, 1944 (1 of 1944) not with reference to value, shall be the amount calculated by applying such rate, but for this notification. Explanation IV. - The expression "assessable value" in Explanation III means the value as determined in accordance with the provisions of Section 4 of the Central Excises and Salt Act, 1944 (1 of 1944). Explanation V. - For the purposes of computing the sum-total of the value of the capital investment made on plant and machinery for the manufacture of tyres, the face value of the capital investment at the time when such investment was made only shall be taken into account, but the value of the investment made on plant and machinery which have been removed permanently or rendered unfit for use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pacity of the undertaking, or which is of such a nature as to amount virtually to a new industrial undertaking, but does not include any such expansion as is normal to the undertaking having regard to its nature and the circumstances relating to such expansion." 54."Factory" has been defined in Section 3(c) in the following terms :- 3(c) "factory" means any premises, including the precincts thereof, in any part of which a manufacturing process is being carried on or is ordinarily so carried on - (i) with the aid of power, provided that fifty or more workers are working or were working thereon on any day of the preceding twelve months; or (ii) without the aid of power, provided that one hundred or more workers are working or were working thereon any day of the preceding twelve months and provided further that in no part of such premises any manufacturing process is being carried on with the aid of power;" "55.Industrial undertaking" has been defined in Section 3(d) of the IDR Act, which reads as under :- "3(d) "industrial undertaking" means any undertaking pertaining to a scheduled industry carried on in one or more factories by any person or autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be 30% of the sum-total of the value of the capital investment made on plant and machinery in such factory under Clause (i) of the proviso. Clause (ii) in the third proviso starts with the word "or", therefore, Clause (ii) must be read independently of Clause (i). Yet again therein the seven years period is to be computed from the date of the said first clearance of tyres from such factory, whereas Clause ii(b) refers such first clearance from any point of time from any other factory. Explanation-I exclude the period commencing on 1st April, 1980 and ending with 23rd April, 1981 for the purpose of computation of the period of seven years. There cannot be, therefore, in our opinion, any doubt that having regard to the plain grammatical meaning of the expressions used therein and the background of the notifications and particularly having regard to the fact that it fits in the object and purport of the notification sub-clause ii (b) of the third proviso of the said notification is applicable in the instant case. 62.However, having regard to the fact that there exists certain disputes with regard to the benefits, which have been taken by the assessee, we are of the opinion that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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