9911796707
TMI Blog1984 (6) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... e level of Rs. 1.50p per gross. Soon after, a number of small factories were established all over the country. The Swedish Match Company Limited, whose associates had then a near International monopoly in matches and which had been importing practically the country's entire requirements from its parent concern in Sweden setup the Western India Match Company Limited (WIMCO) with factories all over India. Another company, namely, ASSAM MATCH COMPANY was also established in 1926 with its factory at Dhurbi (Assam). The claim of the match industry for protection was considered by the Tariff Board during 1926-28 and protection was granted in 1928 for an indefinite period. The import duty of Rs. 1.50 per gross was converted into a protective duty. With this protection, a large number of medium sized factories manufacturing matches mostly by manual labour came into being. A particularly large concentration grew in and around the towns of Sivakasi, Sattur and Kovilpatti in Tamilnadu. 3.Excise duty was levied on matches for the first time in 1934. Up to 1948-49, match factories were classified for purposes of excise into two types, viz., factories producing not more than 100 gross boxes pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esses, namely, dipping of splints in the composition for match heads and for filling of boxes with matches. As a result, the non-mechanised units can employ machines for (i) making boxes (ii) filling up the frames with splints, (iii) side painting, (iv) grinding match composition, and (v) affixing labels and banderolls to the match boxes without losing the excise duty concession. 5.The petitioners herein are manufacturers of matches. In respect of manufacture of matches, as and from 1-8-1981, three notifications bearing notification Nos. 40/81, 41/81 and 42/81, all dated 1-3-1981 had been issued by the Government of India, Ministry of Finance, in exercise of their powers conferred under sub-rule (1) of rule 8 of the Central Excise Rules, 1944. Though the tariff rate in respect of matches was Rs. 10-40 p per gross for box of 50 matches each, the said three notifications fixed three different effective rates of excise duty depending upon the nature of the manufacturing unit. As regards units which manufactured matches with the aid of power, they were classified as mechanised and an effective rate of Rs. 7.20 p per gross was levied under Notification No. 40 of 1981. In so far as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide alone is made of cardboard 5-26 3. Matches packed in boxes in which both the outer slide as well as inner slide are made of cardboard 4-90 In the Notification No. 22 of 1982, dated 23-2-1982, fixing the effective rate of excise duty in non-mechanised cottage units was at Rs. 1-60p per gross, the second proviso provided that the exemption contained in the notification shall not apply to matches packed in boxes in which the outer slide or the inner slide, or both are made of cardboard. The explanation to that notification also provided that the following processes unless carried on mechanically, they shall not be deemed to be a process ordinarily carried on with the aid of power. 6.By a further Notification 97 of 1982, dated 23-2-1982, certain amendments were carried out to the earlier Notification No. 137 of 1981, dated 2nd July, 1981 and Notification No. 40 of 1981, dated 1st March, 1981, Notification No. 28 of 1982, dated 23rd February, 1982. The amendment brought into Notification No. 40 of 1981 introduced the following clause 3 in the proviso. "(iii) in the case of matches packed in boxes in which the outer slide alone is made of cardboard, the amount of exemption s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of India had appointed an Expert Committee on Tax Measures to promote more employment and that Committee found that the exemptions granted or the revenue foregone has not resulted in the additional employment of labour, and that some of the match manufacturing units, particularly medium category, to whom the concessions had been shown in the levy of excise duty, are using power operated machines for a number of processes which were quite labour-intensive, with consequent displacement of labour, such as frame-filling, that is to say, arranging splints in rectangular wooden frames for dipping in the composition for match heads. Labour displacement from the use of power in this process is as high as 10:1. Thus, the user of power-operated machines had resulted in reducing the labour strength to 1/10. Similar labour displacement was also found to take place though not to the same extent in the other process, in box making and labelling, and that therefore, there is justification in continuing the concession for the manufacture of matches in the non-mechanised in the non-use of the power not only in dipping and box-filling but also in other processes. Thus, the Expert Committee sugge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e manufacture of match boxes. Thus, as the petitioners are using cardboard in which labels have been printed already, the respondents have taken the view that they are not entitled to the duty concession based on the user of cardboard for the manufacture of match boxes, and they have begun demanding excise duty at the effective rate and not at the concessional rate which will be available to them as per Notification No. 43 of 1981 before its amendment. Aggrieved by the amendment brought into notification No. 41 of 1981 by notification No. 140 of 1981 which exposes them to a higher excise duty, the petitioners have come before this court. 8.According to the petitioners, the changes made by the impugned notifications are arbitrary and irrational and bear no nexus to the object sought to be achieved, for the following reasons. (1) If it is necessary to preserve the difference and the differential tariff between semi-mechanised and non-mechanised so far as veneer boxes are concerned, there is no reason to abolish the difference and the differential tariff in the case of user of cardboard boxes. (2) Non-mechanised units are traditionally a distinct class. Non-mechanised units packing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s use cardboard in the manufacture of match boxes. That notification was also amended by notification No. 137 of 1981, dated 2-7-1981 which introduced a fifth proviso wherein the benefit of concessional rate of tax was not made available if those cottage and tiny units adopt a mechanical process either in the manufacture of box or in the affixing of labels. Similarly, the result was, those cottage and tiny units which used cardboards in which labels had already been printed were not allowed the benefit of the concessional rate of duty based on the user of cardboard for the manufacture of boxes. The said notification has also been questioned by the concerned petitioners on the same grounds as have been raised by the medium units. 9.The further submissions made by the petitioners are as follows --- The match manufacturing units having been regarded as separate category, the respondent cannot treat them equally in the matter of levy of excise duty and this will amount to unequals being treated equally which will be violative of Article 14 of the Constitution, that even if the Government can be taken to have adopted a new policy based on the theory of displacement of labour, so long ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1983 (12) E.L.T. 58 (supra) because the grounds raised in these writ petitions were not raised in the earlier cases and the petitioners were also different. According to him a new ground can be raised and a new prayer can be made even by the same petitioners who failed at the earlier stage in a subsequent writ petition. In support of the said submission, reliance has been placed on the decisions reported in Ramakrishna Ramnath v. State of Maharashtra (AIR 1964 Bombay 51) and Hoshnak Singh v. Union of India and Others (AIR 1979 SC 1328). The learned Counsel also refers to the decision of the Supreme Court in Chandra Dhawan Boarding and Lodgings, Bangalore v. State of Mysore and Another (AIR 1970 SC 2042) wherein the petitioners who had earlier challenged the provisions as violating Article 19 of the Constitution and failed in 1955 before the Supreme Court, had been permitted, to challenge the provisions of the same Act as violating Article 14 of the Constitution before the Supreme Court again. 12.According to the learned Counsel for the respondents, though Section 11 of the Code of Civil Procedure does not in terms apply to the writ proceedings, the general principles of res judic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he wisdom of their policy and that the concession granted with reference to the materials used or the process employed in making the boxes cannot be said to be irrelevant or inconsistent with the provisions of the Act, and that an exemption notification issued under Rule 8 cannot be questioned on the ground that the policy of the Government was not static. Therefore, since the identical points which were urged before us were not urged before the learned Judges, it is not open for us to say that the petitioners are barred from raising the points urged in these writ petitions. Therefore, we proceed to consider the contentions urged by the petitioners on merits. 14.According to the petitioners, the Government has been following a uniform policy of encouraging the user of cardboard for making match boxes with a view to conserve timber by giving concession in payment of excise duty, and for changing that policy suddenly, there should be sufficient justification. It is submitted that any departure from the policy must be justified by materials, and in support of the said plea, the learned Counsel relies on the decision of the Supreme Court in M/s. Motilal Padampat Sugar Mills Co. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chanical process for affixing labels. As the petitioners are admittedly using cardboards on which the labels have already been printed, they have been held not entitled to the concession as they have used a mechanical process or device for affixing labels which has resulted in the displacement of labour. As pointed out by the Division Bench in Jayaprakash Match Works Kovilpatti and Others v. Union of India and Others [1983 (12) E.L.T. 58], the policy of the Government cannot always be static and it has naturally vary depending upon number of economic factors. It is no doubt true, the Government had earlier granted concession for match making units based on their user of cardboard for manufacture of match boxes. But, later the Government has chosen to restrict the benefit only to those units which did not use a mechanical process in the affixing of labels on the boxes as a labour saving device. Any exemption based on the concept of intensive labour cannot be said to be outside the purview of the Government. The pasting of labels is one of the processes which can be done mechanically or manually. Whatever the process the benefit of exemption based on the user of cardboard could be cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licy and that the materials do not justify a change in the policy cannot be sustained. 15.It is also not possible to agree with the learned Counsel for the petitioners that since the earlier policy was based on the directive principles of State policy, it should be taken to be reasonable and it should have been continued without modification. As we have already stated, securing employment to citizens within its economic means is also one of the directive principles of the State policy set down in Part IV of the Constitution and therefore the new policy also should be taken to be reasonable. According to the learned Counsel, the new policy of taking away the benefit of concession in excise duty in the case of units using cardboard boxes in which the labels are already printed, will amount to violation of Article 14, in that, unequals will be treated alike. It is true, for the purpose of giving effect to this policy of encouraging the use of cardboard, the match units had been classified in a particular manner. But the same classification need not be continued or maintained for the purpose of enforcing its policy of avoiding displacement of labour. What the respondents have done in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
