VISHAL ANDHRA INDUSTRIES Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner-company is a manufacturer of aluminium and stainless steel. Item No. 68 of the Schedule of the Central Excises Act undoubtedly covers these items and therefore the above items are excisable goods. In exercise of the powers conferred by sub-rule (i) of Rule 8 the Central Government has exempted goods falling under Item No. 68 of the First Schedule and cleared for home consumption by a manufacturer whose sum total of the value of the capital investment is not more than Rs. 10 lakhs. The petitioner satisfies this test but there is a provision which lays down that this exemption shall not be applicable to a manufacturer if the total value of all excisable goods cleared by him or on his behalf in the preceding financial year had exceeded rupees thirty lakhs. The Central Government also exempted utensils made of aluminium falling under Item No. 68 of the Schedule from whole of the duty. Admittedly, the clearance during 1977-78 of the petitioner was over Rs. 30 lakhs. By another Notification of 15-7-1977, the Government had excluded for the purpose of turnover the captive goods cleared for home consumption. The petitioner, however, claims that in calculating the total value of all excisable goods cleared by a manufacturer the value of goods on which excise has been exempted should be excluded as these goods could not be termed as 'excisable goods'. This contention was made because if the value of the aluminium utensils was excluded the total value of goods cleared by the petitioner will go to less than Rs. 30 lakhs. The short point which was raised was that aluminium products have been exempted from payment of excise duty. They are thus not excisable goods and in calculating the value of Rs. 30 lakhs these items should be excluded.

(2.) The petitioner has failed before the appellate court and notwithstanding the pendency of the decision of the Central Government has chosen to come to this Court. We find no merit in the contention urged by Mr. Daljit Singh. In our view in calculating the value of the goods cleared by the petitioner the value of the aluminium utensils manufactured by the petitioner would have to be taken into account notwithstanding that the aluminium utensils have been exempted from payment of excise duty. Rule 8 empowers the Central Government by a notification to exempt....any excisable goods from the whole or any part of duty leviable on such goods. The argument of Mr. Daljit Singh that because exemption has been granted to certain goods they have ceased to be excisable goods is without any substance. It will be seen that Rule 8 grants exemption from payment of duty on excisable goods. Thus, Rule 8 itself postulates that the goods on which exemption has been granted are excisable. By issue of a notification goods do not cease to be excisable goods. They remain excisable goods so far as any item in the Schedule includes them. Undoubtedly Item No. 68 of the First Schedule continues to cover aluminium utensils. They are, thus, excisable goods. What happens by issue of a notification under Rule 8 is that a manufacturer becomes entitled to claim exemption and not that the goods cease to be excisable goods. The condition precedent to the applicability of Rule 8 is the existence of excisable goods. Exemption from payment of duty is different from goods being excisable or not. Undoubtedly, as Item No. 68 still continues to cover aluminium utensils they are excisable goods. Mr. Daljit Singh refers to 1978 E.L.T. 525. In that case the petitioner's claim was that the products manufactured by him were entitled to exemption from excise duty. He was denied this on the ground that re-rollable scrap out of which the petitioner manufactures bars had not been assessed to excise duty in the hands of Hindustan Steel omited though it was so liable. It was not disputed that exemption notification had been issued from the payment of excise duty on re- rollable scraps on which the appropriate amount of excise duty had already been paid. The learned Judge held that the manufacturer from re-rollable scraps is not liable to be asked to pay excise duty on the ground unless it is proved that the excise duty has been paid on the re-rollable scraps which he has purchased from another manufacturer. The words 'already paid' were interpreted to mean must have been paid at a prior stage and not the excise duty was actually paid. Having so held the learned Judge did observe that it was arguable that goods manufactured by the petitioner cease to be excisable after they were exempted from payment of excise duty. For this learned Judge referred to Section 38 of the Central Excises Act, which as it then stood laid down that all rules and notifications shall thereupon have effect as if enacted in this Act. The learned Judge was inclined to hold that by issue of a notification it would mean that the goods had been taken out of the First Schedule and, therefore, ceased to be excisable goods. In our view this obiter could not be accepted as laying down that the Notification issued under Rule 8 has the effect of taking the item out of First Schedule. As a matter of fact, notification is issued under Rule 8 precisely because the goods are covered by the First Schedule. Excisable goods is defined to mean goods specified in the First Schedule as being subject to duty of excise. As admittedly Item 68 continues to cover the goods in question they could not obviously cease to be excisable goods notwithstanding the exemption given. Rule 8 permits exemption of payment from the whole or any part of duty leviable on such goods. To take an illustration if exemption was given on payment of part of duty payable say 50% could it be urged that the goods in question have ceased to be excisable goods. Obviously not. Simply because in the present case the Notification exempts payment from the total duty subject to certain conditions does not mean that the goods have ceased to be excisable. This illustration will show the fallacy in the argument of Mr. Daljit Singh that by issue of an exemption notification, goods had ceased to be excisable. This authority is, therefore, of no assistance to the petitioner. We cannot, therefore, find any fault with the impugned orders. The petition is, therefore, dismissed.