V. VEERAN Vs. UNION OF INDIA

JUDGEMENT

(1.) ALL these original petition raise a common question, namely, whether the tariff value for plywood tea -chest refixed with effect from 34 -1979 by Notification No. 8 of 1979, dated 3 -1 -1979 issued under Section 3(2) of the Central Excises and Salt Act, 1944 is valid and enforceable against the petitioners. The petitioners are manufacturers of plywood of different descriptions in small scale industrial units. Plywood and plywood tea -chests are excisable goods included in item.l6B in Schedule of the Act. Plywood for tea -chest when cut to size in panels or shooks and packed in sets is dutiable at 10% ad valorem. By Section 3(2) of the Act a power is delegated to the Central Government to fix by notification tariff values for excisable goods dutiable ad valorem. In exercise of that power from time to time the Government used to fix tariff value for many excisable goods including plywood. By Notification No. 8/79, dated 3 -1 -1979 the tariff value was refixed by the Government. Ext. P2 is the copy of that notification. The value for plywood for tea -chest was re - -fixed at Rs. 10.60 per square metre. But under Rules 96ZA to 96ZG there was a special procedure for levying excise duty on a compounded basis from the manufacturers like the petitioners. This enabling provision was withdrawn with effect from 1 -7 -1979 by an amendment of the Central Excise Rules, namely, Rule s 96ZA to 96ZG were omitted from the Rules. Consequently the petitioners became liable to pay excise duty on plywood tea -chest at 10% Rs. 10.60. They feel aggrieved.

(2.) THE contention of the petitioners is that a fixation at a flat rate of Rs. 10.60 per Sq. Metre is invalid in that instead of providing for the fixation of the value for duty at manufacturing cost and manufacturing profit of the petitioners, an arbitrary value is fixed by the notification. According to them Section 3(1) permits only levy of excisable duty on goods produced or manufacured in India and this has been judicially understood in the case of ad valorem duty to mean a tariff on manufacturing cost and manufacturing profit only. The manufacturing cost and profit to the petitioners will work out only at about Rs. 5/ - but by the notification Ext. P2 they have to pay 10% of Rs.'10.60 per Sq. Metre. That means some other amount is also taken in the fixation of the value. This is not permissible. If Section 3(2) is deemed to confer a power to fix a tariff value ignoring the basic concept of excise duty as above the sub -Section itself is alleged to be invalid. How far this challenge is sustajnable has to be examined.

(3.) THIS understanding of the scope of the Federal Legislative power was affirmed in later cases decided by the Federal Court and the Privy Council, - -See Madras Province' v. Boddu Paidanna and Sons 1942 F.C. 33), -CG. in Cuncil v. Madras Province (A.I.R. 1943 F.C. 11) and CG. in Council v. Madras Province (A.I.R. 1945 P.C 98). Entry 45 Federal List corresponds to Entry 84 List I of Seventh Schedule, Constitution of India. So the same meaning has been given to this Constitutional entry also by the High Courts and the Supreme Courts -See Mis. Chotabhai v. Union of India (A.I.R. 1962 S.C. 1006) and Shinde Brothers v. Dy. Commissioner, Raichur (A.I.R. 1967 S.C 1512).