LAWS(KER)-1983-8-2

CHIRUKANDAN Vs. SUPERINTENDENT CENTRAL EXCISE

Decided On August 02, 1983
CHIRUKANDAN Appellant
V/S
SUPERINTENDENT, CENTRAL EXCISE Respondents

JUDGEMENT

(1.) A common question arises in all these cases, and that is the only point urged before us at the bar on behalf of the petitioners. It is alleged that the Copra Cess Act, 1979, under which the petitioners are required to pay duty of excise on the copra consumed in their mills, is ultra vires and beyond the competence of the Parliament. Such a cess, the petitioners say, is a tax on consumption, and not a duty of excise falling under entry 84 of list I of the 7th Schedule of the Constitution. The petitioner in O. P. No. 3799 of 1979 has not, unlike the others, challenged the whole Act, but only S.3(1) thereof which is the charging section. -

(2.) The Copra Cess Act, 1979 (No. 4 of 1979) imposes under S.3 a cess which is described as a duty of excise. It reads:

(3.) The petitioners contend that the imposition is not on the production or manufacture of goods, as it should be if it were to be a duty of excise, but upon consumption of raw material From which unspecified finished goods are intended to be produced or manufactured. Shri M. I. Joseph, appearing for the petitioner in O. P. No. 3799 of 1979, contends that the levy of cess under S.3 does not fall upon finished goods, but upon raw material purchased by the petitioner to carry on his trade or profession, and such levy has no reference to production or manufacture. Counsel further says that the petitioners are not producers or manufacturers of copra which is only a raw material from which finished goods are produced, and the impost under S.3 upon the consumption of raw material amounts to a purchase tax or a tax on profession or trade which is totally outside the legislative competence of the Parliament. Taxes on sale or purchase of goods, or on profession, trade or calling, counsel points out, fall under list II of the 7th Schedule and are therefore exclusively within the sphere of the state legislature. The fact that tax is computed with reference to the copra consumed, counsel says, would indicate that it is on the consumption of copra and not on manufacture or production of goods that it is levied. These arguments are supported by Shri K. A. Nayar appearing for the petitioner in O. P. No. 3449 of 1979. On the other hand, Shri Aziz, appearing for the Central Government, and Shri T. C. N. Menon, for the respondent Board, submit with much force that the levy under S.3 is not attracted by the purchase of copra, but by the conversion of copra into oil or any other goods. This is what is meant by "consumed in any mill". If copra is purchased and merely kept in a mill without "consumption", respondents' counsel point out, S.3 would not be attracted.