RUBFILA INTERNATIONAL LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner is a Public Limited Company engaged in manufacture of the heat resistant Latex Rubber Threads. Petitioner is an approved exporter of the said product. Petitioner is challenging validity of Ext. P1 notification in this writ petition. Ext. P1 is issued by the Union of India, fixing the rate of cess on the Rubber produced in India and procured for export production by the Export Oriented Units and procured for export production by the Export Oriented Units (EOUs), Units in the Special Economical Zone (SEZ) and Units in the Export Processing Zone (EPZs) at "zero paise" per Kg. According to the petitioner through Ext.P1 an exemption from payment of 'Rubber Cess' is granted to certain industries based on the locality where such industries are set up, and such an exemption is granted in violation of Article 14 of the Constitution of India. Further, it is issued by the Central Government without there being any power derived under the Rubber Act, 1947. If the Units engaged in export of Rubber products, such as EOUs, Units situated at SEZs and EPZs are made eligible for such an exemption, there is no reason for denying such exemption to the petitioner, who is also doing export of Rubber products is the contention.

(2.) The first question for consideration is about the competence and jurisdiction of the Union Government to issue a notification like that of Ext.P1. As evident from Ext. P1, the notification is issued in exercise of power conferred on the Union Government by Sub-section (1) of Section 12 of the Rubber Act 1947 (hereinafter referred as the Act for short). For an easy reference Section 12(1) and (2) is extracted below:

(3.) As per Section 12(7) of the Act, the duty of exercise so collected, reduced by cost of collection as determined by the Central Government, shall first be credited to the 'Consolidated funds of India' and then be paid by the Central Government to the Board for being utilised for the purpose of the said Act, if Parliament by appropriation made by law in this behalf so provides. It is pointed out by Sri. Bechu Kurian Thomas, learned Counsel for the petitioner, that till 1960 the liability to pay excise duty under Section 12(1) was on the owner of the estate in which rubber is produced. But by an amendment to Section 12(2), the liability for payment was extended also to the manufacturer by whom such rubber is used. As per the amended provision the Rubber Board shall collect the duty either from the owner Of the estate on which rubber is produced or from the manufacturer by whom such rubber is used. It is specifically pointed out that the incidence of taxation as prescribed under Section 12(1) is on production of the rubber within the country. The wording of Section 12(1) is to the effect that the cess shall be levied as a duty of excise on all rubber produced in India. Merely because the liability has been extended also to manufacturers, apart from the owners of the estate, the nature of levy or the incidence of taxation is in no way affected, is the submission.