A ARULANANDAN Vs. ASSISTANT COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) SINCE the issues arising in all these writ petitions are the same, they are dealt with together.

(2.) THE Petitioners in all these case are manufacturers of matches and they have challenged the constitutional validity of Section 53 of the Finance Act of 1983 and the conditions imposed in Notification No. 33/83 [GSR 77 (E)/83] dated 23-2-1983 on the ground of violation of the Petitioners' fundamental rights under Articles 14 and 19(1)(g) of the Constitution of India as, also on the ground that it is beyond the legislative competence of the Parliament inasmuch as it purports to retain monies which are not tax collected under the authority of law as provided for in Article 265 of the Constitution of India. THE Petitioners have challenged the conditions imposed in the Notification No. 33/82 [GSR 77(E)/83] in regard to production and clearance also on the ground that it is arbitrary or irrational and discriminatory.

(3.) THE Government of India for the first time in 1967 made a classification of match manufacturing units namely mechanised and non-mechanised for levy of excise duty. A further refinement was made shortly thereafter by giving a larger exemption from duty to non-mechanised match manufacturers producing not more than 75 million match sticks per annum. This scheme continued till the year 1975. THE said notification was continued subject only to a condition that the third category of match units, namely, those producing less than 75 million sticks per annum should obtain a certificate from the Khadi and Village Industries Commission, herein after referred to as the KVIC that the unit is a bona fide cottage unit. On account of the concession shown to the non-mechanised sector, there was substantial increase in the production of matches in the said sector from 1975 to 1980. In the year 1980 the Government of India issued a notification Nos. 98 of 1980 and 99 of 1980 dated 19-6-1980. While the first notification continued the classification of mechanised and non-mechanised sector of the industry and provided for differential rates of effective excise duty, namely Rs. 7.20 per gross of boxes of 50's matches for the mechanised sector and Rs. 4.50 per gross of boxes of 50's matches for the non-mechanised sector, notification No. 99 of 1980 sought to give greater benefit by way of a large exemption from excise duty to certain specified categories of match manufacturers. In notification No. 99 of 1980 the Government fixed a norm of identifying a tiny sector through KVIC and the Co-operative societies established and recognised by the State Government. THE said notification imposed certain conditions for the grant of exemption of excise duty in excess of Rs. 1.60 per gross boxes of 50's matches as against the statutory rate of Rs. 7.20 per gross. THE conditions imposed are contained in the Four provisions to the said notification. THE first proviso of the notification imposed a condition that the lowest rate of levy of excise duty would be allowed to a manufacturer whose factory is recommended by the KVIC for exemption under this notification. THE proviso also gave the power of identifying the tiny unit to the State where the manufacturer is a member of the Co-operative Society and assisting exclusively manufacturers of such matches. THE second condition is contained in the next proviso which provided that the matches produced or sold by such units are through KVIC or the Co-operative society. THE third proviso related to the units recommended by the KVIC or the co-operative Society. This condition was imposed lest the bigger units diversify themselves in small units and become eligible for the larger consessional rate, available in the notification. THE last proviso in the notification deal with the manner in which the matches should be manufactured. THE said notification No. 99 of 1980 was impugned by some of the petitioner before this Court in W.P. Nos. 8845 of 1981 (batch) and this Court has taken the view that the first two proviso in the notification No. 99 of 1980 are impossible of performance and, therefore, the exemption under that notification will be available to all the match manufacturers in the non-mechanised sector. THE Court accepted the plea of the petitioners that though in the production or clearance of matches, that basis, not been adopted the requirement of the that recommendation of KVIC in the first provices only related to the question of the cotese unit bring as bona fide or not did the question as to whether the manufacturing unit is infact a cottage unit, that the proviso did not carry out the intention of the Government regarding the concessional levy inasmuch as the proviso did not enable the KVIC to put a limitation on production to enable a manufacturer to get a bona fide certificate. THE course also held the proviso is discriminatory as persons who had obtained the bona fide certificates in the previous years will be entitled to continue to produce unlimited quantity and yet get the exemption whereas persons who had not obtained the certificate for some reasons or other earlier, or a new entrant will not be permitted to avail of the concession if their output exceeds the limit. THE Court similarly held that the stipulation made by the State Government under notification No. 1466 relating to Match Co-operative Socieities imposed conditions which are impossible of compliance for persons who wanted to apply for the concessional levy even though they are eligible for it. In this view the Court had directed the respondent to apply the said notification to all manufactures in the non-mechanised sector, ignoring the provisions 1 and 2 in the notification.