DUKES PHARMA Vs. GOVERNMENT OF INDIA

JUDGEMENT

(1.) THESE writ appeals are preferred against the common order dated 6-10-1993 passed by the learned single Judge in W. P. Nos. 8885 of 1985, 5484 of 1988, 1539 of 1989 and 7333 of 1988 respectively. The question urged before the learned single Judge was as to the construction to be placed on the provisions relating to exemptions contained in Notification Nos. 80/80, dated 19-6-1980, as modified by another Notification dated 25-3-1981, 85/83, 85/85 and 175/86, as amended by Notification No. 174/89. After considering the various contentions, the learned single judge negatived the contention of the petitioners that the loan licensees should be treated as separate or in other words, as independent. In coming to that conclusion the learned single Judge has followed the decision of another learned single Judge of the Court in W. P. No. 1940 of 1981 etc. , which has been approved by a Division Bench of this court in W. A. Nos. 233 to 236 of 1991, dated 13-3-1991. In these Writ appeals, the Division Bench of this Court, on considering the Notification No. 80/80, dated 19-6-1980, as modified by the Notification No. 73/81, dated 25-3-1989, held as follows : "notification No. 80/80 C. E. , dated 19-6-1980 was modified by Notification No. 73/81 C. E. , dated 25-3-1981 issued under sub-rule 1 of Rule 8 of the Central Excise Rules, 1944. The appellants were aggrieved by a portion of the Notification dated 25-3-1981 which fixed the limit to seek exemption on the basis of the aggregate value of clearances of the specified goods from any factory by or on behalf of one or more manufacturers, and filed writ petition Nos. 5011, 5010, 6315 and 1940 of 1981 respectively in this Court which came to be dismissed by the learned single Judge by a common judgment dated 7-4-1990. It is well settled that the determination of the criteria for applicability of any exemption, is the prerogative of the Legislature or its delegate the executive as the case may be. The learned single Judge took note of the settled law and found that since in the matter of granting concession or granting exemption of tax, the Government has the wide latitude of discretionary power, Courts cannot interfere and command the Government to grant exemption in a particular manner. It is not disputed that in so far as the impugned notification is concerned, it is applicable to all those who are covered by the Notification. Courts cannot decide whether the policy of exempting certain articles followed by the Government is justified or not. The learned single Judge, therefore, rightly dismissed the writ petitions. We see no reason to take a contrary view. The writ appeals fail and they are dismissed. " Thus the view taken by the learned single Judge in W. P. Nos. 1940 of 1981 etc. was approved by the Division Bench of this Court. However, it is contended by Shri Alagirisamy, learned senior counsel that the exemption Notification No. 175/86 relating to clubbing of clearances of various firms to arrive at the aggregate value of clearances has not been correctly construed by the learned single Judge. In relation to the aforesaid notification the learned single Judge has stated thus : "in this connection, he invited my attention to w. M. P. Nos. 26177 and 26377 to 26330 of 1992. In all the W. M. Ps. , the petitioners have prayed for permission for raising additional grounds, based on circulars of the Board. The Circulars referred therein say that each loan licensee was an independent manufacturer. There is no quarrel on that aspect. But while coming to the question of exemption, the decisions are to the effect that must be considered subject to Clauses 2 and 3 in the Notifications, along with Clause 4. If so considered, notwithstanding the fact that each loan licensee is an independent manufacturer, the clearances of such loan licensees will have to be clubbed along with the clearances of factory owners. Therefore, the circulars of the Board will not help the petitioners. However, W. M. P. Nos. 26177, 26327, 26329 and 26330 of 1992 are ordered. No costs. W. M. P. No. 26328 of 1992 in W. P. No. 8885 of 1985 is for amending the prayer in the writ petition. The petition is allowed. No costs. "

(2.) HOWEVER, it is contended before us that the aforesaid notification treats the different firms as different manufacturers for the purpose of exemption limit, therefore, the loan licensees who manufacture within the premises of the petitioners/appellants'factory being independent, they should also to be treated as different manufacturers for the purpose of exemption limit. The circular of the Clarifications to Notification No. 175/86-C. E. reads thus: "s. S. I. EXEMPTION - NOTIFICATION NO. 175/86-C. E. CLUBBING OF CLEARANCES OF VARIOUS FIRMS TO ARRIVE AT THE AGGREGATE VALUE OF clearances Several representations and references have been made to the CBEC regarding the issue of clubbing of clearances of various firms to arrive at the aggregate value of clearances for the purposes of Notification no. 175/86-C. E. , dated 1-3-1986 as amended. The matter has been examined by the Board. For the purpose of ensuring uniformity of levy of duties of excise, the Board, in exercise of the powers conferred under Section 37b of CESA, 1944 hereby orders that the following general principles will be applicable to Notification No. 175/86 as amended: (i) Different firms will be treated as different manufacturers for the purpose of the exemption limit. But if a firm consisting of certain partners say, a, b & c has got more than one factory, all these factories will of course be combined. Limited company, whether public or private, is a manufacturer by itself and will be entitled to a separate exemption limit. . . . " The question as to whether within the factory of a partnership firm there is another manufacturing unit independent of the petitioners'firm, as such it should be treated as a different manufacturer is a question of fact to be ascertained in each case, therefore, it does not have any bearing on the interpretation of the Notification. Hence, if there is any independent unit working in the premises of the factory of the petitioners/appellants not in any way connected with the partnership firm and the manufacturing unit in question, as the petitioner, it is open to the petitioners/appellants to prove the same before the adjudicating authorities. We see no reason to differ from the view taken by the learned single Judge on the aforesaid contention, which has to be proved in each case.