SYNTHETICS LTD, UJJAIN Vs. UNION OF INDIA

JUDGEMENT

(1.) .. By this petition under Article 226 of the Constitution, the petitioner seeks a declaration that rule 9 -A of the Central Excise Rules, 1944, in so far as it permits levy and collection of excise duty at the rate in force at the time of removal of goods, is ultra vires and void.

(2.) THE petitioner is a company incorporated under the Companies Act, 1956. The petitioner has a factory at Ujjain which manufactures nylon and polyester fillament yarn from 1972. The products of the petitioner are subject to Central excise duty under tariff item No. 18 of Schedule I to the Central Excises and Salt Act, 1941. In 1972 the rate of duty as provided in tariff item No. 18 was Rs.60 per kilogram. By Notification dated 17th March 1972, issued under rule 8 of the Rules, partial exemption was granted and the maximum rate of duty payable on nylon yarn was fixed at Rs.35 and on polyester yarn Rs 40 per kilogram. This notification remained in force till 28th February 1573 when it was superseded by notification dated 1st March 1973 by which the maximum duly on nylon yarn was raised to Rs.38 -50 and in case of polyester yarn to Rs,41.90 per kilogram. The latter notification was superseded by another notification issued on 1st March 1974 by which the maximum duty on polyester yarn was raised to Rs 55 per kilogram while the duty payable on nylon yarn remained as before. This notification in its turn, was superseded by notification dated 1st August 1974 by which the duty on nylon yarn was raised to Rs.42 per kilogram. By the Finance Act, 1975, the tariff item No, 18 was amended and the rate of duty was enhanced from Rs.60 to Rs.85 per kilogram. Thereafter, the notification dated 1st August 1974 was superseded by another notification with effect from 1st March 1975 and the rate of duty was increased to Rs.58.80 in case of nylon yarn and Rs.77 per kilogram in case of polyester yarn. The aforesaid changes in the rates of duty were made at the time of budgets for the years 1973, 1974 supplementary budget 1974 and budget for 1975. Under rule 224 the petitioner declared its budget day stocks which were verified by the Excise authorities. The Excise authorities collected the duty on the goods manufactured by the petitioner at the rate prevailing on the date of removal of the goods in accordance with rule 9 -A. The petitioner's contention is that the duty ought to have been collected at the rate prevailing on the date of manufacture and not at the rate prevailing on the date of removal of goods and that, to this extent, rule 9 -A (1) (ii) is ultra vires,

(3.) RULE 2 (v) defines "duty" to mean the duty payable under section 3 of the Act. Chapter III of the rules which consists of rules 7 to 14 B bears the heading "Levy and Refund of, and Exemption from Duty." Rule 7 provides that every person who produces, cures or manufactures any excisable goods, or who stores such goods in a warehouse, shall pay the duty or duties leviable on such goods, at such time and place and to such persons as may be designated, in or under the authority of these rules, whether the payment of such duty or duties is secured by bond or otherwise. Rule 8 empowers the Central Government to exempt by notification subject to such conditions as may be specified in the notification any excisable goods from the whole or any part of duty leviable on such goods. Rule 9 -A the validity of which is in question and which provides for the date for determination of duty and tariff valuation reads as follows : - -