INDORE BOTTLING CO Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioners have prayed that the impugned Notification No. 203/87 dated 9-9-1987 (Annexure F) may be declared as unconstitutional, illegal and the same may be quashed whereby the import facility given to the Aerated Water industries has been withdrawn.

(2.) THE brief facts giving rise to this petition are thus : The 1st petitioner is proprietory concern, owned and managed by a Company registered under the provisions of the Companies Act, 1956 and is engaged in the manufacture of aerated waters. The 2nd petitioner is a shareholder and Director of the petitioner-company. The petitioners have a factory at Indore where they manufacture aerated waters or soft drinks under the trade names of "thumps Up', 'bisleri', 'club Soda', 'gold spot', 'limca and Rimzim'. In the manufacture of these Aerated Waters, the petitioner-company use the following raw materials : (i) Sugar, (ii) Carbon dioxide, (iii) Citric Acid, (iv) Non alcoholic Beverage Base (NABB ). After the Aerated Waters are manufactured, they are bottled in glass bottles and capped with metal crowns. All these raw materials are purchased by the petitioner-company from the open market. Aerated waters fell under Item No. 1-D of the then First Schedule of Central Excise and Salt Act, 1944, which subjected to excise duty at the rate prescribed under that entry. In addition to the excise duty paid by the petitioner-company on the manufacture of aerated water, the petitioner-company also bore the burden of paying excise duty on the aforesaid raw materials, bottles and crowns purchased by them from the open market.

(3.) BY Notification No. 201/79 dated 4th June, 1979 (Annexure A) as amended from time to time, the Central Government exempted all excisable goods on which the duty of excise is leviable and in the manufacture of which any goods falling under Item No. 68 of the then First Schedule to the said Act had been used as raw materials or component parts from so much of the duty of excise leviable thereon as was equivalent to the duty of excise already paid upon the said raw materials and components, upon the terms and conditions mentioned therein. Out of the aforesaid raw materials, bottles and crowns, only synthetic (NABB) fell under Item No. 68 of the First Schedule to the said Act and accordingly, the petitioner-company claimed set-off under the said Notification No. 201 /79 in respect of the duty of excise paid upon the synthetic essence used in the manufacture of their aerated waters. It is alleged that there being a levy under the said Act on all goods, there is a cascading effect of excise duties upon the raw materials and components (known as 'inputs') in respect of the value of the final product. The value of the final product must necessarily be enhanced by excise duties paid upon the inputs. Under the Central Excises and Salt Act, 1944 and Rules certain benefits were sought to be given by way of set-off procedure and the Proforma Credit Scheme. This was changed but a new method was adopted and called Value Added Tax System popularly known as VAT System and another modified system which is popularly known as Modified Valued Added Tax System, in short Modvat System. This benefit was given to the petitioner-company by Notification No. 177/86, dated 1-3-1986. This was given in exercise of powers conferred under Rule 57a of the said Rules and this was revoked by Notification No. 203/87, dated 9-9-1987 (Annexure F ). It is this Notification which is sought to be challenged by the petitioner-company by filing this petition on various grounds, viz. on the principal of Promissory Estoppel and the said Notification is violative of Article 14 of the Constitution of India. In this connection, a reference was made to the Long Term Fiscal Policy Statement that it was a statement given on a floor of Parliament to the extent to cover food products, mineral products, etc. Therefore, the promissory estoppel is applicable. It is contended that the goods distributed in some areas has been leviable and in some areas, has been revoked. Therefore, it is violative of Article 14 of the Constitution of India.