Full Judgment Text
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PETITIONER:
SUPERINTENDENT, CENTRAL EXCISE & ANR.
Vs.
RESPONDENT:
AYYANGAR MATCH WORKS ETC.
DATE OF JUDGMENT04/12/1975
BENCH:
RAY, A.N. (CJ)
BENCH:
RAY, A.N. (CJ)
BEG, M. HAMEEDULLAH
SARKARIA, RANJIT SINGH
BHAGWATI, P.N.
CITATION:
1976 AIR 1003 1976 SCR (2) 888
1976 SCC (1) 716
ACT:
Central Excise Salt Act, 1944-S. 3-Notification dated 4
September 1967 giving concessional rate of duty to small
manufacturers of matches-Khadi and Village Industries
Commission-If competent to grant certificate under the
notification.
HEADNOTE:
For the purpose of protecting the smaller manufacturers
from the cometition of larger manufacturers, the Government
of India, by a notification dated 21 July 1967, amended by
notification dated 4 September, 1967, declared a
concessional rate of duty to those manufacturers who had
filed a declaration before 4 September 1967 that their
estimated annual clearance would be less than 75 million
match sticks. This Court in Union of India v. Parameswaran
Match Works etc. [1975] 2 S.C.R. 573 setting aside the
judgment of the High Court holding that classification was
invalid, held the classification founded on a particular
date to be reasonable; and the concessional rate would be
availed of even by those manufacturers who came to the field
after 4 September, 1967 if they satisfied the condition in
clause (d) of the notification regarding quantity of matches
and are recommended by the Khadi and Village Industries
Commission for exemption.
The respondent filed declarations on 22 December, 1967
that they would not produce more than 75 million match
sticks during the year 1969-70 and claimed to be entitled to
the concessional rate of excise duty.
In appeal to this Court the respondents sought to
support the judgment of the High Court on the grounds (i)
that they were entitled to the exemption on the basis of
clause (d) of the notification; and (ii) that the Khadi and
Village Industries Commission was not competent to make any
recommendation.
Allowing the appeal,
^
HELD: (1) The appeals are covered by the decision of
this Court in Parameswaran Match Works case and no case is
made out by the respondents on the basis of exemption under
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cl. (d) of the notification. There is no allegation in the
petition that the respondents came into the field after 4
September 1967 or that they started manufacturing the
matches after 4 September, 1967 or that they were
recommended by the Khadi and Villages Industries Commission
mission. [871 D & B]
(2) Under s. 15(h) of the Khadi and Village Industries
Commission Act 1956 the Commission may take steps in
ensuring the genuineness of, and for granting certificates
to producers of, or dealers in, Khadi or the products of any
village industry. Therefore, the Commission is competent to
recommend for exemptions under cl. (d) of the Notification.
[871. F-G]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 133-
188 of 1975.
[Appeals by Special Leave from the Judgments and Orders
dated the (1) 29-4-1970, (2) 28-7-1970, (3) 12-3-1970, (4)
28-7-1970, (5) 7-9-1970, (6) 7-4-1970 & (7) 12-3-1970 of the
Madras High Court at Madras in (1) W.P. Nos. 2929, 3253 and
68, 123 and 260 of 1970, (2) W.P. Nos. 1606 and 1607/70, (3)
W.P. Nos. 1998, 2484, 2567, 2568, 2569, 2663-65, 3046, 3125,
3126, 3182, 3363 65, 3410, 3508, 3555-60, 3630, 3631, 3667-
3668, 3810-3812 and
869
3650 of 1969, (4) W.P. Nos. 2647, 2648/69 and 1121, 1451,
1452 and 1495 and 1496 of 1970, (5) W.P. Nos. 1912, 1913,
1919, 2123, 2318, 2516 and 2610 of 1970, (6) W.P. Nos. 2088,
2317 and 2515/70 and (7) W.P. No. 3666 of 1969 respectively.
Niren De, Attorney General of India and R. N. Sachthey,
for the Appellants.
M. R. M. Abdul Karim and Shaukat Hussain for the
Respondents (In Cas. Nos. 137, 140, 149, 152-155, 164, 169,
178, 179, 181, 182, 183 and 187/75.)
Mrs. S. Gopalakrishnan for the Respondents (In CA No.
177 of 1975).
The Judgment of the Court was delivered by
RAY, C.J. These appeals arise out of the judgment dated
11th December, 1968 in writ petition No. 3838 of 1968 in the
High Court at Madras.
In the present appeals the writ petitions in the High
Court were allowed following the judgment of the High Court
in the aforesaid writ petition No. 3838 of 1968.
In Civil Appeals No. 262-273 of 1971 arising out of the
common judgment dated 11 December, 1968 of the High Court at
Madras in writ petition No. 3838 of 1968 this Court in the
decision in Union of India & Anr. v. M/s Parameswaran Match
Works etc. set aside the orders of the High Court and
dismissed the writ petitions.
The present appeals were not heard at that time because
service was not complete.
This Court by order dated 14 July, 1975 directed that
these appeals be listed for hearing on 21 November, 1975.
The Union made an application for consolidation of appeals,
reduction of security and early hearing of the appeals. The
respondents were served in that application. Pursuant to
that application this Court ordered on 14 July, 1975 the
hearing of the appeals on 21 November, 1975. The respondents
have entered appearance in all these appeals.
In these appeals the respondents who were petitioners
in the High Court asked for a writ of prohibition
restraining the appellants from collecting any duty in
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excess of Rs. 3.75 per gross from the petitioners in
pursuance of notification dated 21 July, 1967 as amended by
notification dated 4 September, 1967.
The case of the respondents in the High Court was that
they filed declaration on 22 December, 1969 for 1969-70 that
they would not produce more than 75 million match sticks
during the financial year. The respondents claimed to be
entitled to the concessional
870
rate of excise duty at Rs. 3.75 per gross pursuant to the
notification dated 21 July, 1967. The further case of the
respondents in the High Court was that the notification
dated 4 September, 1967 was issued stating that the
concession of Rs. 3.75 per gross would be available to such
"D" Class manufacturers who had filed the declaration before
4 September, 1967. The respondents challenged the fixing of
the date 4 September, 1967 as an arbitrary time limit making
unreasonable discrimination between the same category of
manufacture simply on the basis of the application being
before or after 4 September, 1967. The respondents craved
reference to the judgment of the High Court in writ petition
No. 3838 of 1968 dated 11 December, 1968 and prayed for
orders in terms of that judgment.
The High Court accepted the petition of the respondents
following the judgment in writ petition No. 3838 of 1968
dated 11 December, 1968.
The appellants challenged the decision of the High
Court and relied on the decision of this Court in M/s
Parameswaran Match Works case (supra). This Court in M/s
Parameswaran Match Works case (supra) held that the purpose
of the notification dated 4 September, 1967 was to enable
bonafide small manufacturers of matches to earn a
concessional rate of duty by filing the declaration. The
small manufacturers whose estimated clearance in a year was
less than 75 million matches would have availed themselves
of the opportunity by making the declaration as early as
possible because they would become entitled to the
concessional rate of duty on their clearance from time to
time. The purpose of the notification was to prevent larger
units who were producing or clearing more than 100 million
matches in a year and who could not have made a declaration
from splitting up into smaller units in order to avail of
the concessional rate of duty by making the declaration
subsequently. The classification founded on a particular
date was held to be reasonable because the choice of a date
was to protect the smaller units in the industry from
competition by the larger ones and that object would have
been frustrated if by adopting the device of fragmentation,
the larger units could become the ultimate beneficiaries of
the bounty.
Counsel for the respondents relied on an observation of
this Court in M/s Parameswaran Match Works case (supra) at
page 576 of the Report to the effect that the manufacturers
who came to the field after 4 September, 1967 were entitled
to concessional rate of duty if they satisfied the condition
prescribed in clause (d) of the notification dated 4
September, 1967. In M/s Parameswaran Match Works case
(supra) the match works asked for a licence on 5 September,
1967 for manufacturing matches stating that it began the
industry from 5 March, 1967 and also filed a declaration
that the estimated manufacture for the financial year 1967-
68 would not exceed 75 million matches. Parameswaran Match
Works contended there that it was denied the benefit of the
concessional rate of duty on the ground that it applied for
a licence and filed the declaration on 5 September, 1967
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after the expiry of the fixed date. This Court held that the
871
concessional rate would be availed by them who satisfied the
condition laid down in the notification.
The case of the respondents as laid in the petition
before the High Court was that they were claiming an order
in terms of the judgment in writ petition No. 3838 of 1968.
There is no allegation in the petition that the respondents
came to the field after 4 September, 1967 or that they
started manufacturing matches after 4 September, 1967. The
notification dated 4 September, 1967 gave relief, inter
alia, to factories mentioned in sub-clause (d) of the
notification. The factories mentioned in sub-clause (d) are
those "whose production during any financial year does not
exceed or is not estimated to exceed 100 million matches and
are recommended by the Khadi and Village Industries
Commission for exemption under this notification as a
bonafide cottage unit or which is set up by a cooperative
society registered under any law relating to cooperative
societies for the time being in force". There are no
allegations in the petitions in the High Court that the
respondents were recommended by the Khadi and Village
Industries Commission for exemption as bonafide cottage
units or were set up by cooperative society registered under
any law relating to cooperative societies. No case was made
by the respondents in the petitions on the basis of
exemption under sub-clause (d).
A contention was advanced by the respondents that the
Khadi and Village Industries Commission was not competent to
make any recommendation as contemplated in sub-clause (d) .
Section 15 of the Khadi and Village Industries Commission
Act, 1956 which speaks of the functions of the Commission
states in clauses (c), (d), (f), (g) and (h) that the
Commission may take steps to provide for the sale and
marketing of khadi or of products of village industries, to
encourage and promote research in the development of village
industries. to undertake, assist or encourage the
development of village industries, to promote and encourage
cooperative efforts among manufacturers of khadi and persons
engaged in village industries. Section 15(h) specifically
states that the Commission may take steps for ensuring the
genuineness of, and for granting certificates to producers
of, or dealers in, khadi or the products of any village
industry. These provisions indicate that the Khadi and
Village Industries Commission is competent to grant
certificates recommending village industries for exemption
under clause (d) of the notification dated 4 September,
1967.
The appeals are all covered by the decision in M/s
Parameswaran Match Works case (supra). The appeals are
accepted. The orders of the High Court are set aside and the
petitions are dismissed. There will be one set of costs to
the appellants.
P.B.R. Appeals allowed.
872