Superintendent, Central Excise & Anr. v. Ayyangar Match Works Etc.

Judgment

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 196~. In Civil Appeals No. 262-273 of 1971 arising out of the common iudgment dated 11 December, 1968 of the High Court at Madras in writ petition No. 3838 of 1968 this Court in the decision in U1Zion of India.& Anr. v. M/s Parameswaran.Match Works etc.(-1) 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 ~ervect 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. Jn these appeals the respondents who were petitioners in the High Court asked for a writ of prohibition restraining the appellants froai collecting any duty in excess of Rs. 3.75 per gross from the petitioners in pursuance of notification dated 21 July, 1967 as amended bv notificalion dated 4 September, 1967. The case of the respondents in the High Court was that thev filed declaration on 22 December, 1969. for 1969-70 that thev would not produce more than 75 million match sticks during the fi.1rnnc-;8! year. The respondents claimed to be entitled to the conc<.:s5ional (1) [1_975] 2 S.C.R. 573. iB JI '870 [1976] 2 'S.C.R. rate oi excise duty at Rs. 3.75 per gross pursuant to the noti~cation dated 21 July, 1%7.

The further case of the respondents m the High Court was that the not~cation dated 4 September, 1967 1 was issued stating that the concess10n of Rs. 3. 7 5 per gross woulu ?c ava!labk to such "D" Class manufacturers who had filed the dec1aration before 4 September, 1967. The respondents cha~cnged . th.e fixing: of the date 4 September, 1967 as an arbitrary time - limit making unreasonable discriminat.ion between t~e ~ame . category of manutaclurer simply on the basis of the apphcat10n bemg before or after 4 September, 1967. The respondents craved reference to the judgment of the High Court in writ petition No. 3838 of 1~68 dated 11 December, 1968 and prayed for orders in terms of that judgment. The l Iigh Court accepted the petition of the respondents following the juogmeot 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 manufacture1s of matches to earn a concessional rftte of duty by filing the declaration. Tiu: 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 timl,\. The purpose of the notification was to prevent larger units who were prod ueing or clearing more than JOO 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 hctd 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 ~rustrated 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 Mis Parameswaran Match Works case (supra) at page 576 of the Report to the effect that the manufacturers ',Vho 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 ma'aufacturing 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. Paramcswaran 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 S September, 1967 after the expiry of the fixed date. This Court held that the SUPDT. CENTRAL EXCISE V. AYYANGAR :MATCH WORKS (Ray, C.J.) 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 ~he judgment in writ petition No. 3838 of 1968.

There 1s no allegation in the petition that the respondents came to the field after 4 September, 1967 or that they started manufacturing matches after 4 Sept~m­ ber. 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 relatin,g 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 l?(h) specific.ally states that the Com~ission may take steps for ensurmg the genumene~s of, and for grantmg certificates to producers of, or dealers in, khadi or the products of any village industry. These provisions indicate that the Khadi and Village Industries ~onm1~ssion is compe~ent to grant certificates recommending village mdustnes for exemption under clause ( d) of the notificatior, dated 4 September, 1967.

The appeals are all covered by the decision in M/s Parameswaran Match 1-Vork.s case (supra). The appeals are accepted. The orders of the High Court are set aside and the petitions are dismissed. There wiil be one set of costs to the appellants. P.B.R. Appeals allowed.