TMI Blog1977 (10) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... parts thereof. Besides manufacturing footwears in its factories, it also purchases Jalsa brand footwears, manufactured by Respondents Nos. 4, 5, 6 and 7, who are small manufacturers, and sells the same to public through various retail shops located throughout the country. The petitioner s case is that Respondents Nos. 4 to 7 have factories of their own, where they manufacture footwears of different descriptions by employing their own machines and labour and each one of them is duly licensed to carry on the business of manufacture of footwears and are separate entities. These respondents do not manufacture footwears exclusively for the petitioner and their products are also sold by them to other customers. The footwears purchased by the petitioner from the aforesaid respondents are marked as Jalsa and Bata which are the trade names of the petitioner. The petitioner produces other descriptions of footwears in its own factories and no process of manufacture in respect of Jalsa footwears is carried on in any factories owned by the petitioner. 3. The petitioner s case is that under the provisions of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt No. 1) by its letter (Annexure 7 ), that the petitioner being a mere purchaser of the footwears manufactured by Respondents Nos. 4, 5, 6 and 7, and not being the actual manufacturer thereof, was not liable to pay the excise duty. Respondent No. l, in reply, informed the petitioner, by letter dated the 17th June, 1977 (Annexure 8 ), that Jalsa brand footwears, by virtue of Annexure 4 , cannot be cleared without payment of duty and affirmed the action of Respondent No 2. Annexure 8 was followed by the demand notice of Respondent No. 2, dated the 13th July, 1977 (Annexure 9 ), to the petitioner, demanding excise duty on 3,203 pairs of Jalsa footwears, amounting to ₹ 7,038.09, and by another letter dated the 14th July, 1977 (Annexure l0 ). Respondent No. 2 asked the petitioner to furnish particulars of the Jalsa brand footwears received by the petitioner s out agencies after the 31st May, 1977. 4. Respondents Nos. 4 to 7 have filed counter-affidavit supporting the stand of the petitioner and asserting that they are independent small scale manufacturers, entitled to exemption, employing less than 50 workers in their factories and using less than two horse power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturer or trader. 7. Mr. Sidhartha Shanker Ray, learned Counsel appearing on behalf of the petitioner, has urged that the Notification at Annexure A not having retrospectively deleted the offending explanation contained in Annexure 4 , the petitioner s grievance with regard to demand of excise duty on Jalsa footwears for the period from the 9th May, 1977 to the 8th August, 1977, i.e., prior to the issue of the notification (Annexure A ) on the 9th August, 1977, subsists. It has rightly not been contended by the learned Standing Counsel that Annexure A is retrospective. The notification being not retrospective, this writ application has not become infructuous on the issuance of Annexure A . 8. The second ground of attack regarding the maintainability of the writ application is based on the provisions of Articles 226(3), 131A, 226A and 228A of the Constitution, brought in by the Constitution (Forty-second Amendment) Act, 1976. Learned Standing Counsel has urged that the constitutional validity of a Central law could not be challenged in this Court and the proper form for the petitioner was the Supreme Court of India. 9. lt is no doubt true that under the amende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where a Central law is challenged as being contrary to or offending against any of the provisions of the Constitution, such as the provisions relating to fundamental rights contained in Part III or relating to distribution of powers contained in Part XI of the Constitution, etc. The expression validity has been defined in words and phrases, permanent Edition, Volume 44, as follows :- Validity, when applied to legal matters, is defined to be legal strength or force, the quality of being good in law. City of Cairo - Vs - Bross 8 III. App. 296. Constitutional validity , therefore obviously means good under the Constitution. 11. The expression constitutional invalidity in the context in which it has been used also obviously means invalidity on the ground of the provisions of the Constitution. If the intention was to make no distinction between the constitutional invalidity and invalidity simpliciter, the Parliament could not have used the expression constitutionally invalid but would have used the simpler expression invalid . Both the expressions invalid and constitutionally have to be given their full meaning. It is well settled principle of interpretation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly, special provision has been made under Article 228A for the disposal of questions relating to constitutional validity of State laws, that the minimum number of Judges of the High Court required to sit for determining any question of constitutional validity of any State law shall be given, and, where the High Court consists, of less than five Judges, then all the Judges are required to sit for determining such questions, and, any State law cannot be declared to be invalid. Where the High Court consists of five Judges or more, by less than two-third majority of the Judges sitting for the purpose and where the High Court consists of less than five Judges, unless all the Judges of the High Court sitting for the purpose hold it to be so. 13. Article 13(3)(a) of the Constitution gives an exhaustive meaning of the term law so as to include within it any Ordinance, Order, Bye-law, Rule, Regulation, Notification, custom or usage having in the territory of India the force of law . Then again, as defined in Clauses (4A) and (26A), respectively, of Article 266. Central Law and State law not only include an Act of the Legislature, or an Ordinance promulgated by the Governor, but a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 (1) of the Rules, the Central Government has, no doubt, granted exemption to small manufacturers of footwears employing less than 50 workers and also using less than two horse power of energy, but while granting the exemption to small manufacturing units, it has added an explanation to the said notification, and in its garb it has made the footwears manufactured by small manufacturers as having been manufactured by some one else, and has made a non-manufacturer of those footwears the manufacturer for the purpose of levying excise duty, which the Central Government cannot do in exercise of the power under Rule 8(1) of the Rules. Learned Counsel for the petitioner has further submitted that the notification is also ultra vires the provisions of the charging Section 3, read with Section 2(f) of the Act, as under the charging section the incidence of the tax is on `manufacturer of an excisable goods. The challenge to the explanation contained in the notification (Annexure 4 ) is thus on the ground that it is ultra vires the rule making power as also the charging section of the Act. The attack on the notification, therefore, does not involve any question of its being contrary to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or other instrument made thereunder ; or (c) for the redress of any injury by reason of any illegality in any proceedings by or before any authority under any provision referred to in sub-clause (b) where such illegality has resulted in substantial failure of justice. Clause (3) of this Article, which is relevant, reads thus - (3) No petition for the redress of any injury referred to in sub-clause (b) or sub-clause (c) of Clause (1) shall be entertained if any other remedy for such redress is provided for by or under any other law for the time being in force. It is thus manifest that where the attack is under sub-clauses (b) or (c) of Clause (1) and not one relating to the fundamental rights, unless the alter native remedy, as envisaged under Clause (3), has been availed of, no writ application will be entertained. 19. Section 35 of the Act lays down that any person aggrieved by any decision or order passed by a Central Excise Officer under the said Act, may, within three months from the date of such decision or order, appeal therefrom to the Central Board of Excise and Customs constituted under the Central Board of Revenue Act, 1963 (54 of 1963), or, in such ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is foreign to the scope of its jurisdiction. I am not, for a moment, suggesting that the power to declare a notification issued under the Rules ultra vires could not be delegated to such an authority, but, no such provision has been pointed out by the learned Standing Counsel either in the Act or in the Rules, under which the appellate or the revisional authority could declare a notification to be ultra vires. He has, however, submitted that the Central Board of Excise and Customs is not constituted under the Act but it is constituted under a different Act, namely, the Central Boards of Revenue Act, 1963 (54 of 1963), and, therefore, it is not a creature of the Excise Act. It is true that the Central Board of Excise and Customs is constituted under Section 3 of the Central Act 54 of 1963, but while exercising powers under the Excise Act, it is nonetheless an authority created by the Excise Act and is an authority under the Excise Act. A statute may create a distinct authority of its own for carrying out the purposes of the Act, or it may be incorporation about an authority created under some different statute, as its authority. That will not mean that authority so adopted will not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstitution. A question arises, when is its true scope. Has it still to stand the test of adequacy of the remedy ? A remedy has to be a real remedy and not an illusory one or useless one and when the Constitution speak of a remedy it must mean so. The question has been fully considered and examined in some detail in a Full Bench decision of the Gujarat High Court in the case of (4) Ahmedabad Cotton Manufacturing Co. Ltd. Vs. Union of India (A.I.R. 1977 Gujarat 113), wherein it has been observed as follows : Even though the words any other remedy has to be for redress of the injury for which this writ jurisdiction is conferred and, therefore, it must be equally adequate of efficacious so that qualitatively and quantitatively the same relief would be given for redress of the injury to the petitioner. Therefore, the adequate efficacious remedy is always implicit if the remedy is to be for redressing the injury as effectively as could be done in the petition. The aforesaid discussion clearly reveals that every Act would have to be examined when such a question of the existence of alternative remedy arises and it would have to be found out as to what is the amplitude of the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 37 of the Act authorises the Central Government to make rules for carrying into effect the purposes of the Act and sub-section (2) enumerates the particular items with reference to which rules could be framed. Relevant for our purpose is sub-item (XVII) of sub-section (2), which authorises the Central Government to make rules to exempt any goods from the whole or any part of the duty imposed by this Act; . The relevant rules made by the Central Government in this regard is Rule 8 of the Rules, which reads as follows :- (1)....... The Central Government may, from time to time, by notification in the Official Gazette, exempt, 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. (2) The Central Board of Excise and Customs may, by special order in each case, exempt from the payment of duty. under circumstances of an exceptional nature, any excisable goods. It is in exercise of the powers under Rule 8(1) of the Rules that the Central Government has issued the notification (Annexure 4 ), allowing exemption from payment of whole of the excise duty leviable on manufacture of footwea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty on production and manufacturer of goods by a series of decision of the Supreme Court (Vide decisions in the cases of (5) R.C. Lal and others v. The Union of India - A.I.R. 1962 Supreme Court 1281; (6) Sea Customs Act, A.I.R. 1963 Supreme Court 1760, (7) A.B. Abdul Kadir Vs. The State of Kerala - A.I.R. 1976 Supreme Court 182, and (8) Messrs McDowell Company Vs. Commercial Taxes Officer - A.I.R. 1977 Supreme Court 1459. The following observations made in A.I.R. 1962 Supreme Court 1281, by the Supreme Court, after referring to the observations of Lord Simonds in (9) Governor - General in Council Vs. Province of Madras (A.I.R. 1945 P.C. 98), may be quoted :- Excise duty is primarily a duty on the production or manufacture of goods produced or manufactured within the country. It is an indirect duty which the manufacturer or producer passes on to the ultimate consumers, that is, its ultimate incidence will always be on the consumer. Therefore subject always to the legislative competence of the taxing authority, the said tax can be levied at a convenient stage so long as the character of the impost, that is, it is a duty on the manufacture or production, is not lost. The metho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the materials supplied by them. Annexure `D is a statement of one Nebu Das, proprietor of Respondent No. 4, dated the 2nd August, 1976, made before the Inspector of Central Excise stating that he gets materials and machines from the petitioner and manufactures Jalsa footwears therefore for the petitioner and gets only labour charges. Annexure `B/1 is a statement dated the 2nd May, 1977, which shows that leather components and micro-sheets 5 mm. and 7 mm. were supplied to different parties, including Respondents Nos. 4 to 7 by the petitioner on certain rates on different dates, during the month of April, 1977. 27. This assertion of the respondents is not only contrary to the assertions made in the writ application, but has also been denied on behalf of the petitioner in reply to the counter-affidavit. The petitioner has also filed Annexure ₹ 11 series to show that it was really the Department who encouraged the petitioner to supply some machines and parts of footwears to those small scale manufacturers. Annexure ₹ 11/D is a letter dated the 15th November, 1967 from the Assistant Collector of Central Excise, Patna, to the petitioner, relevant portion of whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e no order as to costs. 30. Per . B. S. Sinha, J. - I agree but wish to make certain observations with regard to some of the submissions made on behalf of Respondent Nos. 1 to 3. 31. One of the prayers in this writ application is for a declaration that the Notification, dated the 9th May, 1977, copy of which is Annexure 4 appended to the writ application, is ultra vires and void and if necessary the same be set aside and/or quashed. It was urged on behalf of Respondent Nos. 1 to 3 that the constitutional validity of a Central law could not be challenged in view of Articles 226A, 131A, and 228A of the Constitution engrafted in the Constitution by the Constitution (42nd Amendment) Act, 1976. As the relevant provisions of three Articles have been quoted in extenso in the judgment of the Hon ble the Chief Justice I do not consider it necessary to quote them. Article 226A provides that the High Court shall not consider the Constitutional validity of any Central law in any proceeding under that the High Court shall not consider the constitutional validity of any Central law in any proceeding under that Article and clause (1) of Article 228A imposes a restriction upon the High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification, any excisable goods from the whole or part of the duty leviable on such goods by a notification in the Official Gazette. A plain reading of this provision, which has been quoted in the judgment of the learned Chief Justice, it is manifest that the power given to the Central Government is to exempt whole or part of a duty leviable. In other words, the power given to the Central Government to grant exemption and not to impose any excise duty. By the explanation attached to the impugned notification it seems obvious to me, that the Central Government has provided for the imposition of excise duty on a manufacturer who has not manufactured the footwear. In other words the Explanation has attempted to give an extended meaning to the word manufacture as it has been defined in the Central Excises and Salt Act, 1944. Section 2(f) of that Act provides that manufacture includes any process incidental or ancillary to the completion of a manufactured product. By the explanation appended to the impugned notification the word manufacture has been deemed to include any footwear which is affixed with the brand or the trade name registered or not of any manufacturer. By this explanation, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
