TMI Blog1982 (6) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... nd notices Exts. P1 to P9 in relation to levy of cess on scrap rubber and to call for the records relating to proceedings in O.P. Nos. 528 of 1976, 529 of 1976, 167 of 1977, 637 of 1977, 139 of 1978, 184 of 1979, 269 of 1979, 468 of 1979 and 27 of 1980 which culminated in Ext. P 10 common order of the 3rd respondent, District Judge, Kottayam and to quash the same. 2. Petitioner is a company incorporated under the Companies Act and having factories in several places in Kerala and outside and engaged in the manufacture of tyre and other rubber products. Petitioner company has been purchasing different varieties of rubber such as sheet rubber, crepe rubber, scrap rubber, etc. for the purpose of manufacture of rubber products. All these types of rubber are rubber as defined in Section 3(h) of the Act. Section 12(1) of the Act entitles the Rubber Board to levy cess at a rate not exceeding 50 ps. per kilogram on all rubber produced in India as notified by the Central Government. The cess may be collected in accordance with the Rubber Rules, 1955 (for short the Rule ) either from the owner of the estate in which rubber is produced or from the manufacturer by whom such rubber is use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore excise duty cannot be levied on it under the Act. (ii) Petitioner company does not use scrap rubber, but uses only crepe rubber, which is obtained after getting the scrap rubber processed through other factories and as such the petitioner company cannot be said to use scrap rubber in the manufacture of rubber products. Hence what is excisable is only quantity of crepe rubber used and not quantity of scrap rubber acquired. (iii) Rubber as defined in Section 3(h) of the Act and dealt with in Section 12 of the Act must be so construed as to exclude milling waste in so far as scrap rubber is concerned, in which case the assessments made by the Rubber Board are contrary to law; (iv) If the above construction is not accepted, the provision in Section 12 (1) of the Act and Ext. P11 notification fixing cess at 40 ps. per kilogram of rubber are discriminatory and arbitrary and are liable to be struck down as being violative of Article 14 of the Constitution in which case also the assessments are illegal; and (v) In the assessment made on Dunlop India Limited in regard to scrap rubber, the Rubber Board has allowed deduction of the milling waste and levied assessment only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stage of their production or when the articles are ready for consumption. Entry 84 in List 1 of Schedule VII of the Constitution mentions duties of excise on goods manufactured or produced in India. Article 366(12) defines goods as including raw materials, commodities and articles. In Aluminium Corporation of India v. Coal Board (A.I.R 1959 Calcutta 222) the question arose whether coal is a commodity produced and the question was answered in the affirmative. Calcutta High Court stated thus : Although coal is undoubtedly a natural product, the operations required to bring it up to the surface and to make it marketable or even usable is so elaborate and expensive that to speak of the mining and condition of coal as its production is wholly appropriate ... ... Entry No. 84 appears to contemplate some expenditure of human skill and labour in bringing the goods concerned into the condition which would attract the duty. It is not required that the goods should be manufactured in the sense that raw material should be used to run out something altogether different, but it is still required that they should be produced in the sense that some human activity should be spent on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by human agency. The process of bringing out juice from the rubber tree is also an elaborate and expensive process for which human agency is absolutely necessary. It is human activity and ingenuity through a highly skilful process that makes latex available to the consumers. This process can certainly be regarded as process of production of latex, either in the uncoagulated form or in the coagulated form. Scrap rubber is nothing but naturally coagulated form of latex. It has, therefore, to be held that scrap rubber is rubber produced in India. 8. Section 12 of the Act deals with the imposition of rubber cess and it reads as follows: 12. Imposition of rubber cess : (1) With effect from such date as may be notified by the Central Government in this behalf, there shall be levied and collected as a cess for the purposes of this Act a duty of excise on all rubber produced in India at such rate not exceeding one anna per pound of rubber as produced as the Central Government may by the same or a like notification, from time to time fix. (2) The said duty of excise shall be payable by the owner of the estate on which the rubber is produced, and shall be paid by him to the Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urers during the period specified in Rule 33 (e), viz., respective half years. 9. The argument advanced on behalf of the petitioner is that only the quantity of the rubber actually used by the manufacturer is excisable and not the quantity of rubber acquired. The petitioner company acquires scrap rubber and sends it for processing to other processors and obtains back crepe rubber. In the processing of scrap rubber, impurities are, to a great extent, removed. These impurities are called milling waste. Milling waste is not used by the manufacturer in the manufacture of rubber products. Therefore, it is submitted that in assessing cess, the Rubber Board has to deduct milling waste from the quantity of scrap rubber purchased; in other words, the Rubber Board should take into consideration only the quantity of crepe rubber put to use by the petitioner. This distinction between acquire and use has been rebutted by a Division Bench of this Court in the decision reported in Ruby Rubber Works v. Rubber Board (1965 K.L.T. 1159). This court pointed out that a combined reading of Section 12 of the Act with rule 33D of the Rules would clearly indicate that the Act gives an option to col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the construction sought to be given to the inclusive definition contained in Section 3(h) of the Act. In a private publication of the Act referred to by the learned counsel for the petitioner, the inclusive definition beginning from and includes scrap rubber to in any manufactured articles; occurs in continuation of the last words in any state of concentration in sub-clause (iii) of clause (h) of Section 3 of the Act. It is, therefore, argued that the inclusive definition is part of sub-clause (iii) and not part of sub-clause (h) as a whole. But this is not how it occurs in the Act published by the Government of India Press at Delhi, as also in the gazette publication. In the latter the inclusive definition does not appear in continuation of sub-clause (iii), but it appears below it after a comma. It is, therefore, difficult to accept that the inclusive definition is an appendage to sub-clause (iii) and not an appendage to clause (h) as a whole. Rubber has been defined in two ways. i.e. rubber means the things mentioned in clauses (i) to (iii) of Section 3(h) and also rubber includes scrap rubber etc. No doubt, with reference to latex in any state of concentration, in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrived at after subjecting the latex to particular processes. The available books on rubber describe the process by which the dry rubber content of latex can be ascertained. But, the petitioner has not been able to place any material before the court suggesting that the concept of dry rubber content could be used with reference to scrap rubber as well. It appears to me that this concept is inapplicable to scrap rubber mainly because scrap rubber is predominantly the dry form of latex though it may contain a small percentage of moisture. The petitioner has not been able to show to the court any authorities stating that dry rubber content can be arrived at with reference to scrap rubber by subjecting it to any scientific process. Therefore, it is not possible to accept that scrap rubber as such is not rubber and that only the dry rubber content of scrap rubber is rubber as defined in the Act. It is scrap rubber itself which is rubber as defined. 13. Section 12(1) of the Act speaks of levying as cess, a duty of excise on all rubber produced in India at such rate not exceeding 50 ps. per kilogram of rubber so produced, as the Central Government may fix. Clause (2) of Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a statute may not apply in the context of some sections of the Statute. Of course, normally whenever a word is defined in the Statute and that word occurs in the succeeding sections, the meaning given in the definition must be applied in construing the sections concerned. However, there is an exception to this normal rule : if in the subject or context of a particular section it appears that there is something repugnant so that the definition cannot be fitted in, the Court is at liberty not to construe the word occurring in that section in the manner in which it has been defined but to give it either its ordinary meaning or some other meaning opposite to the context or subject. It is argued that the expression rubber in Section 12(1) of the Act must be taken to mean only dry rubber content. That is so with reference to latex. But, since the expression dry rubber content cannot be used with reference to scrap rubber, it cannot be said that the expression rubber in Section 12 (1) can be read as dry rubber content with reference to scrap rubber. It is also argued that the expression rubber in section 12 (1) of the Act must be read as meaning the weight of dry and pure rubb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on a higher percentage of impurities. It has to be borne in mind that we are dealing with excise duties which are levied either as specific duties or as ad valorem duties. In the case of specific duty, the duty is fixed on physical unit of the product without regard to the value of the unit, whereas in the case of ad valorem duty, duty is fixed on the selling price of the product. Specific duties fall more heavily on cheaper brand, while ad valorem duties are more productive. In other words, in imposing specific duty there may be an intrinsic inequality involved depending on the quality of the product, since duty is levied on the physical unit irrespective of the quality or value of the unit. It has been observed by the Supreme Court in V. Venugopala Ravi Varma Rajah v. Union of India and another (A.I.R. 1969 S.C. 1094) thus : Equal protection clause of the Constitution does not enjoin equal protection of the laws as abstract propositions. Laws being the expression of legislative will intend to solve specific problems or to achieve definite objectives by specific remedies, absolute equality or uniformity of treatment is impossible of achievement. Again tax laws are aimed at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expression rubber occurring in Section 12(1) of the Act in its application to scrap rubber as excluding milling waste. 17. The last argument advanced by the learned counsel for the petitioner is that in the assessment made by the Rubber Board on Dunlop India Limited in regard to scrap rubber, deduction has been given for the weight of milling waste. A file relating to Dunlop India Limited has been caused to be produced. The file contains returns in Form K with appendices submitted by Dunlop India Limited to the Rubber Board. In the appendices relating to a few months, such as August 1975, September 1975 etc. Dunlop India Limited has mentioned the gross weight of scrap rubber, weight of milling waste and the net weight of crepe rubber. Petitioner on whom the burden of establishing discriminative treatment lies has not cared to explain the Form K returns of Dunlop India Limited, nor has the petitioner taken the trouble of causing production before court of the assessment orders and other relevant materials relating to Dunlop India Limited. As it is, there is no material before the Court to show that Form K returns submitted by Dunlop India Limited take in only the net we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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