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TMI Blog1988 (3) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... etermination. 2. Admittedly, the Central Excises And Salt Act, 1944 (hereinafter referred to as the said Act) had undergone an amendment in or about March 1986 which and thereby "packaging" has been included within the excisibility of goods including "tea" which is involved in these proceedings. It is also an admitted fact that prior to such incorporation by way of amendment excise duty was leviable under package tea and there was no separate duties leviable for manufactured tea and package tea. Section 3 of the said Act was and still is the charging section and deals with duties specified in the First Schedule which is to be levied and under Sub-section (1) thereunder. The said section postulates that there shall be levied and collected in such manner as may be prescribed duties of excise excisable on all goods other than salt which are produced or manufactured in India, and a duty on salt manufactured in, or imported by land into, any part of India as, and at the rates, set forth in the Schedule to the Central Excise Tariff Act, 1985 provided that the duties of excise which shall be levied and collected on any excisable goods which are produced or manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account and after the amendment as substituted with effect from 28th February, 1986 the same includes any process incidental or ancillary to the completion of a manufactured product; and (i) in relation to tobacco, includes the preparation of cigarette, cigars, cheroots, biris, cigarette or pipe or hookah tobacco, chewing tobacco or snuff; and (ii) in relation to salt, includes collection, removal, preparation, steeping, evaporation, boiling or any one or more of these processes, the separation or purification of salt obtained in the manufacture of saltpetre, the separation of salt from earth or other substance so as to produce elementary salt, and the excavation or removal of natural saline deposits of efflorescence; (iia) in relation to goods comprised in item No. 3A of the First Schedule, includes the labelling or relabelling of containers and repacking from bulk packs to retail packs or the adoption of any other treatment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the First Schedule to the said Act on 24th December, 1982 and on such application a rule was issued with a further direction that the parties concerned would be entitled to impose levy but upon furnishing bond by the said firm for ₹ 25,000 initially to the satisfaction of the Superintendent, Central Excise, Siliguri, Range-III, they would be entitled to release of all the goods. It was further directed that if the security amount was not considered to be adequate by the Collector of Central Excise & Customs or the Superintendent of the said department, who were given liberty to ask the said firm to furnish another security bond not exceeding ₹ 25,000 subject to further orders of this Court. The said petitioner has stated that interim order as mentioned above, was directed to continue initially for a period of two weeks after the "X-Mas" vacation of that year with liberty to ask for extension of the same with notice to the respondents. 5. From the statements as made, it would appear that the matter as mentioned above, came up for hearing on 24th February, 1983, when the learned Judge dealing with the same was pleased to direct that the interim order alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned package tea. They have stated that by that letter dated 29th May, 1984, the Assistant Collector, Central Excise, Jalpaiguri Division, informed them that the factory falls under Jalpaiguri II Range under the jurisdiction of Central Excise Division and it was further contended in that letter that the factory of the said firm at Jalpaiguri would not come under the interim order as made by this Court and the said interim order was not applicable to the case. The said firm was further directed to pay central excise duty on loose tea and package tea according to Central Excise Rules, 1944 (hereinafter referred to as the said Rules) and thereafter by another letter of 31st May, 1984, addressed to the Deputy Collector of Central Excise, North Bengal, the said firm intimated that they had simply shifted their factory and requested, to allow clearance of goods from the premises without payment of duty, but on execution of B16 bond in pursuance of the order as passed by this Court. It has been alleged that the said firm have not received any reply to that letter. It was their further case that they received duty-paid tea from their customers and packed the said duty-paid tea in 25 grams ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent excise authorities had no authority or competence to decide the issues involved and consequently the order dated 13th July, 1984, which was said to be a purported one, should be deemed to be wrongful and illegal, the more so when, the said order dated 13th July, 1984, was passed by the Assistant Collector concerned pursuant to the directions given by the Court. 8. The affidavit-in-opposition in this case was filed by Rajendra Kumar Talajia and the same was dated 9th September, 1985. That affidavit was filed on behalf of the respondents and the same claimed that the excise duty on loose tea was levied for the first time on and from 1st March, 1944, manufactured at the garden under tariff item No. 3 of the concerned Schedule of the said Act and sometime in 1953, Parliament amended the Schedule to the said Act by including sub-item (2) of tariff item No. 3 and under the said sub-item, package tea was one of the items, on which excise duty became payable. It has also been stated that on account of the amendment as mentioned above, the said firm became liable to pay excise mentioned above, the said firm became liable to pay excise duty on package tea. It was also stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that such blending or packeting, would not amount to manufacture as observed in that Brooke Bond's case. The respondent-authorities contended that in view of Section 3 of the said Act read with item 3(2) of the First Schedule, the goods should be deemed to be manufactured goods and it was also contended that once a goods manufactured in the First Schedule to the said Act, further enquiry whether the goods are manufactured or not or how they are known in the trade parlance would not be relevant and material. It is an admitted fact that by his judgment and order dated 13th July, 1983, D.K. Sen, J., in the Brooke Bond's case has held and observed that the package tea as involved in that case, would be liable to excise duty and was pleased to dismiss the application of M/s. Brook Bond India Ltd. holding inter alia amongst others, that goods were manufactured and/or deemed to have been manufactured in the facts of that case and particularly, when such goods are specifically mentioned in tariff item No. 3(2) of the First. 10. The deponent has also denied categorically the allegations of the said firm that they had to make the necessary application for licence under compulsion o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for amendment was unwarranted and was filed with the intent to bring on records certain alleged facts which were not correct. That application was further claimed to be an attempt to divert the Court from the main writ petition and the same was claimed to be misconceived as no amendment was necessary in the facts and circumstances of the case. It was also contended that amendment of a petition or plaint must relate back to the presentation of the plaint or petition before the Court and therefore, the writ petition should not be allowed to contain the fact posterior to the date of presentation of the same. On such facts amongst others, it was claimed that the amendment application should to be dismissed. In their reply, the said firm, apart from repeating and reiterating their statements as made in the writ petition, stated that the points as sought to be raised in the affidavit-in-opposition had no basis and in any event, the determinations as made in Brooke Bond's case, cannot be allowed to be agitated at this stage, since an appeal taken therefrom, is still pending and as a result whereof, the determinations as made by D.K. Sen, J., cannot be held and considered to be a fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the said firm or various other persons or that such tea are well known in the commercial or trade parlance as distinct and different from loose tea with different prices or marketability. It has further been stated that since May, 1984, the said firm only packed duty-paid tea in 25 gms. to 1 kg. packages and their only business is to receive duty-paid tea and to pack them into packages and to deliver the same to their customers. The payment of excise duty on such package tea or the taking of central excise licence for such package, was stated to be under compulsion and not a voluntary action of the said firm. The said firm has also stated that they have no factory for packaging duty paid tea. 13. The said firm has stated that the levy of duty on package tea can be subject to challenge in view of the intricate questions and points of law as raised in the petition and so long the appeal in Brooke Bond's case is not finally disposed of. It has also been reiterated that package tea is not distinctly different from tea or that such package tea has distinct name or character or use and is marketed as such alleged. 14. The amendment application, the particulars whereof, have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t;. It was also argued before the learned Trial Judge that because the word "manufacture" will not normally include packaging all manufactured goods, there are some sub-sections of Section 2(f) of the said Act, wherein packaging has been specifically mentioned so as to bring the same within the definition of "manufacture". 16. The learned Trial Judge has pointed out that the controversy which was raised before him was also in issue in the case of Brooke Bond India Limited v. Union of India 1984 Tax LR 2593 wherein D.K. Sen, J., repelled those arguments on the ground that the process by which tea is packed after manufacture and comes into the category of package tea will be deemed to have been considered by the Legislature to amount to, by itself, a production or manufacture, which brought the article within the ambit of the said Act. Before the learned Trial Judge on a reference to the determinations in the case of Union of India v. Godfrey Philips India Limited and Ors. 1985(22)ELT302(SC) , the determinations as made in Brooke Bond's case (supra) was not in fact upheld. The learned Trial Judge has pointed out that the Supreme Court in the case as mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules made thereunder. 19. The first case to which reference was made in the Brooke Bond's case (supra) in support of the contentions as above, was that of Mc.Nicol and Anr. v. Pinch, (1906) 2 KB 352, where excise duty was levied on the concerned goods for manufacture of saccharin under the English Finance Act of 1901 and on challenges thrown to such levy it was held by the majority judgment of the Court of Appeal, that the duty in question, could not be levied unless there is a transformation of a new produce and such view, as it appears from the case of Union of India v. Delhi Cloth & General Mills Co. Ltd. 1973ECR56(SC) , had been supported from the determination of the Supreme Court where it has been indicated that mere change by subjecting an article to a process would not result in manufacture. The above view also gets support from the case of South Bihar Sugar Mills Ltd. v. Union of India 1973ECR9(SC) , where the Supreme Court has observed that the gas as generated was not carbon dioxide as known to the trade and such would not fall within the mischief of the item of tariff. Similar view has also been expressed or gets support from the determination in the case of J.K. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transformation is necessary for having the goods in question levied to tax, further reference was made to P.C. Cheriyan v. Mst. Barfi Devi 1979(4)ELT593(SC) , where the Supreme Court has held that the lease of a premises for carrying on business of retreading of tyres was not a lease for manufacturing purposes within the meaning of Section 106 of the Transfer of Property Act and has also observed to the effect that the retreading of old tyres does not bring into being commercially distinct or different entity. The old tyre retains its original character, or identity as a tyre. Retreading does not completely transform it into another commercial article, although it proves its performance and serviceability as a tyre. Retreading of old tyres is just like resoling old shoes. Just as resoling of old shoes does not produce a commercially different entity having a different identity so from retreading no new or distinct article emerges. The old tyre retain its basic structure and identity. We may sound a note of caution that the definitions of "manufacture" given in other enactments such as, in the Factories Act or Excise Act should not be blindly applied while interpreting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ore, after extraction, was washed, dressed and screened and also blended to produce the required specification and on such the question arose whether the company could be said to be manufacturing or processing so that other goods purchased by the company to be used in the said operations would attract a lower rate of tax under the Central Sales Tax Act, 1956. The Supreme Court held that operation of blending amounted to processing the meaning of the said Act but blending of different qualities of ores was not manufacture. The Supreme Court observed as follows: -- "the blending of different qualities of ore possessing differing chemical and physical composition so as to produce ore of the contractual specifications cannot be said to involve the process of manufacture, since the ore that is produced cannot be regarded as a commercially new and distinct commodity from the ore of different specifications, blended together." In the case of Commissioner of Sales Tax v. Musarafalli Kutubuddin [1975] 35 STC 503, where the sale of old and second-hand furniture after polishing and colouring was involved, it has been held not to be a manufacture under Section 2(17) of the Bombay Sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which produced tea in bulk and can be treated as a different commercial item. On such view, the learned Judge in the Brooke Bond's case (supra) has further observed that the excise duty levied under the goods manufactured or produced by the petitioner, viz., package tea is valid and lawful and according to him package tea is a separate specific excisable items and as such, the authorities were entitled to treat the same as such. 21. Mr. Gupta submitted that observations as made by the learned Judge in the Brooke Bond's case (supra) on leviability of package tea on the basis of his determination on the effect of the section of the said Act and the Schedule, were improper and according to him if there was or has been any inconsistency between the Schedule and the section, which according to him was the case in this proceeding, the section should have precedents over the Schedule and in not holding so, the learned Judge in the Brooke Bond's case (supra) had acted irregularly. 22. We have referred to and indicated hereinbefore the definition of "manufacture" as in the said Act and for the purpose of having an idea as to what manufacture is or what should be the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can ordinarily come to the market to be bought and sold. The "manufacture" which is liable to excise duty under the Central Excises and Salt Act, 1944 must therefore be the "bringing into existence of a new substance known to the market." The definition of "manufacture" in Section 2(1) does not equate "manufacturing processing" to "manufacture". The processed raw oil is not, therefore, covered by the expression "vegetable non-essential oil" or by "all sorts" as no new substance known to the market has been brought into existence at that stage. There is therefore no legal basis for the demand of excise duty thereon under item 12 (old item 23) of Schedule I. Mr. Gupta then referred to the case of South Bihar Sugar Mills Ltd. and Anr. V. Union of India and Anr. 1973ECR9(SC) , where while dealing with Schedule I and item 14H under the said Act in the case of the appellants who produced gas by lime kilns and used in manufacturing sugar and soda ash on the tests for excisability it has been observed that though in the process of manufacture of sugar by carbonisation process and of soda ash by solvay ammonia soda proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... screen printing on hot tables. The final stage is the finishing process, that is to give a final touch for better appearance. According to the petitioners they do not carry on any spinning or weaving of the fabrics, nor do they sell the processed fabrics but they merely collect from their customers charges only for the job work of processing done by them and it was their case that apart from the excise duty the cotton fabrics and man-made fabrics were also subjected to the additional duties of excise as a result of the amendments of the Additional Duties of Excise (Goods of Special Importance) Act, 1957. By Section 4 of the Amending Act, items 19-I and 22(2) of the First Schedule to the Excise Act were also similarly amended by making an identical substitution of items 19-I and 22(1) in the First Schedule to the Additional Duties Act. The effect of various amendments inserted in the Excise Act by the Amendment Act was to include the processes of bleaching, dyeing and printing, insofar as the present petitions are concerned within the definition of the word "manufacture". The petitioners challenged the validity of the Central Excises and Salt and Additional Duties of Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also been observed in that case that levy as made under the Act in question, was valid and the Act being intra vires entry 84 of List 1 of the Seventh Schedule to the Constitution. The words "manufactured or produced" in entry 84 are used in connection with duty of excise. It is not required by that entry that the goods must be manufactured in the sense that raw material should be first transformed into something altogether different. It would still require that these should be produced in the sense that some human activity and energy should be spent on them and these should be subjected to some processes in order that these might be brought to the state in which they might become fit for consumption. So further transformation of the transformed material by the human labour and skill making it fit for human consumption so as to attract the duty is covered by the entry, apart from holding that in any event the impugned Act would be covered by entry 97 of List 1 of the Seventh Schedule if it is not covered by Entry 84. It is difficult to appreciate the argument that the levy would fail as there will be no appropriate charging section or machinery for effectuating the lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. 24. In fact, it was contended by the appellant before us that the definition of "manufacture" under the said Act is an inclusive one and according to them, the Court should find out on the basis of the tests as indicated as to whether if the facts of this case or in the process as involved, a new commodity comes into being or not. In support of their submissions that the process as involved in the present case, would not bring about a new commodity, reference was made by Mr. Gupta to the case of M/s. Sterling Foods, a Partnership Firm represented by its Partner Shri Ramesh Dalpatram v. State of Karnataka and Anr. 1986(26)ELT3(SC) which is also reported in 1986(26)ELT3(SC) , 1986(26)ELT3(SC) , where it has been observed by the Supreme Court that in order to attract Sub-section (3) of Section 5 of the Central Sales Tax Act it is necessary that the goods which are purchased by an assessee for the purpose of complying with the agreement or order for or in relation to export, must be the same goods which are exported out of the territory of India. The words "those goods" in this sub-section are clearly referable to "any goods" mentioned in the precedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to make them tasty, packed them in plastic bags and sold them locally. The Tribunal found that the fried and salted cashew-nuts sold by the assessees could not be said to be a different commercial commodity from the plain cashew-nuts and that the sample container which was produced before them and in which the cashew-nuts were packed could be opened and closed again. The Tribunal accordingly held that the activity of frying and spicing of the cashew-nuts could not be said to be "manufacture" within the meaning of that term in Section 2(17) of the Act and that the cashew-nuts were not sold in sealed containers. It would appear that on a reference it was held (i) that the question to be considered was whether the fried and salted cashew-nuts prepared by the assessees could be said- to be a different commercial commodity from plain cashew-nuts and this was primarily a question of fact to be determined on the evidence before the sales tax authorities. As the Tribunal had found that even after the plain cashew-nuts were fried and salted by the assessees they still continued to be the same commercial commodity, viz., cashew-nuts, the process or activity applied on the cashew- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63(SC) . In that case the company used to blend ore of different qualities for obtaining ore of requisite specification and a question arose as to whether such blending would come within the purview of the term "processing" and the Supreme Court has observed that though the blending of different qualities of ore possessing differing chemical and physical composition so as to produce ore of the contractual specifications cannot be said to involve the process of manufacture, since the ore that is produced cannot be regarded as a commercially new and distinct commodity from the ore of different specifications blended together, the operation of blending would amount to "processing" of ore within the meaning of Section 8(3)(b) and Rule 13. Consequently, where the blending was done through the Mechanical Ore Handling Plant, the plant fell within the description of "machinery, plant, equipment" used in the processing of ore for sale and it follows as a necessary corollary that if any items of goods were purchased by the assessee as being intended for use as "machinery, plant, equipment, tools, spare parts, stores, fuel or lubricants" for the mechani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of a statute, much less a taxing provision, by reading into it more words than it contains. Apart from the above, it has also been indicated that if a section of a statute is considered as ambiguous it would not be inappropriate to find out the reasons that persuaded the Select Committee to recommend the inclusion of that section. 28. While on the point as indicated above, further reference was made by Mr. Gupta to the case of Rahim Manji and Anr. v. Sheikh Ekbar AIR 1914 Cal 581, where it has been specifically observed in the case of a conflict between the Civil Procedure Code and its Schedule, the Code must prevail. In the case of Muneshwara Nand v. State AIR1961All24 , to which reference was also made by Mr. Gupta, it has been indicated that Schedules form a part of the statute and must be read together with it for all purposes of construction. But expression in the Schedule cannot control, or prevail against the express enactment. If there is any appearance of inconsistency between the Schedule and the enactment the enactment shall prevail, and if the enacting part and the Schedule cannot be made to correspond, the latter must yield to the former and on that basis Mr. Gupt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It has thus been indicated that the original identity continues despite the several processes undergone. In the trade circle, marble slabs or marble tiles that are manufactured after cutting edges, trimming, polishing and other processes continued to be known as marble, unless it is proved that by virtue of sawing process, a different or distinct commodity comes into existence, the process cannot be equated to manufacture. It has further been indicated that marble slabs are not marketable and therefore manufacture of marble is only complete when processes as machining and polishing result in a distinctly different commodity. This determination, on appeal, has been upheld in the case Collector of Central Excise v. Fine Marble etc. (1986) 9 ECR 504. 30. Mr. Bhattacharjee appearing for the authorities concerned and opposing the appeals claimed and contended that package tea is itself a concept and the same forms a different class from tea as purchased in bulk by the appellants and have a distinct character, use and recognition to the consumers and it was specifically claimed by him that such concept, viz., package tea is a different class by itself was evidenced since after the last ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any crude form, silk fabrics, woollen fabrics, rayons, artificial silk fabrics, copper and copper alloys containing not less than 50% by weight of copper and aluminium, Mr. Bhattacharjee referred to the different items of the First Schedule under the said Act and claimed that if tax can be imposed or levied on these items as they have been incorporated in the First Schedule so there would not be any reason why tax cannot be imposed or levied in respect of package tea. 31. On a reference to item 3 of the First Schedule, according to which "tea" includes all varieties of the products known commercially as tea, and also includes green tea, (1)… (2) package tea, that is to say, tea packed in any kind of container containing not more than 27 kilograms net of tea, Mr. Bhattacharjee contended that such inclusive definition would also justify the imposition or levy of tax on package tea as made in the instant case. For the purpose of establishing what is meant by the word "includes" within the meaning of "tea" as in item 3 of the First Schedule, Mr. Bhattacharjee referred firstly, to the case of Khan Bahadur C.K. Mammad Koyi v. Assistant Collector, Est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry", in its natural import, would comprehend within it taxes paid by the employer on behalf of the employee and hence such taxes paid by the employer would be included in the word "pay" in Rule 3. It may also amount to a cash allowance and come within Rule 3. Hence, in any view of the matter, the Income Tax paid by the employer has to be treated as salary for the purpose of valuing the rent-free residential accommodation under Rule 3 of the Income Tax Rules, 1962, and Rule 24A of the Indian Income Tax Rules, 1922. For the purpose of supplementing his submissions, on the above point, Mr. Bhattacharjee made a further reference to the case of The Commissioner of Income Tax, Andhra Pradesh v. Raj Mahal Hotel, Secunderabad AIR 1972 SC 162, where the expression "plant" as in Section 10(2) (vi-b) and (5) of the Income Tax Act, 1922 and the meaning thereof, was considered and while considering the effect and meaning of the word "includes" it has been observed by the Supreme Court that the very fact that even books have been included in the definition of the word "plant" in Section 10(5) shows that the meaning intended to be given to "plant& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lief that the freight charges were not liable to be included in the taxable turnover, in view of certain decisions, especially the decision of the Supreme Court in Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh. Subsequently, the Supreme Court in Hindustan Sugar Mills Ltd. v. State of Rajasthan [1979]1SCR276 held that freight was a part of the sale price of cement. Thereafter the assessee filed revised returns including the freight charges in the taxable turnover and also deposited along with the revised returns the balance of the sales tax payable under the State and Central Acts. In the order of assessment passed under the State Act, the assessing authority levied penalty under Section 7AA of the Rajasthan Sales Tax Act and interest under Section 11B of the Act for the delay in depositing the freight charges. Similarly in the assessment orders passed under the Central Act penalty under Section 7AA and interest under Section 11B of the State Act read with Section 9(2) of the Central Act were levied. The assessee obtained special leave of the Supreme Court under Article 136 of the Constitution of India to appeal against these orders and on such facts it has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not disclosing a part of the taxable turnover in the return an assessee cannot escape the liability to pay interest under Section HB(a) on the amount of tax withheld as a consequence of his own action or inaction from the last date on which it has to be paid as per Section 7(2) or (2A), as the case may be, read with the Rajasthan Sales Tax Rules, 1955. The amount of interest has no doubt to be calculated after the actual amount of tax payable is assessed and necessary adjustments are made, apart from holding that Section 7 of the Act which deals with the submission of returns is not a charging section but a machinery section. It is settled law that a distinction has to be made by Courts while interpreting the provisions of a taxing statute between charging provisions which impose the charge to tax and machinery provisions which provide the machinery for the quantification of the tax and the levying and collection of the tax so imposed. While charging provisions are construed strictly, machinery sections are not generally subject to a rigorous construction. The Courts are expected to construe the machinery sections in such a manner that a charge to tax is not defeated. It is the dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicate that it is well-settled rule of interpretation that a statute must be so construed as not to create any repugnance between its different provisions, for it is a basic assumption underlying every interpretation exercise that the legislature must be supposed not to have intended to contradict itself. 32. To establish that the definition of "manufacture" as in Section 2(f) of the said Act, would be inclusive and the clauses appended to the said definition are merely illustrative and not exhaustive, Mr. Bhattacharjee referred to the determinations in the case of Ramnugar Cane and Sugar Co. Ltd., Jaipur and Ors. v. Union of India and Ors., where, apart from holding in the matter as indicated by Mr. Bhattacharjee, the Division Bench of the Rajasthan High Court has also observed, while dealing with a case of vegetable product and if packing of the same is a process of manufacture that since under tariff item 13 of the central excise tariff, the vegetable product which is made subject to duty of excise should be fit for human consumption, therefore, canning of such a vegetable product in containers of metal or polythene is a process incidental and ancillary to the complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied to the brake lining blanks purchased by the petitioners is incidental or ancillary to manufacture and therefore, the petitioners must be deemed to be " manufacturers " manufacturing brake linings for motor vehicles liable to take out a central excise licence as required by the provisions of Section 6 of the Central Excise Act read with Rule 174 of the Central Excise Rules, 1944 and also liable to pay excise duty thereon under the Act. In that determination the Court has further observed that " manufacture " implies a change though every change is not manufacture. If by a process a change is effected in a product which was not there previously and which change facilitates the utility of the product for which it is meant, then the process is not a simple one but a process incidental or ancillary to the completion of a manufactured product. Commonly, " manufacture " is the end result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may very from one product to another and there could be several stages of processing and different kinds of processing depending upon the utility for which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ludes" in the definition of "motor spirit". The real point for determination really was " whether Esso Solvent Nos. 1425, 3040 and 2445 are exigible to tax under entry No. 39 of Part II of Schedule II or under the provisions of the M. P. Sales of Motor Spirits Taxation Act, 1957?" and it has been indicated following the observations of the Supreme Court in the case of Income Tax Commissioner, A.P. v. Taj Mahal Hotel [1971]82ITR44(SC) , that the word "includes" is often used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the statute, and when it is so used the words and phrases must be construed as comprehending not only such things as they signify according to their nature and import, but also those things which the interpretation clause declares that they shall include. He also contended that the present definition of "manufacture" is all inclusive and has been brought into the statute by way of ex abundanti cautela. In support of such submissions, he referred to the observations in Craies on Statute Law (Seventh Edition) and more particularly to the observations that sometimes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to the case of Union of India and Ors. v. Ahmedabad Manufacturing and Calico Printing Co. Ltd. (Calico Mills), Ahmedabad, 1985(21)ELT633(SC) . The goods manufactured, in that case, which were called "Calikut Special", contained more than 60 per cent of artificial silk at the final stage and it has been observed that the same will be liable to excise duty under item No. 22 of the Schedule notwithstanding the fact that during process at some intermediate stage it contained less than 60 per cent of rayon or artificial silk and was thus liable to heavier excise duty under item No. 19 of the Schedule and having regard to the process involved in the manufacture of the same, the Supreme Court has indicated that it is not possible to hold that the character of the goods at the intermediate stage of production could be taken into consideration for determining the liability under the Act. The process involved in the case after the intermediate stage formed an integral part of the manufacture of the product in question and the classification of the manufactured product for purposes of excise duty would depend upon its nature and character at its final stage of production unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proviso to Section 5(2) of the Bengal Finance (Sales Tax) Act, 1941, is no material for deciding the question that whether the State Government can enact Rule 4(2) of the Central (West Bengal) Rules for application of Rule 27AA of the Bengal Rules. Then a reference was made by Mr. Bhattacharjee to the case of Godavari Plywoods Ltd. v. Union of India, and Ors. 1984(18)ELT732(AP) , for the purpose of establishing that the will of the legislature in a case of the present nature should prevail. In fact, in the facts of that case, it has been observed that the will of the legislature is the supreme law, apart from holding that the legislature is competent to alter the law declared by Courts by legislative fiat giving new meaning by suitable structural alteration in the statute. There is liberal presumption of its validity and change in the legal rights. The legislature is competent to create rights, prescribe procedure and limitation for enforcement. The will of the legislature is the supreme law and it must always prevail. It is to be given effect to without scanning its wisdom or policy and without adding, omitting or implying anything inconsistent with the statute. If the statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can also be used for search lights, signalling, stage lighting, or where powerful lighting for photography or other purposes may be required, could not detract from the classification to which the carbon arcs belong. That is determined by their ordinary or commonly known purpose or user. This is evident from the fact that they are known as "cinema arc carbons" in the market. 36. Dealing with the question of the intention of the legislature, which according to Mr. Bhattacharjee should be the paramount consideration in the matter of interpretation of a statute and also on the question whether a schedule should be deemed or treated to be a part of the statute, further reference was made by Mr. Bhattacherjee to the case of Indira Bai and Anr. v. The Gift Tax Officer, City Circle-II, Madras [1962] 44 ITR 66(Mad), where, while deciding a case under Gift Tax Act, 1958 it has been observed that an Act has to be read as a whole and the schedule to the Act is as much part of the Act as any provisions thereof. If an enactment in a schedule, other than one merely of form, contradicts an earlier clause, it is the schedule that would prevail. Here in this case, Mr. Bhattacharjee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quor at flat rate of rupee one per bottle and on the basis of the observations as above, it has been observed that such levy was not discriminatory. Apart from the cases as cited above, a further reference was made by Mr. Bhattacharjee to the case of Hyderabad Asbestos Cement Products Ltd. and Anr. v. Union of India and Ors. (1980) ELT 735. In that case, it has been observed by the Delhi High Court, while dealing with the question of imposition of excise duty on asbestos fibre from asbestos rock that asbestos rocks are not saleable as such and it is only when the detailed process of manufacture has to be gone through when asbestos fibre is obtained which is different and distinct from asbestos rock on which the Legislature imposed the duty of excise. Therefore, it can be said that imposition of duty on asbestos fibre or insertion of tariff item 22F in the First Schedule to the Central Excises Act was not ultra vires and invalid and it is now settled law that before excise duty can be levied, the goods brought into existence must be the goods which can be bought and sold in the market. In other words, by the process of treatment, labour, and manipulation, the raw material must be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les are in circulation and come to be described and known in common parlance then there is no difficulty for statutory classification under a particular entry. Apart from the above, while on its scope and power under Article 136 of the Constitution of India and whether corrections of classification of an article under particular item and the reason given by the authorities for such classification can be probed, it has been observed that it is not for the Supreme Court to determine for itself under Article 136 of the Constitution under which item a particular article falls. It is best left to the authorities entrusted with the subject. But where the very basis of the reason for including the article under a residuary head in order to charge higher duty is foreign to a proper determination of this kind, the Court would be loath to say that it will not interfere. The appellant in that case, who manufactured automotive tyres, imported V.P. latex and successfully contended before the appellate Collector of Customs that it was classifiable as rubber raw under item 39 of the Tariff Act. The Central Government revised the findings of the appellate authorities and held that the said V.P. la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Act, if different varieties of tea are indicated as being subject to different rates of duties, the same would amount to prescription of the manner of the levy and collection of duty on an excisable goods which have been already [taxed] could not be made unit of taxation is based upon misapprehension. The levy of excise duty under Section 3 is not on any variety as such but is levy on the manufacture of a product commercially known as tea and power is there to indicate what are the different varieties and in what manner these would be leviable to duty under the provisions of the Act, apart from indicating that "tea" as produced in different areas have different markets and different classes of buyers. It cannot be said that teas which are known as Darjeeling Tea is commercially the same commodity of tea which is commercially known as common tea. Therefore, by virtue of Section 3, different types of teas which are produced or manufactured by the different areas, attract differential rates of duty as different commercial sub-clauses of the item of the excisable goods, namely, tea. In the case under consideration it has been indicated that in the context of the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ality of treatment regardless of inequality of realities is not required. The power to levy differential rates of duty for different varieties of tea has a nexus to the legislative end of taxation and the power to indicate or classify different varieties for the purpose of levy of duty is subject to the main condition that such different varieties should be on different commercial identity of the product known as tea. That legislative intent has been made manifest in item 3 of the First Schedule. Secondly, such different varieties can only be fixed by proper rules. Such rule-making power has been preserved by Section 37 of the Act to carry into effect the purpose of the Act. Therefore in the purpose of the Act and specially in the scheme of the Act there is sufficient indication on what basis the different varieties should be fixed for the purpose of classification under item 3(1) of the First Schedule. Secondly, such power or the principles on which such different varieties are to be fixed would be by rules and such rules by virtue of Section 38 of the Act are enjoined to be placed before the Parliament. In that case it has been indicated that the manner of levy and collection mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case under consideration, the real question was whether the provisions treat raw hides and skins and dressed or tanned hides and skins as one class of goods for the purpose of taxation or as two different classes of goods. If they treat them as one class of goods, the contention for the petitioner loses force as taxing of hides and skins at the time of their sale in a raw condition meets the requirements of law, as hides and skins could be taxed only at a single point. If the dressed or tanned hides and skins are not taxed at the time of their sale, that does not offend against the statutory provisions. No question of discrimination arises as a sale of raw hides and skins of whatever origin, i.e., whether produced in the State or imported into the State would be equally liable to the levy of tax and it has been observed that if the statute treats both these kinds of hides and skins as different commodities, the provision of Sub-rule (1) of Rule 16 providing for the levy of tax on raw hides and skins at a certain point even in the absence of any provision for the taxation of dressed hides and skins cannot be said to be discriminatory and invalid. The articles to be taxed were no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discrimination. Such argument proceeded on the assumption that the tariff was prescribed by reference to the use to which tobacco is put and it was argued that the tobacco with which the petitioners were concerned, was not actually used either for cigarettes or smoking mixtures or biris and the fact that it was broken and not whole leaf, would not afford any rational basis for classification. In that background it has been observed that by the test of physical form, the two articles of tobacco mentioned in Clauses (5) and (6) of item 4(1) of Schedule I are different. By the test of capability of user they are different and in a sense according to the Tobacco Expert Committee's recommendations they partake of the character of different commodities. The problem which the Committee had to face was to classify tobacco other than flue cured which would be used for the manufacture of biris, and with that object Clause (5) and Clause (6) have been devised. Therefore, the distinction between tobacco falling under Clause (5) and Clause (6) according to the report of the Committee, is clear and unambiguous and its relation to the object intended by the imposition of tariff is clearly re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax under Section 3, Sub-section (1) only at the point of the first purchase effected in the State of Andhra by a dealer who is not exempt from taxation under Section 3, Sub-section (3) but at the rate of seven and half pies for every rupee on his turnover. Explanation:--For the purpose of this item, country variety of tobacco means variety of tobacco other than Virginia and other similar varieties of tobacco. 44. As a result of this enactment, exemption from tax was limited to sale of what is known as country tobacco (Nattu tobacco) and as far as sales of Virginia tobacco are concerned, they became liable to be taxed. Pursuant to the Amendment Act, the Andhra Government issued on November 4, 1955, a notification No. 711 cancelling the earlier notification No. 144 dated March 31, 1953 and acting under the provisions of the Amendment Act, the Additional Commercial Tax Officer, Guntur, issued notices to the appellants to produce the account books relating to their business in tobacco, for the purpose of assessing sales tax. To this, the appellants replied by filing petition under Article 226 of the Constitution in the High Court of Andhra Pradesh challenging the constitutionality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teleprinting paper under special entry in item 17(2) of central Excise Tariff, it is difficult to understand how it can be classified under the general entry in Item 17(3). A question arose in that case as to whether teleprinter rolls manufactured from printing or writing paper (jumbo rolls), amounts to manufacture and it has been observed that the process of cutting rolls of paper in the specific sizes and dimension and to roll them into teleprinter rolls with the aid of power driven machine amounts to manufacture under Section 2(f) of the Central Excise Act. On the basis of the said determination, it was Mr. Bhattacharjee's specific submission that since package tea has been put in the Schedule or special entry under the Tariff and they are packed in special cartoons with the help and aid of power and labour, there would certainly be an incidence of manufacture and as such, the levy as made on "package tea" was due and proper. While on the point, further reference was made by him to the determinations of the Supreme Court in the case of Khandelwal Metal & Engineering Works and Anr., etc. v. Union of India and Ors. 1985(20)ELT222(SC) . There the Supreme Court has co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are brass scrap, the limited inquiry which has to be made is whether brass scrap can come into being during the process of manufacture. If the answer is in the affirmative, the imported brass scrap will be chargeable to additional duty in accordance with Section 3(1) of the Tariff Act, and Section 3(1) of the Tariff Act, 1975 provides a measure of the additional duty, which has to be "equal to the excise duty" leviable on a like article, if produced or manufactured in India, as defined in the Explanation to that section. The measure of tax or duty cannot determine its nature or character. The brass scrap which is imported into India by the importers of the brass scrap is liable to the levy of additional duty mentioned in Section 3(1) of the Tariff Act, 1975 because, the taxable event is the import of the goods into India and not their manufacture. The duty referred to in Section 3(1) of the Tariff Act, 1975 is, therefore, leviable even if the goods imported into India are not capable of being manufactured in India or are not in fact manufactured in India. The expression "excise duty for the time being leviable on a like article if produced or manufactured in India& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and scrap" includes "brass scrap" and notification No. 156 of July 16, 1977 exempts "copper waste and scrap" from so much of the duty of customs as is in excess of 80% ad valorem. Since brass scrap is includible in the expression "copper waste and scrap" and since, brass scrap is not a "master alloy, the case of the importers of the brass scrap would fall under this Notification. Accordingly, they would be entitled to exemption from customs duty to the extent of 20% only. It has further and ultimately been observed by the Supreme Court, that Clause (b) of entry 26A of the First Schedule to the Central Excises and Salt Act, 1944 is not ultra vires Section 3(1) of the Act. The reason is that "waste and scrap" referred to in that entry is excisable to duty if it is produced or manufactured in India. Waste and scrap are by-products of the process of manufacture and are inevitably incidental to the manufacturing process. The said entry, namely, entry 26A(1b) of the First Schedule to the Act of 1944 is within the legislative competence of the Parliament because, the duty of excise is attracted under the Central Excises and Salt Act, 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not or should not be allowed to turn down and contend against the levy or imposition of tax in the manner as indicated in this case. It was also claimed by him that since the provisions of the said Act have not been challenged, the manufacture of the instant case should mean and include "package tea" as packed from the bulk tea as purchased. It was also pointed out by him that the tariff item, by which package tea has been brought in within the purview of the levy and imposition of tax, has not been challenged and as such also, the appellants cannot claim in the manner as sought to be done in the instant case. It was his further contention that the intention to levy or impose tax should be culled out from the different portions of the said Act and when the Legislature has intended to bring "package tea" under the umbrella of the levy of tax, the challenges as thrown will not be maintainable. It was his specific submission that tea, when packed in packets from out of bulk tea, would give rise to a case of manufacture. It was pointed out by Mr. Bhattacharjee that taxable event would be manufacture and not the ownership and such being the position, when the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of manufacture. The said 1985 Act was claimed by Mr. Bhattacharjee to be an independent enactment and was also said to be a clarificatory law to provide and explain the law which was in existence. Package tea according to Mr. Bhattacharjee, is no new substance, since the same was included in the Schedule/Tariff long ago and more particularly in 1953. It was Mr. Bhattacharjee's submission that pan masala as brought into the statute is a new concept in the commercial world, but package tea is historical and traditionally known since April 1953, so the incorporation of pan masala or the treatments mentioned therefor, according to him cannot be a guiding factor for finding out the meaning of package tea or the tariff item as evolved. He further submitted that if the meaning is clear and there is no ambiguity, an artificial distinction would be improper and the more so when, such distinction would be contrary to the actual tests. 49. Dealing with the cases as cited on behalf of the appellants, Mr. Bhattacharjee firstly, stated that the case of Sterling Food v. The State of Karnataka and Anr. [1987] 11 ECC 89 (SC): 1986(26)ELT3(SC) , wherein it has been observed that in order to att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eyes of the persons dealing in it the State Legislature may make a classification for determining liability to sales tax. This question, for the purpose of the Central Sales Tax Act, has to be determined on the basis of what is commonly known or recognised in commercial parlance would have no application in the instant case. In that case on the facts as indicated hereinbefore, it was held that the purchase of raw shrimps, prawns and lobsters by the appellant for the purpose of fulfilling existing contracts for export were exempt from purchase tax under the deeming provision of Section 5(3) of the Central Sales Tax Act, 1956, even though after making such purchase the appellant subjected them to the process of cutting heads and tails, pealing deveining, cleaning and freezing before export because they remained the same goods in commercial parlance after such processing and freezing. The case of Union of India and Anr. v. Delhi Cloth and, General Mills Limited (supra), was claimed by Mr. Bhattacharjee to be really supporting his contentions as in the instant case because of the process of packing, "package tea" which is a new substance and commercially known, as such, is b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the provisions of the statute and the Schedule and particularly when, the language is quite clear and explicit to attract excise duty. According to him, the terms of the charging section under the said Act is absolutely clear and on the basis thereof, the imposition and levy of duty as made, should be held to be due and proper. 50. Mr. Bajoria sought to distinguish the case of Rahim Manji and Anr. v. Sk. Ekbar (supra) on facts, and also claimed that the determinations in Chowgule & Co. Pvt. Ltd and Anr. v. Union of India and Ors. (supra) was one on completely different facts. It was his further submission that the observations in Commissioner of Income Tax, Madras v. Ajax Products Ltd. (supra) would not apply in this case and the determinations in Collector of Central Excise v. Fine Marbles & Minerals Pvt. Ltd., etc. (1985) 9 ECR 504 and Collector of Central Excise v. Fine Marbles, etc. (1984) 9 ECR 1493 would not also apply in this case in view of the submissions as made in connection with the lobster case. 51. In his reply, Mr. Bajoria also contended that under Section 3 of the said Act the taxable event should be things produced and manufactured in India. He contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant had purchased duty-paid tea and therefrom they merely packed them for the purpose of selling, would not be enough or sufficient to bring such package tea within the definition of "manufacture" as in Section 2(f) of the said Act. He further pointed out that asbestos rock as involved in this case under reply was not saleable and such being the position, under what context the concerned determination was made will have to be looked into. While dealing with the case of Mother India Refrigeration Industries (P) Ltd. v. Superintendent of Central Excise and Ors., 1980 ELT 600, Mr. Bajoria contended that chargeability being the basis of the levy of duty, mere placing "package tea" in the Schedule without changing the definition of manufacture would not be enough. His further contention was that manufacture only attracts excise duty and the entry of a product, if made in the Schedule, would be immaterial for imposition of levy of duty. Mr. Bajoria made a further reference to the case of State of Maharashtra v. Central Provinces Manganese Ore Co. Ltd. (supra) and submitted that in view of the tests regarding manufacture as laid down or indicated therein and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bonds India Ltd. and Anr. v. Union of India and Ors.), there would be some distinguishing features, as Brooke Bonds were and are purchasing tea from tea gardens and then sell them after mixing. He pointed out that Brooke Bonds are blenders and his clients, viz., the appellants are not blenders, but they are selling tea as purchased, after packing them in the manner as indicated herein before. 54. We have indicated hereinbefore, the distinguishing features which Mr. Bajoria pointed out in his case and F.M.A.T. No. 2338 of 1983, which was an appeal by Brooke Bond India Ltd. (hereinafter referred to as the said Company) and another, against the determinations of D.K. Sen, J. as made on 14th July, 1983 and in support whereof, Mr. Jatin Ghosh appeared. By the said judgment and order, Civil Order No. 15368(W) of 1982, which was obtained on July 1983 and was heard at the instance of the parties on merits and without any rule nisi being issued, was dismissed and it was held amongst others that the company was not entitled to the orders as prayed for and as such, the application was disposed of. We have also indicated earlier, the material findings of the said learned Judge, on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 provides for a specific rate of duty on tea excluding instant tea packet in any kind of container containing not more than 27 kg. net weight and the said clause does not lay down any distinction in quality or value or any other factor which distinguishes tea packed in small packets from tea packed in bulk, i.e., 27 kg. or more. It was also contended that the process of blending or packing of tea carried out by the said company does not bring into existence any new product having a distinctive name, character and use, different from the product which is to be processed and there is no transformation and the article, i.e., manufactured product known as "tea" includes all varieties of the product known commercially as tea, and also includes green tea and "instant tea". (1) Tea, all varieties except package tea and "instant tea" falling within sub-items (2) and (3), respectively of this item. (2) Package tea, that is to say, tea packed in any kind of container containing not more than 28 kilograms net of tea but excluding "instant tea". (3) Instant tea, according to the said company, tea really remains the same before and after blending and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the time of manufacture of tea in the processing centres in the gardens and not packaging of manufactured tea at some other place after clearance from the factory/processing centres on payment of duty. It was the further case of the said company that the said sub item (2) means and should mean packaging of tea at the time of carrying on manufacturing operation in the factory/processing centre and not after clearance or despatch of manufactured product at any subsequent stage. According to the said company, mere packaging of tea after clearance of the manufactured tea from the gardens does not amount to manufacture, independently of a new article and as such also, as indicated earlier, item 3(2) has no application and the said sub item should be so construed and given such a meaning in the light of Section 3 of the said Act and any other construction and meaning given to the said sub-item (2) of the Schedule, would be invalid and ultra vires entry No. 84 of List 1 of the Seventh Schedule of the Constitution. It was also pointed out that Clause (2) of item 3 should be construed in the light of section of the said Act and that Schedule I of the said Act is a part of the same and if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge tea in their various factories situated in different parts of India in automatic method and/or process right from blending, packaging and levelling, all by mechanical means. Since 1953, on account of the said amendment as mentioned above, the petitioner became liable to pay excise duty on such packaged tea. The petitioners since 1953 have been submitting returns to the respondents of their manufacture and/or production by mechanical methods of such package tea in their factory premises and had been observing excise formalities including taking out licence for manufacture of excisable product namely package tea falling under tariff item 3(2) and has been paying excise duty in respect of the same voluntarily. He has craved leave to refer to such records including those relating to the licence, (c) they have been employing qualified and experienced persons in the trade for the purpose of manufacturing or producing such package tea. Such packaged tea as manufactured and/or produced by the said company and various other persons are a well-known product in the market and in the commercial and trade parlance, the same is well known and treated as distinct and different from loose tea w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenges as thrown now, are wholly untrue, misconceived and not maintainable. It has further been claimed that the said company is not diligent at all and if not on any other ground, at least on that ground alone, the application was liable to be dismissed. Apart from the above defence, in support of their contentions for dismissal of the writ proceedings, the said company has also claimed such dismissal on the ground of availability of other alternative and efficacious remedy and for admitted non availing of the same. The said company has specifically claimed the application to be wholly misconceived, speculative, harassing and not maintainable (a) as the Parliament has specifically included package tea as a particular item in the Schedule to the said Central Excises and Salt Act, 1944 and the petitioner is not entitled to question its validity on the ground that such product did not involve manufacture, (b) the said company are guilty of gross delay and laches and no proper or any grounds or reasons have been given explaining such delay or laches. In any event the petitioners have no been diligent and as such is not entitled to any relief in the present application, (c) they h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Clause (2) would not be attracted if the operation was only blending. It was also contended that the definition of the expression "manufacture" in Clause 2(f) of the said Act made it clear that mere packing in a small container from a larger bulk would not amount to manufacture of a new article. It was also contended that manufacture envisage a process by which the original commodity would lose or change its identity and the new product having a distinct name, character or use would come into existence. It was further contended that the impugned levy in the instant case was bad on the ground of double taxation as mentioned earlier and it was also the case of the said company that the fact that they have been paying excise duty all along without protest, could not preclude them from challenging the concerned levy at the late stage, as in this case. 67. We have indicated earlier the observations made by the learned Trial Judge on the cases as cited before him. 68. Before us, Mr. Ghosh appearing for the appellant placed the relevant facts as indicated hereinbefore and contended that Section 3 of the said Act is a charging section, which deals with levy at the rate as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the factory gate must necessarily be included in the value for the purpose of levy of excise duty. But when a number of these cartons are put in corrugated fibre board containers for delivery, the cost of the further packing incurred for putting cartons/outers in the corrugated fibre board containers cannot be included in the value of cigarettes for the purpose of assessment of excise duty. Thus, further packing of cartons in which the packets of cigarettes have been packed in the corrugated fibre board containers is not, indeed, in the course of delivery to the buyer in the wholesale trade at the factory gate but is only for the purpose of facilitating the smooth transport of the cartons containing the packets of cigarettes to the buyer in the wholesale trade. On a proper construction of Section 4(4)(d)(i) of the Act read with the explanation, the secondary packing done for the purpose of facilitating transport and smooth transit of the goods to be delivered to the buyer in the wholesale trade cannot be included in the value for the purpose of assessment of excise duty. It is perfectly conceivable that the wholesale dealer who takes delivery may have his depot at a very short d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of particular kind of packing is not relevant. The real test, whether cost of a particular kind of packing is includible in the assessable value of the article, is whether such packing is done in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of goods for assessment to excise duty. But as held in the Bombay Tyres International's case 1983ECR653D(SC) , this is subject to the condition that if any special secondary packing is provided by the assessee at the instance of a wholesale-buyer which is not generally provided as a normal feature of the wholesale trade, the cost of such special packing would not be includible in the value of goods and would have to be deducted from the wholesale cash price. Section 4(4)(d)(i) enacts an inclusive definition of "value" and provides that "value" in the relation to any excisable goods, where the goods are delivered at the time of removal in a packed condit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leaving it to a later date when this question would directly came up for consideration on the facts of a particular case. On the basis of such determinations of the Supreme Court as indicated above, it was Mr. Ghosh's specific submission that packing of tea in small containers, thus, cannot be subject matter of levy, since levy is on manufactures of tea. 69. He further pointed out that on the basis of the scheme of the said Act, levy is on manufacture or on manufactured goods and in such case the manufacturer is to pay the duty. According to him, every word in the tariff item as involved in this case, has a separate meaning and that will have to be considered by the Court. It was further pointed out by Mr. Ghosh that package tea is a class species and since there has been no mention about blending in the concerned provisions of the statute, so, even when blending is made, the tea after blending and packaging would not be liable to any levy. Mr. Ghosh further pointed out that the Schedule to the said Act must be deemed to be a part of the same in some cases and thus there should be harmonious construction with the concerned Schedule and section. 70. It was Mr. Ghosh's fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er bulk, as purchased from auctions will not be a case of manufacture. To establish his submissions as indicated hereinbefore, he also relied on the case of S.B. Sugar Mills and Anr. v. Union of India and Anr. (supra), where the meaning of the word "manufacture goods" have been considered and on placing reliance on the case of Union of India v. Delhi Cloth Mills Co. Ltd. (supra), the Supreme Court has in fact and effect observed in the manner as was done in that case. Then, a reference was made by Mr. Ghosh to the case of The Deputy Commissioner, Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Pio Food Packers (supra), where on consideration of the large number of cases, the point which arose for consideration as to whether the processing of the original commodity bring into existence a commercially different and distinct article? The case under consideration was under the provisions of Kerala General Sales Tax Act, 1963 and the effect of consumption of a commodity in the process of manufacture under Section 5A(1)(a) of that Act was considered and it has been held that if the provisions as indicated hereinbefore, are truly read, they would speak of goods consumed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the market, apart from holding that the mere giving of a new name by the seller to what is really the same product is not the ''manufacture" of a new product. In that view of the matter Mr. Ghosh wanted to supplement his submissions to the effect that blending or packaging of tea in small packets from bulk tea cannot thus be considered to be a case of manufacture. He then referred to the case of Chowgule & Co. Pvt. Ltd., and Anr. v. Union of India and Ors. (supra) and on a reference to the observations as made therein, submitted that processing as in this case, would not amount to manufacture. As submitted earlier, he restated further that every process no doubt would bring a change but every change will not be a case of manufacture and the test in this case would be whether on such manufacture as claimed the original tea loses its quality, character and use in the commercial market. Following the determinations in the case of Piramal Spinning and Weaving Mills Ltd. v. Union of India (supra), the Bombay High Court has observed that by blending or twisting of cotton and nylon yarn no new product came into existence, within the meaning of Section 2(f) of the said Act, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new excisable goods and because excise duty levied on them, would not be proper or such levy would be ultra vires the concerned items of the tariff. The definition of "manufacture" in Section 2(f) has also been held to be an inclusive one and it has also been observed that the section of the said Act being the charging section, levies duty on all excisable goods which are produced or manufactured in India. The question is whether the dismantling of a ship comes within the phrase, "produced or manufactured in India". It is to be noted that the definition of "manufacture" given in Section 2(f) is an inclusive definition. Certain activities which might not otherwise be regarded as manufacture has been specifically included in the definition of "manufacture". It is argued on behalf of the Department that second part of the definition has specifically provided that process relating to any goods in the Section or Notes of the Schedule to the Central Excise Tariff Act, 1985 will have to be regarded as "manufacture" is without any substance. The Department has not been able to show any Chapter Notes or Section in which the activity of disma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on has assessed the scrap import requirements of the country for 1986-87 at 1.4 million tonnes. Therefore, the question will have to be examined in the context of economic realities. Judicial notice must be taken of the fact that ship breaking has become a big industry in India. The main object of this ship breaking industry is to obtain waste and scrap for sale in the market. The things that are obtained by breaking up of ships have a ready market. The ships are broken up for the purpose of catering to the demands of mainly mini steel plants and re-rolling mills. Ships are being imported regularly from foreign countries for the purpose of breaking in India. When there is an organised activity on such a large scale for obtaining waste and scrap it is difficult to hold that the end product of the activity "waste and scrap", cannot be regarded as products of the industry. Therefore, waste and scrap obtained by dismantling of ships in the instant case, must be regarded as "goods" which are "produced or manufactured in India", hence, liable to duty under Section 3 of the Central Excise Act. There having been no activity in this case, in the matter of blend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms "excisable goods" as used in Section 3 of the said Act and claimed that the said term would mean and include goods produced and therefore, the same would also include goods manufactured. It was his specific and further contention that when the Parliament has elected to put package tea in the Schedule, this Court will not be entitled and justified to interfere. To establish the effect of putting the item in the Schedule, reference was made by him to the case of Union of India v. Hindu Undivided Family Business known as Ramlal Mansukhrai, Rewari and Anr. (supra). It was his further and specific submission that when classification of the product/goods has been made in the Schedule and as indicated earlier, the Parliament put the concerned item in the Schedule, the validity thereof cannot be gone into and questioned or challenged. He also referred to the case of Kores (India) Ltd. v. Union of India (supra), a Division Bench determination of the Bombay High Court, and which has held that when Parliament has specifically included a particular product in the Schedule to the said Act, the validity of the same cannot be questioned on the ground that the said product did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal and since that determination was also and really the basis of the determinations in the other Appeal, Mr. Gupta appearing in support of the same contended, that the observation as made by the learned Trial Judge in Brook Bond's case, on the leviability of package tea or his determinations on the effect of Section 2(f) of the said Act and the Schedule, were improper and he also contended that when admittedly, there has been inconsistency between the Schedule and the section, the section should have precedence and in not holding so, the learned Judge was wrong. We have also indicated earlier, the cases which were cited by Mr. Gupta, Mr. Bajoria and also by Mr. Bhattacharjee and how they wanted to distinguish the cases as cited by their adversary. 79. On consideration of the cases as cited, so also the submissions as made by the learned advocates, we feel that package tea is itself a concept and the same has a different and distinct use from the bulk tea as purchased and such package tea grew as a concept and gained popularity prior to 1953. In fact, because of such gaining of package tea as a concept, the same has been levied to tax by the Legislature and as such, the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax on package tea and there can hardly be any doubt, that when package tea has been included in the tariff, the imposition or levy as made, was authorised, more particularly when, such was the intention of the legislature, which should be culled out from the nearest proximity and against, must have preference. In any event, the will of the Legislature will have to be honoured and should receive preference and to give effect to the same, the Court should not give such construction, which will create any ambiguity. While making such determination as above, an Act has to be read and construed as a whole and the Schedule to the same is to be treated as a part of the Act and the first and foremost endeavour of a Court should be, to avoid any ambiguity, which again cannot be achieved in this case, if the Schedule to the said Act is considered separately from the provisions of the said Act. While on the point, we find and hold, if two constructions are possible, which incidentally was the claim and counter claim of the parties before us, that one, which leads to any uncertainty and ambiguity must be avoided or which interpretation would preserve the provisions from the challenge of unco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s case that package tea is not necessarily produced or manufactured by the undertaking which manufactures tea in bulk and furthermore, package tea is sold to a class of buyers different from the class which purchase tea in bulk and which can be treated as a different commercial item. 83. We thus hold that the duty as levied on package tea is valid and legal and the said item/product is a separate and specific excisable item. 84. Thus the two appeals under consideration should be dismissed. 85. We order accordingly. There will however be no order as to costs in the appeals. 86. Consequent to our findings as above, we also dismiss the appeals in F.M. A.T. Nos. 95 and 96 of 1986 where, in fact no separate arguments were advanced by the learned advocates, as the points as involved, would be covered by the judgment as proposed by us in F.M.A.T. No. 4198 of 1985 and F.M.A.T. No. 2338. There will be no order as to costs in these appeals also. Since the point involved in this case are not only matters of great public importance and also requires the determination by the Hon'ble Supreme Court, as prayed for by the learned Advocates appearing for the appellants, we grant necessary c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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