TMI Blog1976 (8) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... bjected to any uniform rate of excise duty. In entry 17 of the First Schedule, though enumerated under a broad heading of " Paper " the different varieties are not only differently enumerated but are subjected to different rates of excise duty. The Finance Act of 1965, in providing some tax relief, introduced a new scheme of tax credit certificate in Chapter XXIIB including therein a provision for such a credit certificate in relation to increased production of certain goods in section 280ZD. That provision is set out hereunder : " 280ZD. Tax credit certificates in relation to increased production of certain goods.--(1) Subject to the provisions of this section, a person, who during any financial year commencing on the 1st day of April, 1965, or any subsequent financial year (not being a year commencing on the 1st day of April 1970, or any financial year thereafter) manufactures or produces any goods, shall be granted a tax credit certificate for an amount calculated at a rate not exceeding twenty-five per cent. of the amount of the duty of excise payable by him on that quantum of the goods cleared by him during the relevant financial year which exceeds the quantum of the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o for redemption of its debentures. (6) In this section-- (a) 'base year', in relation to an existing undertaking which manufactures or produces the goods referred to in sub-section (1), means the financial year commencing on the 1st day of April, 1964, and in relation to any other undertaking, the financial year in which such undertaking begins to manufacture or produce such goods; (b) 'duty of excise' means the duty of excise leviable under the Central Excises and Salt Act, 1944 (1 of 1944)." The scheme referred to in the above provision known as the Tax Credit Certificate (Excise Duty on Excess Clearance.) Scheme, 1965 (hereinafter referred to as the "said Scheme"), was framed by the Central Government in exercise of the powers under section 280ZE by a notification dated November 5, 1965. Paragraph 3 of the said Scheme provides that, subject to the provisions of the Scheme, a certificate shall be granted in respect of any class of goods specified in column 2 of Schedule I to this Scheme and falling under the item specified in the corresponding entry in column 3 thereof for the amount calculated at the rate specified in the corresponding entry in column 4 of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntaining mechanical wood pulp amounting to not less than fifty per cent. of its fibre content. (4) Newsprint referred to in S. No. (3) 17 25% " --------------------------------------------------------------------------------------------------------------------------------------------------- The sole respondent who manufactures paper and paper board as stated hereinbefore claimed the benefit under the aforesaid Scheme for 4 years on the basis of excess clearance of different varieties of papers manufactured and cleared by the company for these years. For the year 1966-67, the company made an application in the statutory form before the appellant, Central Authority, for grant of a tax credit certificate under the said Scheme and the amount of credit claimed was Rs. 9,88,893.18. It is not in dispute that such a claim was made on the basis of quantities of each variety of paper manufactured and cleared by the company from individual mills of its own. Thus, the company not only based the claim for the benefit mill-wise but also on the basis of each variety of paper manufactured by it. The Central Authority, however, by its order dated February 2, 1968, allowed the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf constitutes goods within the meaning of the term used in the provision. Secondly, it was contended that such benefit should be allowed mill-wise or unit of production-wise and not on the basis of overall clearance of such goods from all the units of production. The learned judge in the trial court upheld the first of the aforesaid contentions raised by the respondent-company but overruled the second one. The rules were accordingly made absolute in part and the assessments being set aside, the Central Authority was directed to make a fresh assessment in accordance with law and in the light of his decision. The Union of India and the Central Authority, who were contesting the said rules, being aggrieved by the decision of the learned judge in the trial courts, have come up with these appeals. In these appeals the appellants claim that the assessments as made by the Central Authority should be upheld because assessment should be made on paper as a whole and not on the basis of individual varieties thereof so that the assessing authority had rightly set off the shortfall in production of one variety against the excess production in the other. In two out of three appeals, namely, F.M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment of the tax credit admissible under section 280ZD. Mr. Bose, Mr. Sanyal and Mr. Mukherji appearing on behalf of the appellants in the three appeals have challenged the correctness of the view taken by the learned judge in the trial court. In their fairness they, however, conceded that a great amount of ambiguity is left by the use of the term " goods " not defined in the Act with reference to which the tax credit benefit is to be given. It has, however, been contended on their behalf that the apparent object behind the relief provided by section 280ZD being to stimulate industrial output, such an object is likely to be frustrated if the assessment of the excess manufacture and clearance be not made on the overall basis of all the varieties of papers manufactured and cleared by the respondent-company but is so done with reference to individual varieties thereof. It has further been contended on the authority of the decision of the Supreme Court in the case of V. V. Iyer of Bombay v. Jasjit Singh, Collector of Customs, AIR 1973 SC 194, that even if the term " goods " is capable of two meanings, the meaning assigned by the assessing authority not being totally an unreasona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e duty, say, 50 paise per kg., can reasonably be set off against any excess production of another variety of paper, the excise duty payable for which is higher, say, Re. 1 or Rs. 2 per kg. The basis of calculation being the excess clearance of goods with reference to the excise duty payable thereon, the goods must necessarily mean the different varieties individually, where such varieties are individually subjected to different excise duty. This view finds support from the definition of the term "goods" in the Scheme. Though not defined in the Act, this term has been defined in the Scheme to mean excisable goods and excisable goods on its definition under section 2(d) of Central Excises and Salt Act, 1944, must mean the individual varieties specified in the First Schedule and subject to different duties of excise. This definition being quite consistent with the provisions of the Act and the Scheme framed thereunder, must be taken to be the true meaning of the term " goods " in the section. We are also in agreement with the learned judge in the trial court that even if we take the term " goods " to mean an article which is ordinarily bought and sold in the market even then the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent-company and bought and sold as distinct and different goods in the market and which again are subject to different rates of excise duties must be construed to be different and distinct goods for the purpose of grant of the tax credit certificate under the said section and the Central Authority wag, therefore, clearly in the wrong in assessing the amount of the credit admissible to the respondent-company with reference to the excess determined by setting off the shortfall in production in one variety against the excess in the other and the learned judge in the trial court was right in his conclusion that the tax credit is to be computed in respect of each variety or quality of paper which forms a distinct class of goods for the purpose of excise duty and so also for the purpose of section 280ZD of the said Act. It is difficult to accept the contention put forward on behalf of the appellants that such a construction may frustrate the object of stimulating industrial output. On the materials now before us it is not possible to conclude that in a manufacturing process as carried on by the respondent-company it is possible to divert the manufacturing process of one variety ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Here, in the present case, we have considered the provision as in section 280ZD and in the relative Scheme. In our view, it is not possible to adopt two views as to the meaning of the term "goods" for reasons given by us hereinbefore. Moreover, the term has been defined by the Scheme to give it a meaning we have adopted. Therefore, it can hardly be said that the interpretation given by the Central Authority in making the assessment can in any way be said to be a reasonable view which should not be interfered with by this court. Hence, we find no merit in either of the two contentions put forward on behalf of the appellants. The appeals, therefore, must fail. We now proceed to consider the two cross-objections filed by the respondent in two of the appeals. In these cross-objections, the claim put forward by the respondent is that the tax credit is to be calculated on the basis of the quantum of goods of a particular class or variety cleared from one of its factories and the production of all the factories should not be taken into account ; it is further contended that the learned judge in the trial court is wrong in overruling such a claim. We, however, find no merit in this cla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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