1976 (10) TMI 36

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..... he newly inserted Item 26AA in the First Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act). That item was added to the Schedule by the Finance Act of 1962, and it was claimed by the Central Excise Department that, on the date of the amendment, the State Government was in possession of some stock of iron and steel products, namely flats, squares and rods in its factory, which had been obtained from their manufacturers when they were not excisable articles. The precise claim of the excise authorities was that the duty became payable on those articles by virtue of the newly inserted Item 26AA because the aforesaid stock of iron and steel products was used for the manufacture of agricultural implements like .....

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..... inable in the High Court as it raised a dispute between the Government of India and the State Government within the meaning of Article 131 of the Constitution. 3. The High Court rejected both the contentions of the Central Government and quashed the impugned demand notice and the appellate and the revisional orders. That is why the Union of India has preferred the present appeal. 4. It is not in controversy that the claim for the levy of excise duty was based on sub-sections (1) and (1A) of Section 3 of the Act which reads as follows :-  There shall be "3. (1) levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in India and a duty on salt .....

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..... levy of excise duty. It is true that the rods and bars were utilised for the manufacture of agricultural implements like shovels and spades, but those agricultural implements were not of the description specified in Item 26AA of the First Schedule with reference to Section 3 of the Act. It is admitted by Mr. Raman that agricultural implements 6. were included in the First Schedule to the Act and were not excisable articles. This appears to be so because they are the basic tools of trade by which a vast majority of the citizens of the country earn their livelihood. There could therefore be no question of levying any excise duty on shovels and spades or other agricultural instruments manufactured by the Implements Factory of the State .....

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