TMI Blog1964 (7) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... work on behalf of the appellant on payment of weaving charges fixed at 19 np per yard which included expenses the Society would have to incur in transporting yarn from Bombay and Cotton fabrics woven by the Society to Bombay. The appellant was to supply yarn to be delivered at Bombay to the Society and the Society was to make its own arrangement to bring the yarn to its factory at Gandevi. Clause II provided that the yarn supplied by the appellant remaining either in stock or in process or in the form of ready-made prices would be in the absolute ownership of the appellant and the Society, as the bailee of the yarn, undertook to take such care of it as it would normally take if the yarn belonged to it. The Society also undertook to have the yarn insured against fire, theft and all other risks including transit risks and further undertook to reimburse the appellant in case it failed to do so. The terms of the agreement though recorded on October 12, 1959 were to be deemed to be effective as from April 21, 1959 and the agreement was terminable by either party by giving one month's notice. 3. The Society was a co-operative society carrying on its work at Gandevi and was regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able goods , as meaning goods specified in the Fist Schedule as being subject to a duty of excise, Item 19 in the First Schedule provides for excise duty of different rates depending upon the variety of cotton fabrics. Section 3 which is the charging section, provides for the levy and collection of duties specified in the First Schedule on all excisable goods which are produced or manufactured in India. Rule 8 authorises the Central Government to exempt any excisable goods from the whole or any part of duty payable on such goods. Clause (1) of Rule 9 provides that no excisable goods shall be removed from any place where they are produced, cured or manufactured or any premises appurtenant thereto, which may be specified by the Collector in this behalf, whether for consumption, export or manufacture of any other commodity in or outside such place, until the excise duty leviable thereon has been paid at such place and in such manner as is prescribed. Clause (2) of that rule provides that if any excisable goods are in contravention of sub-rule (1), deposited in, or removed from any place specified therein, producer or manufacturer thereof shall pay the duty leviable on such goods upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s superseded. By this notification the Central Government exempted cotton fabrics produced on power-looms owned by any co-operative society or owned by or allotted to the members of the society from the whole of the duty leviable thereon subject to the four conditions therein set out. The notification dated April 30, 1960 is to the following effect. In pursuance of sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, as in force in India and as applied to the State of Pondicherry, and in supersession of the notification of the Government of India, Ministry of Finance (Department of Revenue) No. 74/59-Central Excises, dated the 31st July, 1959, the Central Government hereby exempts cotton fabrics produced on power-looms owned by any co-operative society or owned by or allotted to the members of the society, which is registered or which may be registered under any law relating to co-operative societies, from the whole of the duty leviable thereon subject to the following conditions : (a) that every member of the co-operative society who has been a manufacturer of cotton fabrics on power-looms, has been exempt from excise duty for three years immediately preceding the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t under the contract between the appellant and the Society there was no relationship of master and servant but the appellant supplied raw material and the contractor i.e., the Society produced the goods. But even on the assumption that the appellant had manufactured the goods by employing hired labour and was therefore a manufacturer, still the appellant was entitled to exemption from excise duty since the case fell within the language of the two notifications dated July 31, 1959 and April 30, 1960, and the cotton fabrics were produced on power-looms owned by the co-operative society and there is nothing in the notifications to suggest that the cotton fabrics should be produced by the co-operative society for itself and not for a third party before it was entitled to claim exemption from excise duty. It was contended on behalf of the respondent that the object of granting exemption was to encourage the formation of co-operative societies which not only produced cotton fabrics but which also consisted of members, not only owning but having actually operated not more than four power-looms during the three years immediately preceding their having joined the society. The policy was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... left there. Learned Counsel for the respondents is possibly right in his submission that the object behind the two notifications is to encourage the actual manufacturers of handloom cloth to switch over to power-looms by constituting themselves into co-operative societies. But the operation of the notification has to be judged not by the object which the rule-making authority had in mind but by the words which it has employed to effectuate the legislative intent. Applying this principle we are of opinion that the case of the appellant is covered by the language of the two notifications dated July 31, 1959 and April 30, 1960 and appellant is entitled to exemption from excise duty for the cotton fabrics produced for the period between October 1, 1959 to April 30, 1960 and from May 1, 1960 to January 3, 1961. It follows therefore that the appellant is entitled to the grant of a writ in the nature of certiorari to quash the order of the Assistant Collector of Central Excise of Baroda dated November 26, 1962 and the appellate order of the Collector of Central Excise dated November 12, 1963. 6. For the reasons expressed we hold that the judgment of the High Court of Gujarat dated Jul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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