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TMI Blog1974 (11) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... lidity of clause (b) of notification of the Government of India, Ministry of Finance (No. 205/67-C.E., dated September 4, 1967) on the ground that clause (b) is violative of the fundamental right of the respondent under Article 14. The High Court allowed the petition and this appeal, by special leave, is filed against the order. 3. Section 3 of the Central Excises and Salt Act, 1944 (for short, 'the Act') imposes excise duty on manufacture in respect of items mentioned in Schedule I of the Act. Match boxes are mentioned in Item 38 of the said Schedule and duty is leviable on the manufacture of match boxes at the rates specified therein. For the purpose of levy of excise duty match factories were classified on the basis of their production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xceeds 100 million matches, the entire quantity cleared during the financial year will be charged to duty at Rs.4.30 per gross. This notification, however, enabled the manufacturers with a capacity to produce more than 100 million matches and who were clearing more than 100 million matches during the previous years to avail of the conessional rate of duty at Rs. 3.75 per gross by filing a declaration as visualized in the proviso to the notification by restricting their clearance to 75 million matches. This would have defeated the very purpose of the notification namely, the grant of concessional rate of duty only to small manufacturers. In order to avert this tendency on the part of the larger units, the notification date July 21, 1967 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sification was unreasonabe inasmuch as the fixation of the date for making the declaration, namely, September 4, 1967, as the basis of the classification between those who are entitled to the benefit of the concessional rate of duty an those who are not so entitled, has no nexus with the object of the Act. The High Court said that all manufacturers whose estimated production would not exceed 75 million matches in the financial year 1967-68 would fall under one class and the fact that some among them filed the declaration before September 4, 1967, is not different .... having a nexus with the object of the Act for putting them in a different class. The High Court, therefore, came to the conclution that there was no difference between the two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to benefit the large units which had split up into smaller units to earn the concession. The tendency towards fragmentation of the bigger units into smaller ones in order to earn the concessional rate of duty has been noted by the Tariff Commission in its report (see the extract from the report given at p. 500 in M. Match Works v. Assistant Collector, Central Excise, AIR 1974 SC 497. The whole object of the notification dated September 4, 1967, was to prevent further fragmentation of the bigger units into smaller ones in order to get the concessional rate of duty intended for the smaller units and thus defeat the purpose which the Government had in view. In other words the purpose of the notification was to prevent the larger units who we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter of granting concession are exemption from tax, the Government has a wide latitude of discretion. It need not give exemption or concession to everyone in order that it may grant the same to some. As we said, the object of granting the concessional rate of duty was to protect the smaller units in the industry from the competition by the larger ones and that object would have been frustrated if, by adopting the device of fragmentation the larger units could become the ultimate beneficiaries of the bounty. That a classification can be founded on a particular date and yet be reasonable has been held by this Court in several decisions [see M/s. Hathisingh Mfg. Co. Ltd. v. Union of India, (1960) 3 SCR 528 at p. 543 = (AIR 1960 SC 923 at p. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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