PIECO ELECTRONICS AND ELECTRICALS LTD.versusCOLLECTOR OF CENTRAL EXCISE, PUNE

A            PIECO ELECTRONICS AND ELECTRICALS LTD.
                                         v.
                COLLECTOR OF CENTRAL EXCISE, PUNE

                               OCTOBER 24, 1996

B                    (S.P. BHARUCHA AND S.C. SEN, JJ.]

        Provisional Collection of Taxes Act 1931, s.3 r/w Central Excise Tariff,
  Entry 15 A, Entry 68-Whether declaration as to enforceability of amendment
  forthwith applied to goods exigi,ble to excise duty but exempt from payment of
C duty-Held, no; there was neither fresh imposition nor increase of excise duty
  by the amendment and therefore, declaration would not apply.

          The appellants manufactured plastic piece parts such as radio
    cabinets and knobs which fell within entry 15A(2) of the Central Excise
    Tariff. However, these were exempt under a separate notification from
D   payment of excise duty. By the Finance Bill, 1982 ['Bill'], introduced on
    February 27, 1982, Entry 15A(2) was proposed to be amended whereby the
    plastic pieces fell outside the scope of that entry and became exigible to
    duty under Entry 68. The Bill contained a declaration as required by s.3
    of the Provisional Collection of Taxes Act, 1931 ('Act') bringing the amend·
E   ment into effect one day after the Bill was introduced in Parliament..

          The appellants contended that by virtue of the said declaration, the
    amended Entry 15A(2) had come into operation on February 28, 1982.
    From that day the plastic piece parts fell outside the ambit of that Entry
    and were liable to excise duty under Entry 68. The Tribunal came to the
F   conclusion that the plastic piece parts continued to remain under Entry
    15A(2) until the enactment of the said Bill on April 19, 1982, whereupon
    they become classifiable under Entry 68.

          Dismissing the appeal, this Court

G          HELD : 1.1. The plastic piece parts being exigible to excise duty even
    under the unamended Entry 15A but being exempt from payment by reason
  · uf the notification, there was no "imposition" of excise duty upon them and
    they became liable thereto under Entry 68 only when the Bill was enacted
    and not from February 28, 1982, the date mentioned in the declaration.
H                                                                       [668·A·B]
                                         664
                                                                                    }
         , , riLECIRON!CSAND ELECTRICAI.Sv. ffilLECIOROF C.E. [BHARUCHAJ.j   665

      1.2. Where, by reason of a Bill the customs or excise statute is to be       A
amended either to impose duty for the fist time or, where it is already
imposed, to increase it, the declaration under the Act made the imposition
or increase effective upon the introduction of the Bill. The Act does not
take account of exemption notifications for they apply only when goods are
exigihle to duty but, thereby, the payment of duty or a part thereof is            B
exempted. [667-G-H]

        CIVIL APPELLATE JURISDICTION : Civil Appeal No. 488 of
1986.

     From the Judgment and Order dated 29.8.85 and 6.9.85 of the                   C
Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in
A.No. ED (SE) T.A. No. 484/83-C (Order No. 642/85-C.)

        M.S. Ganesh, R. Narain, S. Narain and Ashok Sagar for the Appel-
!ant.
                                                                                   D
        R. Mohan, T.V. Ratnam and R.B. Misra for the Respondent.

        The Judgment of the Court was delivered by

     BHARUCHA, J. This appeal relates to the Provisional Collection of
Taxes Act, 1931.                                                                   E
      The appellants manufacture plastic piece parts such as radio
cabinets, knobs, etc. The plastic piece parts fell within the scope of Entry
15A(2) of the Central Excise Tariff, but they enjoyed the benefit of
exemption from payment of excise duty under an Exemption Notification
(no. 68/71).                                                                       F
     The Finance Bill, 1982, was introduced in the Lok Sabha on 27th
February, 1982. It proposed, in clause (49), the amendment of the First
Schedule to the Central Excises Act in the manner specified in the Third
Schedule thereto. Entry 15A was proposed to be amended.
                                                                                   G
      Clause 2 of the proposed amendment, with which we are concerned,
read thus:

        "(2) Article of material described in sub-Item
        (i), the following namely :
                                                                                   H
    666                   SUPREME COURT REPORTS [1996] SUPP. 7 S.C.R.

A         Boards, sheeting, sheets films, whether Fifty per cent ad
          lacquered or metalised or laminated or not; lay valorem."
          that tubings not containing any textile material.

         The plastic piece parts fell outside the scope of Entry 15A(2) as
    proposed to be amended, and within the scope of the residuary Entry 68.
B
          The said Bill contained the following declaration :

            "Declaration under the Provisional Collection of Taxes Act, 1931.

                It is hereby declared that it is expedient in the public interest
c           that the provisions of clauses 43, 44, 45, 46, 47, 49, 50, 51, 52 and
            53 of this Bill shall have immediate effect under Provisicnal Col-
            lection of Taxes Act, 1931 (16 of 1931)."

          The Provisional Collection of Taxes Act, 1931, (the said Act) is an
D Act "to amend the law providing immediate effect for a limited period of
    provisions in Bills relating to the imposition or increase of duties of
    customs or excise". Section 2 thereof defines a "declared provision" to mean
    "a provision in a Bill in respect of which a declaration has been made under
    Section 3". Section 3 reads thus :

E           "3. Power to make declarations under this Act.- Where a Bill to be
            introduced in Parliament on behalf of Government provides for
            the imposition or increase of a duty of customs or excise, the
            Central Government may cause to be inserted in the Bill a decla-
            ration that it is expedient in the public interest that any provision
            of the Bill relating to such imposition or increase shall have
F           immediate effect under this Act."

  Under the provisions of Section 4 a declared provision has the force of law
  immediately on the expiry of the day on which the Bill containing it is
  introduced and it ceases to have the force of law under the provisions of
G the said Act when it comes into operation as an enactment.
          It was the case of the appellants that by virtue of the said declaration,
    Entry 15A(2) had come into operation on the expiry of the day on which
    the said Bill was introduced, that is, on 28th February, 1982. The plastic
    piece parts fell outside the ambit of Entry 15A(2), as sought to be
H   amended, with effect from 28th February, 1982, and were then liable to
     PIECX> ELECTRONICS AND ELECIRICAL'i v. COllECfOR OF CE. [BHARUCHA, J.J   667

 ei.cise duty under Entry 68. Prior to 28th February, 1982, there was no A
 excise duty payable on the plastic piece parts because of the exemption
 aforementioned. Consequent upon the proposed amendment, excise duty
 was payable thereon under Entry 68. There was, thus, an imposition of
 excise duty on the plastic piece parts and, by virtue of the said declaration,
 the amendment of Entry 15A(2) came into effect on 28th February, 1982,
                                                                                B
 so that from that date they were liable to excise duty under Entry 68. The
 Tribunal came to the conclusion that the plastic piece parts continued to
 remain under Entry 15A(2) until the enactment of the said Bill on 19th
 April, 1982, whereupon they became classifiable under Entry 68. It is that
 order of the Tribunal which is under challenge.
                                                                                    c
        Learned counsel for the appellants contended that amendment of
  Entry 15A(2) brought about an imposition of excise duty on the plastic
  piece parts. The said declarati~aving been made, the amended Entry
  15A(2) came into effect on the expiry of the day on which the said Bill was
' introduced, that is, on 28th February, 1982. The basis of the submission          D
  was that articles falling under the unamended Entry 15A(2) were exempt
  from excise duty by reason of the aforesaid Exemption Notification. By
  reason of the proposed amendmen~ of Entry 15A(2), the plastic piece parts
  became liable to duty under Entry 68. The plastic piece parts were,
  therefore, liable to excise duty under Entry 68 on and after 28th February,       E
  1982. It was also submitted that no attack by the Revenue on its own
  declaration should be entertained.


       As we see it, the submission on behalf of the appellants proceeds
 upon an erroneous footing. Section 3 of the said Act empowers the F
 Government, where a Bill to be introduced on its behalf "provides for
 imposition or increase of a duty of customs or excise", to insert in the Bill
 a declaration that "any provision of the Bill relating to such imposition or
 increase shall have immediate effect under the Act". What is requisite is
 that by reason of the Bill the customs or excise statute is to be amended
 either to impose duty for the first time or, where it is already imposed, to G
 increase it. By making the declaration under the said Act the imposition
 or increase becomes effective upon the introduction of the Bill. The said
 Act does not take account of Exemption Notifications for they apply only
 when goods are exigible to duty but, thereby, the payment of duty or a part
 thereof is exempted.                                                          H
    668                   SUPREME COURT REPORTS [1996) SUPP. 7 S.C.R.
A         The plastic piece parts were, even under the unamended Entry 15A,
    exigible to excise duty but, by reason of the aforesaid Exemption Notifica-
    tion, exempted from the payment thereof. That, consequent upon the
    amended Entry 15A, the plastic piece parts would become liable to the
    payment of excise duty did not mean that there was an "imposition" of
B   excise duty upon them or that they became liable thereto under Entry 68,
    not when the said Bill was enacted, but from 28th February, 1982.

          It cannot be said that in advancing the argument which the Tribunal
    accepted, as we do, the Revenue made an attack on its own declaration.
    The Revenue was entitled to urge the true scope of the declaration as
C   applying only where there was, in fact, an imposition or increase in excise
    duty by virtue of the said Bill.

           The appeal is dismissed. No order as to costs.

    S.M.                                                    Appeal dismissed.