Supreme Court of India
UNION OF INDIA & ORS.versusM/S MODI RUBBER LIMITED
- Citation
- 1986 INSC 173
- Decided
- 18 August 1986
- Disposal
- Disposed off
- Bench
- P N BHAGWATI
Holding
The phrase "duty of excise" in the 1974 and 1981 notifications is limited to the basic duty payable under the Central Excise and Salt Act, 1944, and the 1982 Amendment and Validation Act is merely declaratory and not unconstitutional.
Summary
Modi Rubber Ltd, a tyre manufacturer, claimed that two Government notifications (1974 and 1981) exempted it from all forms of excise duty, including special and additional duties levied under various Finance Acts. The Central Government and the Revenue argued that the phrase "duty of excise" in those notifications referred only to the basic duty payable under the Central Excise and Salt Act, 1944. The Supreme Court examined the definition of "duty" in Rule 2(v) of the Central Excise Rules, 1944 and held that the notifications, issued under Rule 8(1) without reference to any other statute, could only exempt the basic duty. It further ruled that the Central Excise Laws (Amendment and Validation) Act, 1982 was merely declaratory and could not be struck down as unconstitutional. Consequently, the Court limited the exemption to the basic excise duty and rejected the assessee's broader claim. The appeals were allowed and the writ petition dismissed.
Issues considered
- Whether the expression "duty of excise" in the 1974 and 1981 notifications includes only the basic duty under the Central Excise and Salt Act, 1944 or also special, additional, and auxiliary duties levied under Finance Acts and other statutes.
- Whether the Central Excise Laws (Amendment and Validation) Act, 1982, which seeks to prescribe the interpretation of such notifications, is constitutionally valid.
Legislation cited
Subjects
excise dutyexemptioninterpretation of statutescentral excise rulesspecial duty of exciseconstitutional validitydeclaratory legislation
Judgment
A
UNION OF INDIA & ORS.
v.
MIS MODI RUBBER LIMITED
B
AUGUST 18, 1986
[P.N. BHAGWATI C.J., V. KHALID AND G.L. OZA, JJ.]
Exemption from duty in special cases-Government issuing two
Notifications on 1.8.74 and J.3.1981 using the expression "duty of
excise"-Whether the said expression is limited to basic "duty of excise" c
r· levied under the Central Excise and Salt Act, 1944 or it covers also
"special duty of excise" levied under various Finance Acts, additional
duty levied under the Additional Duty of Efccise (goods of special im,
.portancej Act, 1957 or any other kind of auxiliary duty of excise levied
under a Central enactment. D
The manufacture of tyres is subject .to duty of excise under tbe
Central Excise and Salt Tax Act, 1944. Section 3(1) of this Act provides
that there shall be levied and collected in such manner as may be pre-
scribed by Rules made under tbe Act duties of excise on all excisable
goods other than salt which are produced and manufactured in India. E
The word duty for the purposes of these Rules is defined in clause (v) of
Rule 2 to mean "the duty payable under section 3 of the Act." Section
8(1) authorises the C~htral Government to exempt from duty in special
cases by Notfficatlotis made thereunder. As such the exemption which
the Central Government can grant by issuing Notification under sub-
rule (1) of Rule 8 of the Act can only be from the whole or any part of F
~ the duty of excise payable under section 3 of the Act.
Since 1963 special duty of excise was levied inter a/ia on manu-
facture of tyres from year to year up to 1971 by various Finance Acts
passed from time to time. The levy of special duty of excise was discon-
_tinued from 1972 until 1978 when it was again revised by the Finance G
Act, 1978. Thereafter, it continued to be levied from year to year.
By virtue of the powers vested in it, the Central Government
issued the Notification No. 123/74/C-E dated August 1, 1974. The asses-
see which manufactured "tyres" and who is_ eligible to exemption under
the said Notification, submitted, prior to 9.1t.1979, classification list in H
587
588 SUPREME COURT REPORTS [ 19861 3 S.C. R.
A terms of Rule 1738 of the Central Excise Rules, 1944 and paid excise
duty ou the basis .that the Notification dated August 1, 1974 granted
partial exemption only in respect of basic excise duty levied under the
Act and did not claim any such exemption in respect of special duty of
excise. However, on 9.11.1979 the assessee, while submitting its classifi-
cation list contended that by reason of the Notification dated 1.8.74 the
B
assessee was exempted from payment not only in respect of basic excise
duty levied under the Act but also in respect of special duty of excise
levied under the rele.vant Finance Acts because the language used in the
Notification was not restrictive and it referred generally "to duty of
excise" without any qualification and 'it, therefore, coVered all duties of
excise whether levied under the Central Excise and Salt Act, 1944 or
c under any other Central enactment. The Assistant Collector of Central
Excise rejected the claim and the assessee being aggrieved filed a writ
petition before the Delhi High Court. The Central Government issued
under Notification No. 27/81/C-E dated 1.3.81, during the pendency of
the writ petition, resulting in the amendment of the writ petition so as to
bring the question of interpretation of the second Notification as well.
D
The Delhi High Court upheld the contention of the assessee.
Meanwhile Parliament also enacted the Central Excise Laws (Amend-
ment and Validation) Act 1982 laying down statutory rules which
should guide the court in interpreting Notifications granting exemption
from payment of duty of excise etc. Hence the writ petition by the
E
assessee challenging the constitutional validity of the 1982 Amendment
and Validation Act and the appeal by Revenue after obtaining special
leave.
Allowing the appeal and dismissing the writ petitions, the Court,
r HELD: 1. The Central Excise Laws (Amendment and Valida-
tion) Act, 1982 is merely declaratory of the existing law and hence its
constitutional validity cannot be assailed. [6iJIB-CI
2. Under the Notifications dated 8th November, 1967, Isl August,
· 1974 and 1st March, 1981 the assessee is entitled to exemption only in
· respect of the basic duty of excise leviable under the Central Excise and
Salt Act, 1944 and are not entitled to claim any exemption in respect of
special duty of excise or additional duty of excise or auxiliary duty of
excise. [60 ID I
. .
3.1 The Notifications dated 1st August, 1974 and 1st March, 1981
H
U.0.1. v. MODI RUBBER LTD. [BHAGWATI,O:J 589
are issued under Rule 8(1) of the Central Excise Rules,.1944 and since i\
the definition of "duty" in Rule 2 Clause (v) must necessarily be pro-
jected in Rule 8(1) and the expression "duty of excise" in Rule 8 (!)
must be read in the light of that definition, the same expression used in
these two Notifications issued under Rule 8(1) simpliciter, without any-
thing more must also be interpreted in the same sense, namely, duty of B
excise payable under the Central Excise ;md Salt Act, 1944 and the
exemption granted under both these Notific~tions must be regarded as
limited only to such duty of excise, [598D-F] ·
3.2 Merely because, as a matter of drafting, the Central Govern-
ment has in some other Notifications specifically referred to the excise
duty in respect of which exemption is granted as "duty of excise"
leviahle under the Central Excise and Salt Act, 1944, it does not follow
that in the absence of such words of specificity in the 1974 and 1981
Notifications, the expression "duty of excise" standing by itself must be
read as referring to all duties of excise, The legislature sometimes, with
a view to making its intention clear beyond doubt, uses language ex [)
abundanti cautela though it may not be strictly necessary and even
withOut it the same intention can be spelt out as a matter or judicial
construction and this would be more so in case of subordin.ate legisla-
tion by the executive, [5%F-H]
3.3 Further the expression "duty of excise" in the Notification
E
dated 1st August 1974 could not possibly be read as comprehending
special duty of excise which did not exist at the date of this Notification
and came to be levied almost four years later, It is only when a new duty
of excise is levied, wl)ether special duty of excise or auxiliary duty of
excise or any other kind of duty of excise, that a question could arise
whether any particular article should be exempted from payment of
F
such duty of excise and the Central Government would then have to
apply its mind to this question and having regard to the nature and
extent ofsuch duty of excise and the obj~ct and purpose for which it is
levied and the economic situation including supply and demand position.
then prevailing, decide whether exemption from payment of such excise
duty should be granted and if so, to what extent. [597F-G: 598B-C]
G
3.4 Undoubtedly, by reason of sub-section 4 of section 32 of the
Finance Act, 1979 and similar provision in the other Finance Acts, Rule
8( 1) would become applicable empowering the Central Government to
• grant exemption from payment of special duty of excise, but when the
Central Government exercises this power, it would be doing so under
H
590 SUPREME COURT REPORTS [1986[ 3 S.C.R.
A Rule 8(1) read with sub-section 4 of section 32 or other similar provi-
sion.Jhe reference to the source of power in such a case would not be
just to Rule 8(1), it does not of its own force and on its own language
apply to granting of exemption in respect of special duty of excise, but
the reference would have to be to Rule 8( l) read with sub-section 4 of
B section 32 or other similar provision. Therefore, whether a Notification
granting exemption is issued only under sub-rule (1) of Rule 8 of the
Central Excise Rules 1944 without reference to any other statute mak-
ing the provisions of the Central Excise and Salt Act, 1944 and the
Rules made thereunder applicable to the levy and collection of special,
auxiliary or any other kind of excise duty levied under such statute, the
exemption must be read as limited to the duty of excise payable under
c the Central Excise and Salt Act, 1944 and cannot cover such special,
auxiliary or other kind of excise. In the instant case, the Notifications
were issued. under sub-rule (I) of Rule 8 of the Central Excise Rules
1944 simpliciter without reference to any other statute. [599C-D; 600D-E]
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
D
415-4.19of1983.
From the Judgment and Order dated 6.8.1982 of the Delhi High
Court in C.W.P. Nos. 1773 of 1979, 1517, 2156. 2410 and 2411of1981.
and
E WRIT PETITION NO. 498OF1983
Under Article 32 of the Constitution of India.
K. Parasaran, Attorney Gen., M. Chandrasekharan and C.V.S.
Rao for the Appellants in C.A. Nos. 415-419 of 1983 and Respondents
in Writ Petition No. 498of1983.
F
Soli J. Sorabji, H. Salve, T.M. Ansari and Ravindra Narain for
the Respondent in C.A. Nos. 415-419 of 1983 and for the Petitioners in
Writ Petition No. 498of1983.
The Judgment of the Court was delivered by
G
BHAGWA Tl, CJ. These appeals and writ petition raise a short
question of the construction of the expression "duty of excise" employed
in two Notifications issued by the Government of India under sub-rule
(I) of Rule 8 of the Central Excise Rules 1944, one bearing No. 123/
74-C.E. dated !st August 1974 and the other bearing No. 27/81-C.E.
dated !st March 1981. The question is whether this expression is
H
U.0.1. '·MODI RUBBER LTD. !BHAGWATI,CJ.! 591
mited in its connotation only to basic duty of excise levied under the A
Central Excise and Salt Act 1944 or'it also covers special duty of excise
levied under various Finance Bills and Acts, additional duty of excise
levied under the Additional Duty of Excise (goods of special import-
ance) Act 1957 and any other kind of Dnty of excise levied nnder a
Central enactment. If this question is decided in favour of the assessee B
and it is held, accepting the contention of the.assessee, that the expres-
sion "duty of excise" in the two Notifications is not confined only to the
basic duty of excise levied under the Central Excise and Salt Act 1944
and but also comprises special duty of excise, additional duty of excise
.r.; or any other kind of duty of excise, a further contention is raised on
~ behalf of the assessee challenging the constitutional validity of the
Central Excise Laws (Amendment and Validation) Act 1982 by which c
Parliament sought to lay down certain statutory rules for interpreta-
tion for arriving at the true meaning and content of the expression
.... "duty of excise" in the Notifications issued under sub-rule (1) of Rule
8 of the Central Excise Rules 1944 and which consequentially had the
effect of restricting the meaning and connotation of the expression
D
"duty of excise" in the two Notifications in question to basic duty of
excise levied under the Central Excises and Salt Act 1944. The facts
giving rise to these appeals and writ petition are few and may be briefly
stated as follows:
The assesse in these appeals and writ petition is a limited company E
which manufactures tyres. The manufacture of tyres is subject to duty of
excise under the Central Excise and Salt Act 1944. Section 3 sub-
section(i) of this Act provides that there shall be levied and collected in
\ such manner as may be prescribed by Rules made under the Act duties
L of excise on all excisable goods other than Salt which are p.roduced and
, - manufactured in India as and at the rates Set-Forth in the First
Schedule. The First Schedule enumerates various items of goods which F
are liable to duty of excise and also Set-Forth the rate at which the duty
· of excise shall be charged on those goods. Item 16 in the First Schedule
reads: "Tyres and Tubes" and the manufactures of tyres is therefore is
liable to excise duty at the rates Set-Forth in the First Schedule. Section
37 of the Act confers power on the Central Government to make rules
for carrying into effect the purposes of the Act and in exercise of this G
power the Central Government has made the Central Excise Rules
1944. Rule 8 of these Rules is material for the determination of the
question of interpretation which arises in these appeals and writ petition
and we may therefore reproduce it in extenso: .
~
"Rule 8. Power to authorise exemption from duty in spe-
H
592 SUPREME COURT REPORTS [1986] 3 S.C.R.
A •
cial cases-(!) The Central Government may from time to
time, by notification in the Official Gazette, exempt (sub-
ject to such conditions as may be specified in the notifica-
tion) any excisable goods from the whole or any part of
duty leviable on such goods.
B
(2) The (Central Board of Excise and Customs) may
by special order in each case exempt from the payment of
duty, under circumstances of an exceptional. nature, any
excisable goods." ·
The word "duty" for the purposes of these Rules is defined in Clause
c (v) of Rule 2 to mean "the duty payable under section 3 of the Act"
and obviously therefore the exemption which the Central Government
can grant by issuing Notification under sub-rule (1) of Rule 8 can only
he from the whole or any part of the duty of excise payable under
Section 3 of the Central Excise and Salt Act 1944:
D
It seems that the Central Government iSsued Notifications from
time to time under sub-rule (1) of Rule 8 exempting various categories
of excisable goods from the whole or any part of the excise duty levi-
able on such goods. So far as tyres are concerned, a Notification bear-
ing No. 123/74-C.E. dated 1st August 1974 was issued by the Central
Government exempting tyres for motor vehicles from a part of the
E
excise duty leviable thereon and since it is this Notification which inter
alia falls for construction, it would be desirable to set it out in full:
Notification No. 123/74-C. E. dated ]st August 1974 .
F
"In the exercise of the powers conferred by sub-rule· . .
(1) of Rule 8 of the Central Excise Rules, 1944, the Central ,
Government hereby exempts tyres for motor vehicles fal-
ling under sub-item (I) of Item No. 16 of the First Schedule
to the Central Excises and Salt Act, 1944 (1of1944), from
so much of duty of excise leviable thereon as is in excess of
fifty-five per cent ad valorem."
G
Subsequently, another Notification bearing No. 27/81-C.E. dated 1st
March 1981 was issued by the Central Government in respect of tyres
for two-wheeled and three-wheeled motor vehicles, power cycles, ~
power cycled rickshaws, tractors and trailors exempting these goods
H "from so much of the duty of excise leviable thereon as is in exeess of
/
U.0.1. v. MODI RUBBER LTD. [BHAGWATI,CJ.l 593
the duty specified in the corresponding entry in Col. 5" of the Table A
annexed to this Notification.
Now since 1963 special duty of excise was levied inter alia on
manufacture of tyres from year to year up to 197 J by various Finance
Acts passed from time to time. The levy of special duty of excise was B
· discontinued from 1972 until 1978 when it was again revived by the
Finance Act 1978. Thereafter, it continued to be levied from year to
year right up to the period with which we are concerned in the present
appeals and writ petition. The provisions levying special duty of excise
in these various Finance Acts were in almost identical terms and it
would therefore be sufficient if we reproduce the relevant provision in
only one of the Finance Acts. We propose to refer to the Finance Act c
1979 since that is the Finance Act which was in operation when the
present controversy in regard to the interpretation of ~he expression
"duty of excise" arose between the assessee and the Revenue. Section
32 of the Finance Act 1979 provided as follows:
D
32. Special Duties of excise-(1) In the case of goods
chargeable with a duty of excise under the Central Excises
Act as amended from time to time, read with any notifica-
tion for the time being in force issued by the Central Gov-
.ernment in relation to the duty so chargeable there shall be
levied and collected a special duty of excise equal to five E
per cent of the amount so chargeable on such goods.
(2) Sub-Section (1) shall cease to have effect after
the 31st day of March, 1980, except as respects things done
or omitted to be done before such cesser; and Section 6 of
the General Clauses Act, 1897, shall apply upon such ces- F
•. ser as if the said· sub-section had then been repealed by a
Central Act.
(3) The special duties of excise referred to in sub-
section ( 1) shall. be in addition to any duties of excise
chargeable on such goods under the Central Excises Act, or G
any other law for the time being in force.
( 4) The provisions of the Central Excises Act and the
rules made thereunder, including those relating to refunds
and exemptions from duties, shall, as far as may be. applv·
in relation to the levy and collection of the special duties of H
594 SUPREME COURT REPORTS [ 1986\ 3 S.C. R.
A excise leviable under this section in respect of any goods as
they apply in relation to the levy and collection of the
duties of excise on such goods under that Act or those rules
as the case may be.
The Finance Acts from 1973 to 19(.6 also levied auxiliary excise duty
13
on various categories of excisable goods including tyres but the levy of
auxiliary excise duty was discontinued with effect from 1977 and we
are, therefore, not concerned with it so far as the present appeals and
writ petition are concerned.
Prior to 9th November 1979 the assessee submitted classification
c list in terms of Rule 173 B of the Central Excise Rules, 1944, and paid
excise duty on the basis that the Notification dated 1st August 1974 )
granted partial exemption only in respect of basic excise duty levied ,
under the Central Excise and Salt Act 1944 and did not claim any such \..
exemption in respect of special duty of excise. However, on 9th
November 1979 the assessee, while submitting its classification list,
D
contended that by reason of the Noiification dated 1st August 1974 the
assessee was exempted from payment .not only in respect of basic
excise duty levied under the Central Excise and Salt Act 1944 but also
in respect of special duty of excise levied under the relevant Finance
Acts, because the language used in this Notification was not restrictive
and it referred generally to "duty of excise" without any qualification
E
and it therefore covered all duties of excise whether levied under the
Central Excise and Salt Act 1944 or under any other Central enact-
ment. This contention was advanced by the assessee in relation to the
period from 9th November 1979 to October 1982. The Assistant Col- i
lector of Excise however, rejected this contention and held that the ,._
term "duty of excise" in the Notification dated 1st August 1974 refer- ·
• F
red merely to the basic duty of excise levied under the Central Excise
and Salt A.ct 1944 and the exemption granted under that Notification
was not available in respect of special duty of e"cise levied under the
Finance Acts. The assessee thereupon filed a writ petition in the Delhi
High Court challenging the order of the Assistant Collector of Excise.
During the pendency of this writ petition, the Notification dated 1st
G
March 1981 was issued by the Central Government and the assessee
was therefore constrained to amend the writ petition so as to bring the
question of interpretation of this Notification also before the court.
The Delhi High Court by a Judgment delivered on 6th August 1982
upheld the contention of the assessee and took the view that the expre-
H
ssion "duty of excise" in the two Notifications dated 1st August 1974
U.0.1. v. MODI RUBBER LTD. [BHAGWATl,CJ.[ 595
and !st March 1981 included not merely basic duty of excise levied A
under the Central Excise and Salt Act 1944 but also special duty of
excise levied under the varipus Finance Acts and any other duty or
duties of excise levied under Central enactment. The Central Govern-
ment was of the view that the Delhi High Court judgment was errone-
ous and it accordingly preferred the present appeals after obtaining
B
special leave from this Court. Meanwhile, Parliament also enacted the
Cencral Excise Laws (Amendment and Validation) Act 1982 laying
down statutory rules which should guide the court in interpreting
Notifications granting exemption from payment of duty of excise and
prescribing the conditions oil
which a Notification granting exemptioh •
from payment of duty of excise can be construed as applicable to duty
of excise levied under any Central law making the provisions of the c
Central Excise and Salt Act 1944 and the Rules made thereunder
applicable to the levy and collection of duty of excise under such
Central Law. Since this enactment had the effect of limiting the in-
terpretation of the expression "duty of excise" in the two Notifications
dated !st August 1974 and 1st March 1981 to the basic duty of excise
D
levied under Central Excise and Salt Act 1944 and excluding from its
coverage special duty of excise levied under various Finance Acts, the
assessee filed the present writ petition challenging the constitutional
validity of this enactment. That is how the present appeals and writ.
petition have come up for hearing before us.
E
The first question that arises for consideration on these facts is as
to what is the true import of the expression "duty of excise" in the
. notifications dated !st August 1974 and !st March 1981. It is only if
this expression is held to include duties of excise leviable not only
under the Central Excise and Salt Act, 1944 but also under any other
enactments that the question would arise whethe~ the Central Laws
F
(Amendment and Validation) Act, 1982 is constitutionally invalid.
We, therefore, asked the learned counsel appearing on behalf of the
parties to confine their arguments only to the first question of interpre-
tation of the expression "duty of excise" in the notifications dated !st
August 1974 and !st March 1981.
G
Both these Notiifications, as the opening part shows, ate issued
under Rule 8(1) of the Central Excise Rules, 1944 and since the defini-
tion of 'duty' in Rule 2, cl. (v) must necessarily be projected in Rufo
8(1) and the expression 'duty of excise' in Rule 8(1) must be read in the
light of that definition, the same expression used in these two Notifica-
tions issued under Rule 8(1) must also be interpreted in the same H
596 SUPREME COURT REPORTS \ 1986\ 3 S,C. R.
A sense, namely, duty of excise payable under the Central Excise and
Salt Act, 1944 and the exemption granted under both these Notifica-
tions must be regarded as limited only to such duty of excise. But the
respondents contended that the expression 'duty of excise' was one of
large amplitude and in the absence of any restrictive or lirnitative
B words indicating that it was intended to refer only to duty of excise
leviable under the Central Excise and Salt Act, 1944, it must be held to
cover all duties of excise whether leviable under the Central Excise
and Salt Act, 1944 or under any other enactment. The respondents
sought to support this contention by pointing out that whenever the
Central Government wanted to confine the exemption granted under a ·
notification to the duty of excise leviable under the Central Excise and
c Salt Act, 1944, the Central Government made its intention abundantly
{
\
clear by using appropriate words of limitation such as "duty of excise
leviable ..... under section 3 of the Central Excise and Salt Act, 1944"
D
or "duty of excise leviable ..... under the Central Excise and Salt Act,
1944" or "duty of excise leviable ...... under the said Act" as in the
Notification No. CER-8(2)/55-C.E. dated 17th September 1955,
Notification No. 255/77-C.E. dated 20th July 1977, Notification No.
-
CER-8(1)/55.C.E. dated 2nd September 1955 Notification No.
C.E.R.-8(9)/55-C.E. dated 31st December 1955, Notification No. 95/
61-C.E. dated 1st April 1961, Notification No. 23/55-C.E. dated 29th
April 1955 and similar other notifications. But, here said the respon-
dents, no such words of limitation are used in the two Notifications in
E
question and the expression "duty of excise" must, therefore, be read
according to its plain natural meaning as including all duties of excise,
including special duty of excise and auxiliary duty of excise. Now, it is
no doubt true that in these various notifications referred to above, the
Central Government has, while granting exemption under Rule 8(1),
F used specific language indicating that the exemption, total or partial,
granted under each such notification is in respect of excise duty levi-
able under the Central Excise and Salt Act, 1944. But, merely be-
cause, as a matter of drafting, the Central Government has in some
notifications specifically referred to the excise duty in respect of which
exemption is granted as 'duty of excise' leviable uhder the Central
Excise and Salt Act, 1944, it does not follow that in the absence of such
G
words of specificity, the expression 'duty of excise' standing by itself
must be read as referring to all duties of excise. It is not uncommon to
find that the legislature sometimes, with a view to making its inention
clear beyond doubt, uses language ex abundanti cautela though it may
not be strictly necessary and even without it the same intention can be
H ' spelt out as a matter of judicial construction and this would be more so
U.0.l. v. MODI RUBBER LTD. [BHAGWATI, CJ.I 597
in case of subordinate legislation by the Executive. The officer drafting A
a particular piece of subordinate legislation in the Executive Depart-
ment may employ words with a view to leaving no scope for possible
doubt as to its intention or sometimes even for greater completeness,
though these words may not add anythjng to the meaning and scope of
the subordinate legislation. Here, in the present Notifications, the B
words 'duty of excise levia!Jle under the Central Excise and Salt Act,
.1944' do not find a place as in the other Notifications relied upon by
the respondents. But, that does not necessarily lead to the inference,
that the expession 'duty of exci~e' in these Notifications was intended
to refer to all duties of excise including special and auxiliary duties of
~· excise. The absence of these words does not absolve us from the obli-
gation to interpret the expression 'duty of excise' in these Notifica- c
I
tions. We have still to construe this expession-what is its meaning arid
import-and that has to be done bearing in mind the context in which
it occurs. We have already pointed out that these Notifications having
been issued iinder Rule 8(1), the expression 'duty of excise' in these
Notifications must bear the same meaning which it has in Rule 8( I) [)
and that meaning clearly is-excise duty payable under the Central
Excise and Salt Act, 1944 as envisaged in Rule 2 clause (v). It cannot in
the circumstances bear an extended meaning so as to include special·
excise duty and auxiliary excise duty.
>-- Moreover, at the date when the first Notification was issued, E
namely, 1st August 1974, there was no special duty of excise leviable
on tyres. It came to ·be levied on tyres with effect from the financial
.year 1978 under various Finance Acts enacted from year to year. It is
therefore difficult to understand how the expression 'duty of excise' in
I the Notification dated 1st August 1974 could possibly be read as com-
.· "t--· prehending special duty of excise which did not exist at the date of this F
,
i Notification and came to be levied almost four years later. When spe-
. cial duty of excise was not in existence at the date of this Notification,
how could the Central Government, in issuing this Notification, have
intended to grant exemption from payment of special excise duty? The
presumption is that when a Notification granting exemption from pay-
ment of excise duty is issued by the Central Government under Rule G
8(1), the Central Government would have applied its mind to the
question whether exemption should be granted and if so to what ex-
tent. And obviously. that can only be with reference to the duty of
_l. excise which is then l.eviable. The Central Government could not be
presumed to have projected its mind into the future and granted ex-
emption in respect of excise duty which may be levied in the future, 1-1
598 SUPREME COURT REPORTS I 1986) 3 S.C. R.
A without considering the nature and extent of such duty and the object
and purpose for which such levy may be made and without taking into
account the situation which may be prevailing then. It is only when a
new duty of excise is levied, whether special duty of excise or auxiliary
duty of excise or any other kind of duty of excise, that a question could
B arise whether any particular article should be exempted from payment
of such duty of excise a_nd the Central Government would then have to
apply its mind to this question and having regard to the nature and
extent of such duty of excise and the object and purpose for which it is
levied and the economic situation including supply and demand posi-
tion then prevailing, decide whether exemption from payment of such
c
excise duty should be granted and if so, to what extent. It would be
absurd to suggest that by issuing the Notification dated !st August
~
I
1974 the Central Government intended to grant exemption not only in
respect of excise duty then prevailing but also in respect of all future
duties of excise which may be levied from time to time.
We have already pointed out, and this is one of the principal
D
arguments against the contention of the respondents, that by reason of
the definition of"duty" in clause (v) of Rule 2 which must be read in
Rule 8 (!),the expression 'duty of excise' in the notifications dated !st
August, 1974 and !st March, 1981 must be construed as duty of excise
payable under the Central Excise and Salt Act, 1944. The respondents
E
sought to combat this conclus.ion by relying on sub-seiction (4) of sec- "1.
tion 32 of the Finance Act, 1979-there being an identical provision in
each Finance Act levying special duty of excise-which provided that
the provisions of the Central Excise and Salt Act, 1944 and the rules
made thereunder including those relating to refunds and exemptions '
from duties shall, as far as may be, apply in relation to the levy and t
collection of special duty of excise as they apply in relation to the levy' \ -
F
and collection of the duty of excise under the Central Excise and Salt
Act, 1944. It was urged on behalf of the respondents that by reason of _i
this provision, Rule 8(1) relating to exemption from duty of excise '
became applicable in relation to the levy and collection of special duty
of excise and exemption from payment of special duty of excise could
therefore be granted by the Central Government under Rule 8(1) in
G
the same manner in which it could be granted in relation to the duty of
excise payable under the Central Excise and Salt Act, 1944. The argu-
ment of the respondents based on this premise was that the reference
to Rule 8(1) as the source of the power under which the notifications _,.-
dated 1st August, 1974 and 1st March,' 1981 were issued could not
H therefore be relied upon as indicating that the duty of excise from
•
U.0.1. '· MODl'RUBBER LTD. [BHAGWATI. CJ.I 599
which exemption was granted under these two notifications was
limited only to the .duty of excise payable under the Central Excise and
Salt Act, 1944 and the expression 'duty of excise' in these two notifica·
lions could legitimately be construed as comprehending special duty of
excise. This argument is, in our opinion, not well-founded and cannot
be sustained. It is obvious that when a notification granting exemption 13
from duty of excise is issued by the Central Government in exercise of
the power under Rule 8(1) simpliciter, without anything more, it must,
by reason of the definition of 'duty' contained in Rule. 2 clause ( v)
which according to the well-recognised canons of contruction would be
projected in Rule 8(1), be read as granting exemption only in respect
·of duty of excise payable under the Central Excise and Salt Act, 1944.
Undoubtedly, by reason of sub-section (4) .~f section 32 of the Finance c
Act, 1979 and similar provision in the other Finance Acts, Rule 8(1)
would become applicable empowering the Central Government to
grant exemption from payment of special duty of excise, but when the
Central Government exercises this power, it would be doing so under
Rule 8(1) read with sub-section (4) of section 32 or other similar provi·
D
sion. The reference to the source of power in such a case would not be
just to Rule 8(1), since it does not of its own force and on its own
language apply to granting of exemption in respect of special duty of
excise. but the reference would have to he to Rule X( I) read with
sub-section (4) of section 32 or other similar provision. It is significant
.\.· to note that during all these years, whenever exemption is sought to be
l:
granted by the Central Government from payment of special duty of
excise or additional duty of excise, the recital of the source of power in
the notification granting exemption has invariably been to Rule 8(1)
read with the relevant provision of the statute levying special duty of
excise or additional duty of excise, by which the provisions of the
·t· Central Excise and Salt Act, 1944 and the rules made thereunder
including those relating to exemption from duty are made applicable.
F
Take for example, the notification bearing No. 63/78 dated !st Au·
gust, 1978 where exemption is granted in respect of certain excisable
goods "from the whole of the special duty of excise leviable thereon
under sub-clause (I) of clause 37 of the Finance Bill, 1978". The
source of the power recited in this notification is "sub-rule ( 1) of Rule
G
8 of the Central Excise Rules, 1944 read with sub-clause (5) of clause
37 of the Finance Bill, 1978". So also iri the notification bearing No.
29/79 dated !st March, 1979 exempting unmanufactured tobacco
. -~
"from the whole of the duty of excise leviable thereon both under the
Central Excise and Salt Act, 1944 and Additional Duties of Excise
(Goods of Special Impqrtance) Act, 1957", the reference to the sour¢e H
•
600 SUPREME COURT REPORTS [1986] 3 S.C.R.
A of power mentioned in the opening part of the notification is "sub-rule
(1) of Rule 8 of the Central .Excise Rules, 1944 read with sub-section
(3) of section 3 of the Additional Duties of Excise (Goods of Special
Importance) Act, 1957". The respondents have in fact produced sev-
eral notifications granting ex~mption in respect of special duty of ex-
B cise or additional duty of excise and in each of these notifications, we
find that the source of power is described as sub-rule (1) of Rule 8 of
the Central Excise Rules, 1944 read with the relevant provision of the
statute levying special duty of excise or additional duty of excise by
which the provisions of the Central Excise and Salt Act, 1944 and the
Rules made thereunder including those relating to exemption from
c
duty are made applicable. Moreover the exemption granted under all
these Notifications specifically refers to special duty of excise or addi-
tional duty of excise, as the case may be. It is, therefore, clear that
<-
\
where a notification granting exemption is issued only under sub-rule
( 1) of Rule 8 of the Central Excise Rules 1944 without reference to any
other statute making the provisions of the Central Excise and Salt Act,
1944 and the Rules made thereunder applicable t.o the levy and collec-
D
tion of special, auxiliary or any other kind of excise duty levied under
such statute, the exemption must be read as limited to the duty of
excise payable under the Central Excise and Salt Act, 1944 and cannot
cover such special, auxiliary or other kind of duty of excise. The
Notifications in the present case were issued under sub-rule (1) of Rule
E
8 of the Central Excise Rules 1944 simpliciter withou.t reference to any .-..{
other statute and hence the exemption granted under these two Notifi-
cations must.be construed as limited only to the duty of excise payable
under the Central Excise and Salt Act, 1944.
We may incidentally mention that in the appeals a question of
interpretation was also raised in regard to the Notification bearing No.
F
249/67 dated 8th November 1967 exempting tyres for tractors from "so
much of the duty leviable thereon under item 16 of the First Schedule
to the Central Excise and Salt Act, 1944 as is in excess of 15%". The
argument of the respondents in the appeals was that the exemption
granted under this Notification was not limited to the duty of excise
payable under the Central Excise and Salt Act, 1944 but it also ex-
G
tended to special duty of excise, additional duty of excise and auxiliary
duty of excise leviable under other enactments. This argument plainly
rims counter to the very language of this Notification. It is obvious that
the exemption granted under this Notification is "in respect of so much
of the duty leviable thereon under item 16 of the First Schedule to the
H Central Ei<eise and Salt Act, 1944 as is in excess of 15%" and these
U.0.1. v. MODI RUBBER LTD, [BHAGWATl,O.[. 601
words describing the nature and extent of the exemption on their plain A
natural construction, clearly indicate that the exemption is in respect
of duty of excise leviable under the Central Excise and Salt Act, 1944
and does not cover any other kind of duty of excise. No more discus-
sion is necessary in regard to this question beyond merely referring to
the language of this Notification. B
On the above view taken by us, we must hold that the Central
Excise Laws (Amendment and Validation) Act, 1982 is merely de-
claratory of the existing law and hence its constitutional validity cannot
be assailed.
. f
\_ c
We accordingly, allow the appeals and dismiss the writ petition.
We set aside the judgment of the High Court antl hold that under the
Notifications dated 8th November, 1967, 1st August, 1974 and 1st
March, 1981 the respondents in the appeals and the petitioners in the
writ petition are entitled to exemption only in respect of the basic duty
of excise leviable under the Central Excise and Salt Act, 1944 and are
D
not entitled to claim any exemption in respect of special duty of excise
or additional duty of excise or auxiliary duty of excise. The respon-
dents in the appeals _and the. petitioners in the writ petition will pay the
costs of the Union of India.
E
S.R. Appeals allowed and Petition dismissed.
,.
1
'
I .
Ill..-.(
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