ORDER
A.R. Lakshmanan, J.
1. In these batch of Writ Petitions, the validity of Notification No. 140 of 1981 dated 2-7-1981 issued under Rule-8 sub-rule (1) of Central Excise Rules, 1944 is in question.
2. By the said notification, the petitioners who are manufacturers of matches without aid of power have been denied the concessional rates of excise duty which they were entitled to in terms of an earlier Notification No. 42 of 1981. The petitioners in these Writ Petitions have therefore questioned the amendment issued under the impugned notification.
3. In order to appreciate the questions involved and raised in these Writ Petitions, it is necessary to set out a few relevant facts also to trace briefly the history of the excise duty levied on matches. Excise duty was levied on matches for the first time in 1934. Upto 1948-49, match factories were classified for the purpose of excise into two types viz., industries producing not more than 100 gross boxes per day and rest with a higher output. It was then felt that such classification put the medium sized factories at a disadvantage as they came within the higher category and had to pay duty at the full rate. With duty at this rate, they could not compete with the fully mechanised big factories. Hence a second preferential category was introduced comprising factories whose output did not exceed 5 lakhs gross boxes per year but exceed 100 gross boxes per day. Subsequently representation was made to Govt. for enlarging the scope of preferential excise tariff for cottage match factories. Need was felt for giving encouragement to cottage/small units in view of their employment potential in rural areas. Accordingly, in 1954, a new class of factories, with production not exceeding 25 gross boxes per day was created and a very substantial rebate in duty was allowed to them. The total number of units in 1955-56 was classified as A, B, C and D on the basis of the output intimated by the Planning Commission at (234 in ‘A’ class, 103 in ‘B’ class, 81 in ‘C’ class and 42 ‘D’ class). The aggregate capacity was estimated at 35.3 million gross boxes of 60 sticks and the actual production that year was 34.1. million gross boxes. By agreement production of WIMCO was restricted to about 50 per cent of the country’s total demand.
4. The units producing matches are now classified broadly in two categories, viz., the power-operated or mechanised units and the non-power-operated ones. The non-power operated sector can be divided further into two categories viz., ‘cottage’ and other than cottage depending on their output. Those producing not more than 75 million matches per year and recommended by KVIC for a Cooperative Society are categorised as ‘cottage’/’tiny’. It may be noted that, broadly speaking, manufacture of matches involves the following processes :
(i) Making of veneers,
(ii) Making of splints,
(iii) Dipping,
(iv) Box making,
(v) Box Filling,
(vi) Pasting of labels and banderolls, and
(vii) Packing.
5. The petitioners herein are manufacturers of matches which is an excisable commodity falling under Item 38 of First Schedule to the Central Excises and Salt Act. As stated earlier, there are broadly three classes of manufacturers. They being (1) Mechanised Sector, (2) Semi-mechanised Sector and (3) Non-mechanised Sector. The mechanised sector comprises of manufacturers like WIMCO who use power in almost all of the processes of manufacture. Semi-mechanised sector are those in which one or more of mechanised processes are carried on with the aid of power and non-mechanised sector is one where none of the processes are carried on with the aid of power. The petitioners in the above Writ Petitions belong to the non-mechanised sector manufacturers who manufacture without the aid of power. The manufacture of matches includes the filling the matches in boxes which were either boxes made out of wood called veneer or boxes made out of cardboards. The basis excise duty for matches in terms of the Act was Rs. 10.20 per gross. However, the effective rates of duty in respect of matches manufactured by various classes of manufacturers were reduced by notifications issued under Rule 8(1) of the Excise Rules.
6. Three different notifications were issued by the Government of India on 1-3-1981 under Rule 8(1) of the Excise Rules relating to the matches manufactured by the mechanised sector, semi-mechanised sector and non-mechanised sector, being notifications 40, 41 and 42 respectively.
7. Before proceeding further to deal with all the three notifications it is useful to reproduce Notification No. 40 of 1981 which reads as follows :
* * * *
The said notification deals with mechanised sector and the effective rate of duty for matches manufactured with the aid of power is Rs. 7.20 per gross boxes of 50 matches each. However, by the proviso of the said notification, the concession was granted to matches manufactured by those manufacturers using power if the matches were packed in card-board boxes, the rate will be Rs. 6.60 or Rs. 6.90 as the case may be per gross.
8. Notification No. 41 of 1981 is reproduced here as under :
* * * * * The above notification deals with semi-mechanised sector reduced the effective rate of duty for matches to Rs. 5.50 per gross. By the proviso to the said notification, a concessional rate was made in respect of matches packed in card-board boxes being Rs. 4.90 and Rs. 5.26 as the case may be, by provisos 1 and 2. 9. Notification No. 42 of 1981 is reproduced as under : * * * * *
The above notification deals with non-mechanised sector under with the Central Government exempts matches in or in relation to the manufacture of which none of the following processes viz., (i) box making, (ii) frame filling, (iii) dipping of splints in the composition for match heads; (iv) fillings of boxes with matches; (v) labelling and benderolling; and (vi) packing, is ordinarily carried on with the aid of power falling under Item 38 of the First Schedule to the Central Excises and Salt Act and cleared for home consumption by a manufacturer, the rate of tax at Rs. 4.50 per gross. By the proviso to the notification, concessional tariff was made with reference to matches packed in card-board being Rs. 3.90 or Rs. 4.26 as the case may be, for proviso 1 and 2. The concession granted to each one of the class of manufacturer in respect of matches packed in card-board boxes was granted by the Government taking into account the shortage of wood and the policy to preserve wood.
10. On 1-7-1981 Notification No. 140/1981 was issued amending the Notification No. 42/1981 which rends as follows :
* * * * What is relevant to be noted under Notification No. 140/81 is the deletion of clauses 1 and 2 of the first proviso. On the same day, the Central Government issued Notification No. 137/81, which reads as follows : * * * * *
It may be seen from these two notifications that upto July, 1981, the petitioners were liable to pay excise duty at the rate of Rs. 4.50 per gross boxes of 50 matches each and they were getting further reduction in excise where the matches were packed in boxes in which both the outer side slide as well as the inner slide was made of card-board, in cases where such matches were packed in boxes in which the inner slide alone was made of card-board. The further concessions available under the second proviso in the Notification 42/81 hereby deleted came in a modified form in Notification No. 137/81 instead of Rs. 4.50 with a further concession with reference to the use of card-board either for one side or for both the outer slide as well as the inner slide. In cases where matches were packed in boxes in which the outer slide along was made of card-board, the petitioners were given a concessional levy of Rs. 5.50 and in those cases where matches were packed in boxes in which the inner slide alone was made of card-board, the concessional levy was fixed at Rs. 5.26 per gross of boxes of 50 matches each. Similarly, for matches packed in boxes in which the outer slide as well as the inner slide was made of card-board, a duty of Rs. 4.90 per gross of boxes of 50 matches each was levied. This was subject to the further condition that the sum total of the value of the capital investment made from time to time on plant and machinery installed in the industrial unit in which the said matches are manufactured was not more than Rs. 20 lakhs.
11. It is pertinent to notice at this stage that persons like the petitioners have raised similar contentions before this Court in W.P. No. 10045/81 and a Division Bench of this Court consisting of Hon’ble Mr. Justice V. Ramasamy (as he then was) and Hon’ble Mr. Justice Singaravelu [reported in 1983 (12) E.L.T. 58] in Jayaprakash Match Works, Kovilpatti and Others v. Union of India and Others has rejected the same and sustained the validity of the impugned notification.
12. Another group of manufacturers belonging to the non-mechanised sector filed W.P. No. 1119/82 etc., batch for an identical relief and a Division Bench of this Court consisting of Hon’ble Mr. Justice Ramanujan and Hon’ble Mr. Justice Ratnam by their common order dated 21-6-1984 dismissed the Writ Petitions by rejecting the contentions advanced by the petitioners and also have agreed with the views expressed by the Division Bench in Jayaprakash Match Works v. Union of India case (1983 (12) E.L.T. 58).
13. Petitions for Special Leave to Appeal (Civil) Nos. 7439/84 etc., were filed against the Division Bench Judgment in W.P. Nos.1119/82 etc., batch. The Supreme Court upon hearing the learned counsel on either side passed the following order :
“Mr. K. G. Bhagat, learned Additional Solicitor General for the Union of India states that the Secretary to the Government of India in the Ministry of Finance in the Department of Revenue dealing with Central Excise on match sticks shall give an opportunity to the petitioners and the concerned department to be heard on the question of the wisdom of the policy of withdrawing or continuing the exemption as set out in the impugned notification without being influenced by the decision of the High Court and give his finding and decision of High Court and give his finding and decision after examining all the relevant facts that may be placed before him. Both the parties may be represented through their learned counsel and they will be entitled to file written submissions. Hearing must be completed within four months from today.
The petitioners are at liberty to seek appropriate orders for relief in the payment of arrears of excise duty.
On the aforementioned statement of Mr. K. G. Bhagat, learned Additional Solicitor General, Mr. K. K. Venugopal, learned counsel for some of the petitioners in this group of special leave petitions and other learned counsel withdraw the petitions. The petitions stand disposed of as withdrawn.”
14. Pursuant to the directions of the Supreme Court in the order dated 29-2-1984, the Secretary to the Government of India in the Ministry of Finance (Department of Revenue) gave an opportunity to the petitioners to be heard on the question of the wisdom of the policy of withdrawing or continuing the exemptions as set out in the impugned Notification Numbers 137/81 and 140/81 (both dated 2-7-1981). The parties were represented by their learned counsel and they also filed written submissions. The Secretary, Ministry of Finance (Department of Revenue), on a consideration of the submissions made by the counsel appearing for the respective parties, rejected the contentions, holding that the impugned notifications are based on reasonable conclusions and did not suffer from any infirmity and that the notifications are legally valid and therefore, the petitioners are liable to pay excise duty on the basis of the two notifications. He has also held that the challenge to tax law on the mere ground that it imposed a heavy tax even if it is true, cannot be entertained, and that the rates of duty on matches produced in the non-mechanised sector without using cardboard are not excessive if all the factors are taken into consideration. However, in the concluding para of his order, a suggestion was given to the Government for reconstructing the rates of excise duty on matches produced by different sectors in the light of the fresh facts, if any, which may be produced before it and any change in duty rates, if and when made, would only have prospective effect and will not alter the duty liability of the petitioners for the past period. Aggrieved by the order of the Secretary (Revenue) Ministry of Finance, Department of Revenue dated 24-1-1985, the above-said Writ Petitions have been filed for the aforesaid relief.
15. The Union of India filed counter-affidavits stating that the order of the Secretary (Revenue) Ministry of Finance does not suffer from any of the vices, as alleged. It has adequately dealt with the various points submitted by the petitioners in the oral and written representations and that the petitioners are merely interested in exploiting the due process of law to evade and postpone the legitimate amounts due to the Government. It is further stated that all the arguments advanced by the petitioners against the vires of the Notification No. 137/81 was judicially considered by a Division Bench of this Court has neither been modified nor annulled, and that the enquiry by the Secretary, Ministry of Finance (Department of Revenue) was agreed to, taking into consideration the changes in the situation in the match industry and to determine whether the provisions of Notification No. 137/81 should be continued. It was also to find out whether higher rate of duty imposed was justified on the basis of the policy of the government prevailing at the time of issue of notification and subsequent developments. It is further urged that the vaidity of the notification having been explicitly upheld by the Division Bench of this Court, positively approved by the Supreme Court and not interfered with the judgment and order dated 21-6-1984 in W.P. 1119/84 while disposing of Civil Appeal No. 7439 to 7456/84 on 24-9-1984, it is not open to the petitioners to re-agitate the same point by filing fresh petitions. The petitioners having on their own volition withdrawn the Special Leave Petition filed against the decision of this Court on the merits of the case they cannot be heard to complain against the order of the Secretary much less claim that they have no other remedy. When the wisdom of Notification Nos. 137/81 and 140/81 were subjected to judicial review before this Court and a Division Bench of this Court held them to be intra vires, it is no longer permissible for the petitioners to again invoke the jurisdiction of this Court under Art. 226 of the Constitution in regard to a concluded matter. The Division Bench of this Court has specifically gone into that again and held that the notifications are not violative of Art. 14 or 19(1)(G) of the Constitution and there is no discrimination as alleged.
16. Mr. R. Krishnamoorthy, learned Senior Counsel appearing for the petitioner has put forward the following propositions before this Court for consideration :
“(i) The Impugned Notification which denies the concessional rate of duty to the petitioners who belong to Non-Mechanised Sector when they use card-boards for packing matches while the said benefit is continued to be given in the case of Mechanised and semi-mechanised match manufacturers is discriminatory and violative of Article 14 of the Constitution.
(ii) The classification of the manufacturers of matches for the purpose of granting concession in the rate of excise duty as reflected in the impugned notification is unreal and has no nexus to the policy or object underlying the grant of concession and therefore violative of Article 14 of the Constitution.
(iii) The Impugned Notification read with Notification No. 137/81 dated 2-7-1981 has the effect of treating the Semi-Mechanised Sector and Non-Mechanised Sector (to which category the petitioners belong) who are un-equals as equals in the matter of levy of duty and therefore violative of Article 14 of the Constitution.
(iv) The Impugned notification which denies the concessional rate of duty to the noe-mechanised sector match manufacturers is un-reasonable and arbitrary and appears to have been brought about on account of extraneous and irrelevant factors besides being vitiated by non-application of mind and therefore violative of Article 14 of the Constitution.
(v) The impugned notification which is said to be based on a policy decision of the Government is open to question on the ground that the said policy is discriminatory or arbitrary and unreasonable and is vitiated by both the aforesaid considerations. In view of the order passed by the Supreme Court which left the matter open to be considered afresh by the Government of India and the respondents having rejected the representations of the petitioner, it is open to them to question the impugned notification on the ground that the policy underlying the same is vitiated by discrimiantion and/or arbitrariness.”
Thus it is contended that by the impugned notification, the concession extended on matches manufactured by non-mechanised sector when packed under card-board alone has been denied while the concession in the cases of the other two sectors when they packed matches in card-boards have been retained. The classification of non-mechanised sector for differential treatment is wholly discriminatory and has no valid basis whatsoever. The only ground or reason set out by the respondent in support of the classification is that the new policy has taken note of the labour deployment also in the case of non-mechanised sector. According to the learned Senior Counsel, the said contention of the Government is wholly without any basis. The policy underlying the grant of concession in duty when they use card board was to preserve wood to subserve public interest. That policy had been maintained so far as mechanical and semi-mechanical sectors are concerned. To adopt a different standard so far as non-mechanised sector alone is concerned so far as non-mechanised sector alone is concerned would be wholly unjustified and would consititute hostile discrimination. In other words, the policy underlying the concession when cardboard boxes are used can be only one and that is preservation of wood. Therefore, adopting of a different or additional standard in the case of non-mechanised sector would be discriminatory. It is stated that in the present case, non-mechanised sector involves more labour than mechanised and semi-mechanised sectors in the matter of manufacture of matches including packing by using card-board boxes. There is no additional labour deployment in the mechanical sector in the process of using card-board boxes in order to extend the benefits to them and deny the same benefit to the petitioners. In the circumstances, when the concession is extended to the other two sectors where labour force is lesser when card-board boxes are used, to deny the same benefit to the petitioners cannot be justified and the reason for classification therefore has no nexus to the object sought to be achieved.
17. The contention of the respondent through its Addl. Central Government Standing Counsel Mr. P. Venkatasubramanian is that the non-mechanised sector is not equal to the mechanised sector and therefore, the question of discrimination would not arise. It cannot be denied that the mechanised sector and the non-mechanised sector are different classes of manufacturers. The non-mechanised sector which belongs to weaker group have therefore been conferred with better benefits like reduced duty. The question in issue is the extension of concessional rate of tariff to various classes of manufacturers. The complaint by the petitioners is that while extending this benefit the respondents have discriminated the non-mechanised sector on the basis of irrelevant factors which have no nexus to the object sought to be achieved. Therefore, the counsel for the petitioner would submit that the contention of the respondents to justify the denial of the concessional tariff is liable to be rejected.
18. According to the learned senior counsel, if the non-mechanised sectors are to be treated as unequals for all purposes, then the impugned notification read with Notification No. 137/81 which treats the Non-mechanised sector on par with semi-mechanised sector in the matter of levy of duty would be liable to be struck down as being violative of Art. 14 of the Constitution in treating ‘unequals’ as ‘equal’. It is seen that non-mechanised sector are subjected to an effective rate of duty of Rs. 4.50 per gross which is less than the effective rate of duty fixed for mechanised and semi-mechanised sector being Rs. 7.20 and Rs. 5.50 per gross respectively. Thus, it is contended that the treatment meted out to the non-mechanised sector in clubbing them with the semi-mechanised sector and treating them as such would be illegal.
19. The next challenge is that the impugned notification is arbitrary and unreasonable. Non-mechanised sector belongs to a group who do not use any power or mechanical process in the manufacture and packing of matches. The entire process is done by hand. Taking note of these facts the effective rate of excise duty has always been fixed lower in the case of non-mechanised sector as compared to the mechanised or semi-mechanised sector. It is stated that even after the impugned notification, the effective rate for non-mechanised sector is only Rs. 4.50 as compared to Rs. 5.50 and Rs. 7.20 in the case of semi-mechanised and mechanised sectors respectively, when they use Veneer boxes for packing. It is only in the case of card-board use that a discrimination has been brought about without any justification. The result of the impugned notification is that the non-mechanised sector is compelled to pay a higher rate of Rs. 5.50 per gross if they use card-board boxes and the reasons stated by the Government is that they have adopted a dual policy by extending concession in the case of non-mechanised sector using card-board boxes viz., wood preservation and labour deployment, which is wholly unreasonable and bad for non-application of mind. Elaborating the said contention, it is argued that the Govt. have assumed that there is less about involved when the non-mechanised sector use card-board boxes which is without any valid basis. The Govt. appears to have taken into account that printed card-boards are used and therefore manual labour relating to affixing of label on card-board boxes would not be involved. Criticising the stand of the Govt., the learned Senior Counsel would submit that the assumption of the Government is without substance. The petitioner can use unprinted or plain card-board boxes and affix labels in the said card-board boxes involving the same labour process as in the case of Veneer boxes, and that the denial of the benefit of the concession to the petitioners and requiring them to pay a higher duty at the rate of Rs. 5.50 per gross when they use card-board boxes would therefore be wholly unreasonable and arbitrary. Thus, according to the petitioners the impugned notification which denies the concession to the non-mechanised sector while continuing to extend the benefit to other sectors is unreasonable and based on irrelevant factors.
20. Lastly, it was contended that the mechanised sector and the semi-mechanised sector have been fixed with an effective duty of Rs. 7.20 and Rs. 5.50 respectively, and when they use card-board boxes for packing, a concessional tariff is extended to them. In the case of non-mechanical sector the effective rate of duty is Rs. 4.50 per gross. But the rate is confined only if the non-mechanised sector uses Veneer boxes. When the non-mechanised sector uses card-board boxes, the petitioners are not only denied of the concessional tariff as is available to the other two sectors, but the petitioners are required to pay a higher tariff of Rs. 5.50 or Rs. 5.26 or Rs. 4.90 per gross as the case may be. It is therefore alleged that the impugned notifications not only deny the benefit which is extended to the other sectors, but seek to penalise them and impose a heavier burden if they use card-board boxes. There is absolutely no reasonableness in the said action or policy of the respondent and therefore the same has to be condemned as only unreasonable.
21. In support of their respective contentions, both the parties have relied on the following judgments :
1. Jayaprakash Match Works and Others v. Union of India and Others [1983 (12) E.L.T. 58 (Madras)].
2. W.P. No. 1119 of 1984 Etc., cases dated 21-6-1984 in Sathur Original Match Company and Others v. Union of India and Others.
3. Indian Express Newspapers (Bombay) Pvt. Ltd. and Others v. Union of India and Others
4. The Union of Indian and Another v. Rizwan International (1993 I M.L.J. 569).
22. Before we deal with the decisions cited by the learned counsel on either side, it is relevant to refer to certain factual aspects of the matter. As stated above Notification No. 42/81 dated 1-3-1981 was meant for non-mechanised sector. The said Notification sets out the following rates and duties for different kind of matches viz.,
(a) The outer slide and the inner slide are made of card-board, the amount will be Rs. 4.50 minus 60 paise = Rs. 3.90 per gross box.
(b) The inner slide alone is made of card-board, the amount will be Rs. 4.50 minus 24 paise = Rs. 4.26 per gross of boxes.
23. The above notification was in force till 1-7-1981. On 2-7-1981, the Government of India issued Notification Nos. 137/81 and 140/81. Notification No. 137/81 which sets out the following rates for matches in which card-board constituents were used even if they were manufactured in semi-mechanised/cottage/non-cottage hand-made sector.
(a) Outer alone card-board Rs. 5.14 (b) Inner alone Rs. 5.26 (c) Inner and outer Rs. 4.90 24. Notification 140/81 stipulated the following conditions for enjoying Notification 42/81 by non-mechanised sector. The following changes were effected in Notification 42/81 : (a) The process of giving the Veneer flats or strips of the configuration of a match box including the outer slide or the inner slide with the use of match paper, should be done without the aid of power. (b) The process of affixing labels, by pasting or any other means on match boxes or veneers should be done without the aid of power. (c) The concession extended for using card-board components in the match box was omitted. (d) Nothing contained in Notification 42/81 would be applicable to matches packed in boxes in which card-board components were used.
25. From the foregoing, we are able to see the real intention of the Legislature. The Government treated the matches packed in boxes consisting of card-board constituents as not belonging to hand-made sector for which alone the benefit of Notification 42/81 was meant. This above policy stems from the simple fact that by using card-board boxes, the manufacturers reduce the labour force for making the boxes, labelling and side painting. These works are done mechanically outside the factory, which card-board boxes are made with the aid of machines. As a natural corollary, those units are covered by Notification 41/81 meant for semi-mechanised units, for which the rate of duty is Rs. 5.50 if they use Veneer boxes. If they use card-board constituents, they are eligible for the concession spelt under Notification 137/81.
26. Thus, the policy of the Government in this regard is two fold viz., maintaining sector difference, at the same time, considering the labour potential. It is the Government’s prerogative to give preference to any one of these two important principles when they come to clash. In this case, the Government thought it fit to treat the non-mechanised units as semi-mechanised units if they use card-board boxes and this is done on sound reasoning. Moreover, it may be seen, that the Government is consistent is extending concession to two different sectors in two different manners with an eye on the question, as to what is to be stressed, and where. In the mechanised sector, the stress is on the use of card board boxes with an intention to avoid deforestation. In the non-mechanised sector, the stress is on the labour involvement because the very purpose of keeping the rate lower for even the Veneer boxes to them is on this point. Hence, we are of the opinion, that the petitioners cannot draw any parallel with the mechanised/semi-mechanised sector.
27. We need not stress here again that unequals cannot be equated and the question of discrimination does not arise. As noticed earlier by us, several writ petitions were filed challenging the validity of Notifications 137/81 and 140/81 on the ground that they amounted to discrimination and it is an arbitrary exercise of power. This Court, in W.P. No. 10045 of 1981, etc. batch dismissed the petitioners’ claim on 3-3-1982 with an observation that the policy of the Government varies taking into account various economic factors. The wisdom behind the policy of the Government cannot be questioned as well on the ground of inconsistency, as observed by this Court in the said judgment.
28. Several manufacturers filed appeals before the Supreme Court challenging the decision of this Court in W.P. No. 1119 of 1982, etc. batch, in Special Leave Appeal (Civil) Nos. 7439 to 7456 of 1984, etc. But the same were withdrawn with the observation of the Court that the wisdom of policy could better be decided by the Government after giving sufficient opportunity to the petitioners. As per the observations of the Supreme Court on 24-9-1984, 63 units were given chance to represent their case before the Secretary (Revenue), Ministry of Finance, Department of Revenue, Govt. of India, who, after considering all the materials placed before him, in his order F. No. 109/38/84 Cx dated 24-1-1985 passed the impugned order, which is challenged in some writ petitions. The Central Government dismissed the claims of the petitioners and observed that restructuring of the duty may be made if it is found necessary, but the same will be prospective only. The order, in our view, reiterates the soundness of the policy.
29. It is brought to our notice by the learned Addl. Central Govt. Standing Counsel appearing for the respondent, that during the budget proposals 1985, the matches produced in fully mechanised sector regulated by Notification 40/81 has been superseded by Notification 71/85 and the rate of duty has been prescribed as Rs. 6.85 per gross of 50’s matches. Notification 137/81, exclusively issued for the matches packed with card-board boxes, has been rescinded by Notification 83/85 dated 17-5-1985. The Middle Sector units (petitioners’ units) – non-mechanised middle sector is enjoying exemption under Notification 42/81 paying duty at Rs. 4.50 per gross. The tiny/cottage sector units were paying duty at Rs. 160/- per gross – vide Notification 22/82. However, these provisions did not apply to matches packed in card-board matches as there was a proviso that the exemption contained in the notification shall not apply to matches packed in boxes in which the outer slide or inner slide is made of card-board. However, it is stated, that the Government have reduced the duty from Rs. 5.50 to Rs. 5.15 as per Notification 75/85 for semi-mechanised sector.
30. The learned Addl. Central Govt. Standing Counsel appearing for the respondent has denied the argument of the learned Senior Counsel appearing for the petitioners that sufficient opportunity was not given to the petitioners. The impugned order dated 24-1-1985 clearly reveals that the principle of natural justice has been scrupulously followed. In the case of some writ petitioners, time was granted as per their request and separate orders were issued later. All the petitioners were given opportunity to represent their case, which was also discussed at length by the respondent. The petitioners have also withdrawn their Special Leave Petitions before the Supreme Court, which directed the Government to consider the wisdom of continuing or withdrawing the Notifications 137/81 and 140/81. The Supreme Court never suggested the cancellation of the notification and there is also no observation to that effect.
31. The argument of the learned Senior Counsel for the petitioners that the policy of the Government was inconsistent and is in violation of Article 14 of the Constitution is also, in our opinion, not tenable. There was also no discrimination of the petitioners as alleged. A contention was urged in some writ petitions challenging the duty fixed at Rs. 4.50 for the non-mechanised sector. The contention of the petitioners that when the Government after study removed the condition and made the Notification 42/81 operative for card-board boxes also, they did not reduce the duty element as was done for mechanised and semi-mechanised sectors, is not correct. The petitioners want concession for card-board boxes used by them. In effect, they want 60 paise concession as originally envisaged in Notification 42/81 and would pay Rs. 3.90 only for card-board boxes. This contention, in our opinion, is not sustainable for the following reasons :
(a) Notification 137/81 was rescinded in Notification 83/85. Hence, there was no concession for semi-mechanised sector either for use of card-board boxes.
(b) Notification 40/81 was rescinded by Notification 71/85 and no concession has been extended for mechanised sector also for using card-board boxes.
(c) Effective rates for all the boxes in respect of mechanised/semi-mechanised sectors have been reduced whereas such reduction is given to them cannot be a ground for them to get concession for card-board boxes.
(d) The claim of the petitioners that they would pay only Rs. 3.90 on the boxes has no legal force. The Government by Notification 117/85 have reduced the rate of duty. The period of dispute in these writ petitions is from 17-3-1985 to 7-5-1985. For this period also the petitioners cannot question the reduction of duty for semi-mechanised sector. No concession was extended on the ground that they were using card-board boxes.
32. We may also usefully refer to the decision of a Division Bench of this Court reported in Jayaprakash Match Works, Kovilpatti v. Union of India [1983 (12) E.L.T. 58 (Madras)]. That Bench consisted of V. Ramaswami, J., (as he then was) and T.N. Singaravelu. J. In that batch of writ petitions, the validity of Notification 137/81, Central Excise, dated 2-7-1981 issued by the Government of India in exercise of their powers under Rule 8(1) of the Central Excise Rules, 1944, giving exemption to a limited extent in respect of excise duty leviable on certain conditions was questioned. In Form, the petitioners have prayed for a writ of mandamus directing the Union of India and the Superintendent of Central Excise to forbear from collecting excise duty on matches in excess of that which is payable under Notification 42/81. All the petitioners before the Division Bench are manufacturers of matches without the aid of power viz., non-mechanised sector manufacturers. The argument of the petitioners in all those cases was that while granting exemption from the whole or part of excise duty leviable under Rule 8, the Central Government can impose such conditions which are germane or relevant to the particular excisable commodity only and the conditions imposed in Notification 137/81 are neither germane nor relevant for the purpose of such exemption. The learned counsel appearing for the petitioners also pointed out that under Item 38 of First Schedule framed under Section 3 of the Central Excises and Salt Act, 1944, the word ‘matches’ is defined. The container or the boxes in which the matches are packed and sold or the material used for making such boxes, have no relevance to the match sticks which are subjected to excise duty and therefore, fixing a concessional rate of duty with reference to the use of card-board either for inner slide or outer slide or both is beyond the powers of the Central Government under the Act or under Rule 8 of the Rules. This is the gist of the argument of the petitioners before the Division Bench. The learned Judges of the Bench have also referred to the decisions reported in P.J. Irani v. State of Madras ; Jyoti Prasad v. Union Territory of Delhi and Orient Weaving Mills. v. Union of India and have come to the conclusion that though wide discretionary powers are conferred on the Government in the matter of granting exemptions, any particular order could be questioned if it was contrary to the provisions of the Act or that the conditions imposed thereunder for getting the concessions are neither germane nor relevant to the particular item in respect of which the condition was imposed or that it was not consistent with the operative provisions of the Act itself. It was also brought to the notice of the Division Bench of number of instances where the exemption was based on the process of manufacture, as, for instance, those manufactured in the mechanised sector and those manufactured in the non-mechanised sector and that when the validity of such exemption was questioned, the Supreme Court upheld the same in Orient Weaving Mills v. Union of India and also in a decision of the Kerala High Court reported in Western India Plywood Ltd. v. Union of India (I.L.R. 1972 (2) Kerala, 157).
33. In that case, the Division Bench has accepted the contentions of the learned counsel for the Revenue as well-founded. The Division Bench, in the concluding part of the judgment has observed as follows :-
“The learned counsel for the revenue contended that in the case of user of veneer for making boxes, it was labour intensive and therefore may be costlier, whereas card-boards are machine manufactured and less costlier and the Government considered the use of card-boards for making match boxes as a factor which should be taken into account. We cannot say that the conditions imposed by the Notification were either arbitrary or irrational. The policy of the Government varies and depends on a number of economic factors taken into account. The courts neither have the where-withal nor the equipment to decide the wisdom of that policy. Nor can we question a policy of the Government, so long as the conditions imposed have a relevance to the exemption as such. The purpose of the Act also though to consolidate and amend the law as seen in the long title would include control of the production and the manufacture.”
The Division Bench, in the circumstances, was unable to hold that the differential duty based on the use of card-board boxes is not authorised by Rule 8 of the Central Excise Rules and accordingly dismissed all the writ petitions.
34. A Division Bench of this Court consisting of G. Ramanujam, J., and V. Ratnam, J., has also agreed with the views expressed by the Division Bench in 1983 (12) E.L.T. 58 (Madras) and rejected all the contentions advanced by the petitioners by its judgment dated 21-6-1984 in W.P. No. 1119 of 1982, etc. batch filed by Sathur Original Match Company and Others against the Superintendent, Central Excise and Another. As rightly pointed out by the learned Addl. Central Govt. Standing Counsel, the judgment of the Division Bench consisting of G. Ramanujam, J., and V. Ratnam, J., in W.P. No. 1119 of 1982 etc. batch was not set aside by the Supreme Court. As stated above, the validity of the impugned notifications was questioned before the Division Bench. The Division Bench has observed as follows :-
* * * * *
35. We are also of the view that the State while granting concession or partial concession of excise duty is always at liberty to see that the concession not only results in the conservation of timber but also in additional employment of labour, and that the Government is well within its limits in having its intention to conserve timber. We are also of the opinion that the respondents are well within their rights while granting partial concession in excise duty with an avowed object to see that persons who employ mechanical process in any one of the processes for the manufacture of matches resulting in displacement of labour do not get the same concession given for the user of the card-board instead of veneer. Further, we are of the view, that the petitioners cannot question the policy of the Government in classifying the match units and the purpose of giving effect to their policy of encouraging the use of card-board.
36. The challenge made on the ground of hostile discrimination in these cases has no merit. The decision in Indian Express Newspapers (Bombay) Pvt. Ltd., v. Union of India. turned on the peculiar fact situation of the case and also the direct impact of the notification felt on the exercise of the fundamental right secured under Article 19(1)(a) of the Constitution of India, which ultimately was found to adversely affect the advancement of public interest involved in publishing facts and opinions for educating the mass of the country. As a matter of fact, in the very decision, the Apex Court while declaring the position that a subordinate legislation may be struck down as arbitrary or contrary to statute or the constitutional requirements or that it offends Article 14 or 19(1)(a) of the Constitution also held in unmistakable terms that it cannot be done merely on the ground that it is not reasonable or that it has not taken into account relevant circumstances which the Court considers relevant. Apparently, it is only on that view the Apex Court even while considering the appeals filed against the decision of the Division Bench dated 21-6-1984 in W.P. Nos. 1119 of 1982, etc., merely record the representation of the learned Additional Solicitor General to consider once again the wisdom on the policy of withdrawing or continuing exemption, while allowing the appellants before the Apex Court to withdraw the Special Leave Petitions. The committee appointed by the Govt. of India appears to have found, after a detailed study of the relevant aspects, that in the highly labour intensive area of activities in the industry like (i) box making – both inner and outer, (ii) affixing of labels and banderols, (iii) frame fitting; (iv) side friction, painting and (v) packaging are being gradually replaced by mechanised processes even in the non-mechanised sector and that production of card-board match boxes in a big way in the cottage and non-mechanised middle sectors, using card-board flats with embossed labels thereon manufactured in capital intensive industry and consequently the Government thought fit to treat matches packed in card-board boxes as distinct and sophisticated class associated more with mechanised production and curtail the benefit of exemption to such production. There is no justification whatsoever in law for the petitioners to contend that in according exemption, the Govt. of India must have regard to certain or one of the many aspects pertaining to the manufacture of matches. So long as it cannot be stated that the aspects taken into account by the Government were wholly irrelevant or extraneous or alien to the purpose or object of granting exemption itself, it is not for the petitioners to dictate to the State of the need for its priorities in the matter of grant of a concession and in such circumstances, normally, this Court will hesistate to intervene or interfere to impose itself or its views of the priorities or relevant aspects or circumstances. The decision in The Union of India v. Rizwan International (1993 (I) M.L.J., 569) also has no application to the peculiar problem that is now under consideration before us.
37. For the foregoing reasons, we see no merit in the writ petitions and accordingly, we dismiss all the writ petitions. However, there will be no order as to costs.