1. By this special Civil Application petitioner Jagdish D. Dengvekar isseeking to quash or set aside the order passed by Superintendent, CentralExcise, Poona II Divn. on 26/27th April 1968 whereby the Superintendent,Central Excise, levied excise duty Rs.566.44 on the petitioner formanufacturing French Polish between March 1964 and May 1965 and furtherexcise duty of Rs.228.21 for having manufactured French Polish betweenJune 1965 and April 1966 and further levied penalty of Rs.5/- for breachof Rule 9 and penalty of Rs.2/- for breach of Rule 53, which orderlevying excise duty as well as penalty was confirmed by the Collector of Central Excise on 3rd Sep tember, 1969.
2. A few facts leading to the petition may be stated. In January, 1963 the petitioner made an application for licence to manufacture French Polish and also for a permit for denatured spirit. It appears that hewanted to start a manufacturing concern in his factory at Poona and forthat purpose he made the aforesaid application in January 1963. On 4th March, 1964, a licence as well as permit asked for were granted. Thelicence obviously was to manufacture French Polish, Varnish and Thinners. It appears that the petitioner went on manufacturing French Polishwithout complying with the provisions of the Central Excises and Salt Act, 1944 and the Rules framed thereunder. On 23 December, 1965 theInspector, Central Excise, Poona visited its premises and he noticed aunit licensed for the manufacture of French Polish Operating in thepremises. He also found that the petitioner had not maintained accountsrequired under Rule 53 of the Central Excise Rules, 1944. It was furthernoticed that he had manufactured a quantity of 2,360.20 litres of French Polish during the period March 1964 to May 1965 and had cleared itwithout payment of duty. The petitioner’s statement was recorded by theInspector. Later, on 24th February, 1966 a show cause notice was issuedto the petitioner calling upon him to show cause why duty and penaltyshould not be levied on him. Curiously enough the petitioner made arepresentation to the Collector which he termed as an Appeald whereby hechallenged the proposed levy of duty as well as penalty on the groundthat what he had manufactured was French Polish and the same did notconstitute Varnish within the meaning of item “Varnish” contained inTariff Item 14(II)(i) of the Central Excise Tariff underwhich Varnish wasliable to excise duty. The said item runs as follows :-
“II. Varnishes and blacks –
and then follow the rates at which the excise duty is payable. Thecollector rejected his representation on 28th February 1966. Thepetitioner carried the matter further by way of revision to the CentralBoard of Excise & Customs and the Central Board by its letter dated 16th March, 1967 rejected the revision. Against the order of the CentralBoard of dExcise the petitioner preferred further application to theGovernment of India, Ministry of Finance (Department of Revenue andInsurance), New Delhi on 3rd June, 1967, which application was rejectedby the Government of India on 11th June, 1968. It may be stated thatlevy of duty as well as penalty was challenged by the petitioner in theseproceedings adopted by him against the show cause notice on three grounds:(1) that no excise duty was leviable because the French Polish was notcovered by item of Varnishes; (2) that in the case one Mr. Sharma, whowas manufacturing French Polish, exemption had been granted from levy ofexcise duty and as such the petitioner was discriminated against; and (3)then certain notification which was issued on 6th July, 1963 in which adistinction was sought to be made between manufacturers of Varnishes whohad owned their factories prior to 6th July, 1963 and those who ownedsuch factories on and after 6th July 1963 was discriminatory. All thesegrounds were negatived and the Government of India rejected thepetitioner’s application dated 3rd June 1967 on 11th June, 1968.Thereafter, the Superintendent, Central Excise, by his order dated26/27th April, 1968 levied the dexcise duty of Rs.566.44 for themanufacture of French Polish between March 1964 and May 1965 and furtherexcise duty of Rs.227.21 for the manufacture of French Polish betweenJune 1965 and April 1966 and penalty of Rs.5/- and Rs.2/- for breaches of Rules 9 and 53 respectively of the Central Excise Rules, 1944. Againstthis order of the Superintendent Central Excise, imposing excise duty aswell as penalty the petitioner preferred and appeal to the Collector of Central Excise, Poona, on 1st July, 1968 but the Collector of Central Excise rejected the appeal on 3rd September 1969. It is these two orderspassed by the Superintendent, Central Excise on 26th/27th April, 1968 andthe Collector of Central Excise on 3rd September, 1969 that are beingchallenged by petitioner by the present writ petition filed underArticles 226 and 227 of the Constitution.
3. The respondent have resisted the petition on several grounds by filingan affidavit in reply of one N. D. Khosia, Deputy Collector of CentralExcise, on 14th June, 1971. Apart from raising preliminary objection tothe maintainability of the petition on the ground of laches as well as onthe ground of non-exhaustion of remedies available to him udnder the Actand Rules framed thereunder, the respondents have denied severazlsubmissions and contentions made by the petitioner on merits. It hasbeen contended that French Polish has been rightly held to be included inthe item of `Varnishes’ in Tariff Item 14 (II) (i) of the Central ExciseTariff and the levy of duty as well as penalty on the petitioner wasprefectly justified in respect of manufacture of French Polish indulgedin by him without complying with the provisions of the Act and the Rules. It is further denied that the case of Sharma in respect of whomexemption has been granted is similarly situated as that of thepetitioner and as such the charge of discrimination is vehemently denied. The notification dated 6th July, 1963 is also justified on the groundthat classification of manufacturers of French Polish in two groups,those who owned their factories prior to 6th July, 1963 and those whoowned their factories on and after 6th July, 1963 is made on rationalbasis and as such there was no discrimination as suggested by thepetitioner.
4. On merits also we do not think that the petitioner has made out a casefor getting the relief which he has sought. On merits three points havebeen raised by Mr. Rege before us and we shall deal with them seriatim.In the first place, Mr. Rege contended that the item which wasmanufactured by the petitioner was French Polish and according to him,French Polish could not be regarded as falling within the concept ofVarnises, which is the item mentioned in item 14(II)(i) of the FirstSchedule of the Central Excise Act. He contended that French Polish andVarnishes were two distinct items and the one could dnot be regarded orclassified as falling within the concept of `Varnishes’. But the Exciseauthorities have taken a contrary view and we do see any reason why thatview should be disturbed. After all the correct test in interpreting anyitem mentioned in the First Schedule to the Central Excise Act is to seethe commercial sense in which the item is understood or the sense inwhich traders or persons dealing in that item understand it and not thetechnical or scientific sense. The principle of proper construction ofitems occurring in statute like Sales Tax Act has been laid down by theSupreme Csdourt in M/s Ganesh Trading Co. v. State of Haryana , where the Supreme Court has observed as follows :
“This court has firmly ruled that in finding out the true meaning ofentries mentioned in a Sales Tax Act, what is relevant is not dictionarymeaning but how these entries are understood in common parlance,specially in commercial circles. Sales Tax primarily deals with dealerswho are engaged in commercial activity. Therefore, what is of theessence is to find out whether in commercial circles, paddy is consideredas identical with rice.”
5. We are of the view that French Polish will have to be regarded as oneof the species of Varnishes as it was not disputed before use that bothFrench Polish as well as Varnishes are substances used for the purpose ofgiving a polish or gloss to surfaces of articles of furniture or thingslike that. The Central Government when it rejected the petitioner’srepresentation dated 3rd June, 1967 has clearly observed as follows :
“`French Polish’ is a solution of Schellac in denatured spirit. Based onthis chemical composition, it is rightly classifiable as `Varnish’falling under Item No.14 of Central Excise Tariff.”
This would show that even on the basis of chemical composition FrenchPolish could be regarded as properly classified under Item `Varnishes’.
6. It may be stated that the question as to whether French Polish couldbe included in the item `Varnishes’ directly arose for considerationbefore the Madhya Pradesh High Court in the case of Akhtar Abbas v. Asst.Collector of Central Excise, Bhopal, , and the Madya Pradesh High Court has taken the view that French Polishcould be classified as Varnish. The relevant headnote runs as follows:-
“`Varnish’ is a generic name given to a homogeneous solution of gums orresins in alcohol, linseed oil or the like which is coated on variousarticles for preventive or decorative purposes. French Polish is only aspecies, being a homogeneous solution in alcohol with the result that thevoltatile besolvent evaporates quickly.
In taking states, which have to be construed strictly, it is the naturalmeaning of the word which must be adhered to. In the absence of anyindication in the statute itself, it will not be reasonable to restrictthat meaning only because a commodity clearly falling within its ambitis, for certain purposes, given another name in commerce, French Polishis included in the word `varnishes’ and is, therefore, taxable under item22 of the Act.”
In view of this position it seems to us clear that the Central Governmentwas justified in taking the view that French Polish was included in theTariff Item 14(II)(i) of the Act and the said decision cannot beinterfered with.
7. The next contention of Mr .Rege was one of discrimination. In thefirst place, he contended that the notification that was issed by theCentral Government on 6th Jjuly, 1963 whereunder the manufacturers ofVarnishes were divided into two groups, those who had owned theirfactories prior to 6th July 1963 and those who owned their factories onand after 6th July, 1963, was discriminatory and violative of Art. 14 ofthe Constitution. His contention was that there was not rational orintelligible basis for making such classification of manufacturers ofVarnishes by reference to a particular date. In the affidavit in replywhich has been filed on behalf of the respondents the basis of thenotification and classification made thereunder have been sufficientlyexplained in para 9 thereof. It has been pointed out that notificationdated 6th July, 1963 was issued with a view to prevent fragmentation offactories manufacturing French Polish with the object of evading paymentof legitimate duty, the exemption at the time being conditioned by thequantum of French Polish manufactured by the factory in the financialyear. It has been further pointed out that an additional object was toprotect the interests of the existing manufacturers who could not havevisualised the new restriction imposed with effect from 6th July, 1963. It was on this basis that classification based on starting of thebusiness before and after a particular date has been sought to bejustified us being reasonable and we see no reason as to why the basisgiven in the said para should not be accepted as rational basis forclassification of manufacturers by reference to that date. The secondaspect of plea of discrimination was that if the case of the petitionerwas compared with the case of one Mr. Sharma, who was also a manufacturerof French Polish, the petitioner could be said to have been discriminatedagainst, for, according to petitioner, Mr. Sharma had been grantedexemption from payment of excise duty. Now here the admitted facts arethat Mr. Sharma had commenced his manufacturing factory of French Polishlong prior to 6th July, 1963 whereas admittedly the French Polish inJanuary 1963 was granted licence on 4th March, 1964, with the result thatthe petitioner could be said to have commenced manufacturing FrenchPolish thereafter. Therefore, the case of Mr. Sharma and that of thepetitioner cannot be said to be similarly situated. Obviously, theexemptions that was granted to Mr. Sharma was not the basis that he was amanufacturer of French Polish long prior to 6th July, 1963. The twocases being not identical, the plea of discrimination must fail.
8. In the result, we feel that there is no substance in the petitioneven on merits.
9. Rule is, therefore, discharged with costs.