PETITIONER:
PREMIER TYRES LTD.
Vs.
RESPONDENT:
COLLECTOR OF CENTRAL EXCISE, COCHIN
DATE OF JUDGMENT09/02/1987
BENCH:
REDDY, O. CHINNAPPA (J)
BENCH:
REDDY, O. CHINNAPPA (J)
KHALID, V. (J)
CITATION:
1987 AIR 729 1987 SCR (2) 198
1987 SCC (1) 697 1987 SCALE (1)273
ACT:
Central excise Rules, 1944: Rule 8(1)--Exemption from
excise duty--Notification dated June 16, 1977 and July 14,
1978'Applicability of.
Excise duty-- Double taxation-- Whether permissible.
HEADNOTE:
By a notification dated August 1, 1974 the Central
Government in exercise of its powers under sub-rule(1) of
Rule 8 of the Central Excise Rules, exempted automobile
tyres from excise duty leviable thereon as was in excess of
fifty-five per cent ad valorem. Another notification issued
on June 16, 1977 exempted all excisable goods from duty to
the extent of the duty already paid on the inputs. A further
notification dated July 14, 1978 exempted tyres and tubes
from so much of the duty leviable thereon (read with any
relevant notification issued under the said subrule(1) of
Rule 8 in force for the time being) as was in excess of
eightyseven and a half per cent of such duty if produced in
any factory which commenced production for the first time
earlier than the 1st day of April 1976, and seventy five per
cent of such duty if produced in any factory which commenced
production for the first time on or after the 1st day of
April, 1976.
A dispute arosse in respect of the latter two notifica-
tion as to which of them was first to be given effect to.
The Tribunal accepted the Department's contention that
effect had to be given in the first instance to the notifi-
cation dated June 16, 1977, and then to the notification
dated July 14, 1978.
In this appeal, it was contended for the appellant that
to give effect to the second notification and thereafter to
the third notification would mean that the assessee would
not be getting full credit for the entire duty paid on the
inputs but only a percentage of it and that there would,
therefore, be double taxation at least to that extent.
Dismissing the appeal, the Court,
199
HELD: 1. The Tribunal was right in taking the view that
effect had to be given first to the notification dated June
16, 1977 and then to the notification dated July 14, 1978.
The words "read with any relevant notification issued under
the said sub-rule (1) of Rule 8 in force for the time being"
super-added by the latter notification show conclusively
that the earlier notification dealing with exemption to the
extent of the duty paid on the inputs which was already in
force had first to be given effect to. [201E-G]
Assistant Collector of Central Excise v. Madras Rubber
Factory Limited, Civil Appeal No. 3195 of 1979, distin-
guished.
2. There is no general principle that there can be no
'double taxation' in the levy of excise duty. The Court may
lean in favour of a construction which will avoid double
taxation, but in the instant case there does not appear to
be any lean question of construction at all. [202B-C]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 943 Of
1986.
From the Judgment and Order dated 4th July, 1985 of the
Appellate Tribunal in Appeal no. 244 of 1985-D.
L.M. Singhvi and K.K. Bhaduri for the appellant.
A Subba Rao and Ms. S. Relan for the Respondent.
The Judgment of the Court was delivered by
CHINNAPPA REDDY, J. This appeal is directed against a
judgment of the Customs, Excise and Gold Control Appellate
Tribunal in regard to the manner and sequence in which
certain notifications under Rule 8 Sub-rule (1) of the
Central Excise Rules granting exemptions from duty have to
be worked out. By a notification dated August 1974 the
Central Government, in exercise of its powers under
subrule(1) of Rule 8 of the Central Excise Rules exempted.
“Tyres for motor vehicles failing under sub-
item(1) of Item No. 16 of the First Schedule
to the Central Excise and Salt Act, 1944(1 of
1944) from so much of the duty of excise
leviable thereon as is in excess of fifty-five
per cent Ad valorem”.
200
Thereafter on June 16, 1977 another notification was issued
in the following terms:
“In exercise of the powers conferred by sub-
rule (1) of Rule 8 of the Central Excise
Rules, 1944 the Central Government hereby
exempts all excisable goods (hereinafter
referred to as the “said goods”) on which the
duty of excise is leviable and in the manufac-
ture of which any goods falling under Item No.
68 of the First Schedule to the Central Excise
and Salt Act, 1944 (1 of 1944) (hereinafter
referred to as the inputs) have been used,
from so much of the duty of excise leviable
thereon as is equivalent to the duty of excise
already paid on the inputs. Notification No.
205/77 dated 28.9.77, subject to the condi-
tions that the manufacturer furnishes to the
proper Officer a statement showing the quanti-
ty of the inputs used in the manufacture of
every unit of the said goods.
Provided that where the duty of excise levi-
able on the said goods is less than the amount
of duty of excise paid on the inputs the
extent of exemption shall be restricted to the
duty of excise on the said goods.”
A Further notification was issued on July 14, 1978 and this
was in the following terms:
“In exercise of the powers conferred by sub-
rule(1) of rule 8 of the Central Excise Rules,
1944, the Central Government hereby exempts
tyres and tubes excluding flaps failing under
Item No. 16(1) and 18(3) of the First Schedule
to the Central Excises and Salt Act, 1944 (1
of 1944) (hereinafter referred to as the
specified goods) from so much of the duty of
excise leviable thereon (read with any rele-
vant notification issued under the said sub-
rule(1) of rule 8 and in force for the time
being) as is in excess of
(a) eighty-seven and a half per cent, of such
duty, if produced in any factory which com-
menced production of the specified goods for
the first time earlier than the 1st day of
April 1976: and
(b) Seventy-five per cent of such duty, if
produced in any factory which commenced pro-
duction of the specified
201
goods for the first time on or after the 1st
day of April, 1976,
subject to the conditions that:-
There is no controversy regarding evaluation According
to the assessee as well as the department effect has first
to be given to the notification dated August 1, 1974 and the
duty calculated in terms of that notification. There is also
no controversy at this stage. The controversy begining
thereafter. According to the dapartment, thereafter, effect
has to be given first to the notification dated June 16,
1977 and then to the notification dated July 14, 1978 where-
as according to the assessee effect has to be given, in the
first instance, to the notification dated July 14, 1978 and
then to the notification dated 16, 1977. The Department’s
contention was accepted by the Tribunal. In this appeal, Dr.
L.M. Singhvi, learned counsel for the appellant argued that
on principle the effective duty has to be first determina-
tion by applying the notification dated July 14, 1978 first
and the duty paid on the inputs should be set off under the
notification dated June 16, 1977 against the duty determined
as payable after applying the notification dated July 14,
1978. In support of his argument, the learned counsel relied
upon a recent judgment of this court in Assistant Collector
of Central Excise v, Madras Rubber Factory limited, Civil
Appeal No. 3195 of 1979 etc. We are afraid that in the face
of the language of the notifications, it is not possible to
agree with the submission of Dr. Singhvi. We have already
extracted the notification dated June 16, 1977 and July 14,
1978. The notification dated July 14, 1978, it is to be
noticed, has super-added the words “read with any relevant
notification issued under the said sub-rule(1) of Rule 8 and
in force for the time being.” These super-added words show
conclusively that the notification dealing with exemption to
the extent of the duty paid on the inputs, which was already
in force, had to be given effect before giving effect to the
notification dated July 14, 1978. This was the submission of
Shri A. Subba Rao, learned counsel for the department and it
is difficult to see any escape from it. The case upon which
reliance was placed by Dr. Singhvi does not appear to have
any relevance to the question at issue. There, the court was
concerned with the determination of the assessable value and
not with the present question relating to the order of
priority in which the notifications granting
202
exemption from duty had to be applied. There, what the court
decided was that Excise Duty cannot be computed without
proper determination of the assessable value namely assessa-
ble value exclusive of permissible deductions. That princi-
ple cannot come in aid of the question involved in this
appeal. The learned counsel also argued that to give effect
first to the notification dealing with exemption to the
extent of the duty paid on inputs and thereafter to the
notification dated July 14, 1978 would mean that the asses-
see would not be getting full credit for the entire duty
paid on the inputs but only to a percentage of it and that
there would, therefore, be double taxation atleast to that
extent. There is no general principle that there can be no
‘double taxation’ in the levy of Excise Duty. The court may
lean in favour of a construction which will avoid double
taxation but in the present case there does not appear to be
any lean question of construction at all. On the language of
the notification dated July 14, 1978 only one result can
follow. That is the view taken by the Tribunal in the order
under appeal. We agree with that view of the matter. The
appeal is dismissed with costs.
P.S.S. Appeal dismissed. ?203