IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 04-02-2008
CORAM
THE HONOURABLE MR. JUSTICE P.K. MISRA
AND
THE HONOURABLE MR. JUSTICE K.K. SASIDHARAN
WRIT APPEAL NO.2970 OF 2003
and
WAMP.NO.4691 OF 2003
Tamil Nadu Small Industries
Corporation Ltd.,
Rep. by its General Manager,
Thiru-Vi-Ka Industrial Estate,
Guindy, Chennai 600 032. .. Appellant
Vs.
1. The Collector of Central Excise,
Chennai.
2. The Customs Excise & Gold (Control)
Appellate Tribunal,
New Delhi. .. Respondents
Appeal filed under Clause 15 of the Letters Patent against the order of the learned single Judge in W.P.No.2255 of 1995 dated 16.8.2002.
For Appellant : Mr.Arvind Datar
Senior Counsel for
Ms. Pushya Sitaraman
For Respondent-1 : Mr.P. Wilson
Asst.Solicitor General
Respondent-2 : Mr.K. Ravindranath
for Customs Excise
- - -
J U D G M E N T
P.K. MISRA, J
The present appeal is filed against the decision of the learned single Judge in W.P.No.2255 of 1995, whereunder the present appellant had challenged the order passed by the present Respondent No.2. The question relates to availability of exemption under Notification 175/86-CE dated 1.34.1986.
2. For appreciating the aforesaid question, it is necessary to notice the facts.
The appellant was registered as a Company under the Indian Companies Act as per G.O.Ms.No.4704/Ind.Spl. dated 1.10.1965. All the shares of the company are held by the Government or the officials of the Government in their official capacity. The first Board of Directors of the Company consisted of the Secretary to Government, Industries, Labour and Co-operation as the Chairman, Director of Industries & Commerce, Secretary to Government, Finance Department, Deputy Secretary, (Small Industries) Industries, Labour & Co-operation Department, Special Officer, Office of the Director of Industries & Commerce Department as the Managing Director by virtue of G.O.Ms.No.4704 dated 1.10.1965. Notification:175/86 is the notification issued under the Central Excise Act relating to exemption. Explanation V to such Notification is as follows:-
“Explanation V. – For the purposes of this notification, where the specified goods are manufactured in a factory, belonging to or maintained by the Central Government or by a State Government, or by the Khadi and Village Industries Commission, then the value of excisable goods cleared from such factory alone shall be taken into account.”
3. The contention of the appellant is to the effect that since all the shares of the Company are held by the Government or its officers in official capacity, the benefit of the exemption should be made available. This contention having been rejected by the Respondents 1 & 2, the writ petition was filed.
4. The learned single Judge rejected the writ petition by observing:
“2. … Though the Company like the present one may be regarded as an instrumentality of the State Government for the purpose of Article 12 of the Constitution, the Company nevertheless remains a distinct and separate legal entity, with capacity to sue and to be sued, to contract, as also to enforce the obligations arising from such contracts. The Company cannot, therefore, be regarded as an integral part of the State Government and exemptions granted to the State Government cannot be regarded as encompassing the Companies in which the State Government holds all the shares, or the majority of the paid up share capital of the Company.”
For the aforesaid purpose, the learned single Judge has relied upon the decision of the Supreme Court in (1999) 4 SCC 458 (ELECTRONICS CORPORATION OF INDIA LTD. v. SECRETARY, REVENUE DEPARTMENT).
5. Learned Senior Counsel appearing for the appellant, while assailing the decision of the learned single Judge, submitted that the ratio of the decision of the Supreme Court in (1999) 4 SCC 458 (cited supra) is not applicable to the facts of the present case and on the other hand the decision of the Supreme Court reported in (1998) 5 SCC 738 (INDIAN OIL CORPORATION LTD. v. CHIEF INSPECTOR OF FACTORIES AND OTHERS) is applicable. It is further submitted by him that the intention under the Notification is to give encouragement to Government enterprises and a purposive interpretation is to be adopted to effectuate the intention of the notification. It has been further submitted that in fact subsequently by way of amendment to the notification it has been made clear that the intention was to give benefit to the Government owned Corporations and the amendment was only clarificatory.
6. Learned counsel appearing for the Respondents, on the other hand, supported the decision of the learned single Judge and has submitted that the very fact that the amendment to the notification had been made subsequently would only indicate that such amendment had been made to incorporate such new provision.
7. The fact that the present appellant is a Government owned Corporation where all the shares are either hold by the Government or the designated officers of the Government, is not in dispute. Explanation-V of the Notification, which has been extracted, refers to specified goods manufactured in a factory ” belonging to or maintained by the Central Government or by a State Government, or by the Khadi and Village Industries Commission”. The amendment effected by Notification:47/88-CE with effect from 1.3.1988 refers to State Industries Corporation and State Small Industries Corporation. It is no doubt true that such amendment has not been made specifically retrospective. However, as contended by the learned Senior Counsel for the appellant it can be safely concluded that such amendment, whereunder reference has been made to State Industries Corporation and State Small Industries Corporation, can be said to be clarificatory. In other words, this amendment can be said to only clarify what was the original meaning and the intention of the notification.
8. Law is now well settled that at times the amendments are made which are clarificatory in nature which only emphasise the meaning which was originally intended. For the aforesaid purpose, reference can be made to the decision of the Bombay High Court in (1988) 36 ELT 479 (SUN EXPORT CORPORATION, BOMBAY v. COLLECTOR OF CUSTOMS, BOMBAY AND ANOTHER), which was specifically approved by the Supreme Court in (1997) 6 SCC 564.
9. It is no doubt true that the learned single Judge has relied upon the decision of the Supreme Court in (1999) 4 SCC 458 (cited supra) to come to a conclusion that the Company has got a separate and distinct identity from its shareholders. The aforesaid decision was rendered in a context of the provisions relating to Land Ceiling. In the present case, as already observed, the intention of the exemption notification is to encourage the Central Government or the State Governments. Keeping in view the purpose for which such notification had been issued, in our opinion, a purposive interpretation is required to be adopted to effectuate the main intention of the exemption notification. In fact, for the subsequent period, there is no doubt that such exemption being made applicable to Small Industries Corporation under the control of the State Government. In our opinion, the ratio of the Supreme Court decision given in an entirely different context cannot be made applicable to the peculiar facts and circumstances of the present case. On the other hand, as rightly contended by the learned Senior Counsel for the appellant, the ratio of the decision of the Supreme Court in (1998) 5 SCC 738 (cited supra) can be made applicable. It is also interesting to note that in a subsequent decision, the CEGAT has given the benefit of such exemption to the very same appellant as it is apparent from the decision reported in 2001(131) E.L.T. 131 (TANSI v. COMMISSIONER OF CENTRAL EXCISE, CHENNAI). In such decision, the CEGAT has accepted the contention that amendment is clarificatory and has given the benefit of exemption. It is also asserted by the appellant and not refuted by the Counsel for the Department that such subsequent decision of the CEGAT has not been challenged by the Department. As a matter of fact, similar decision was also made by CEGAT in an earlier decision reported in (1999 (82) ECR 330 (TANSI v. CCE, Madras), wherein the benefit of the exemption was made available to TANSI.
10. Having regard to these decisions and particularly keeping in view the intention of the notification, we are inclined to accept the contention of the learned Senior Counsel for the appellant and hold that benefit of the exemption is available to the appellant.
11. Learned counsel for the Respondents has contended that a reading of the order of the learned single Judge indicates as if such decision was rendered on the basis of the fair concession made by the counsel for the present appellant before the learned single Judge. We have carefully gone through the observations made by the learned single Judge. It appears that the decision relied upon by the learned single Judge was brought to the notice of the learned single Judge by the counsel for the appellant. It does not mean that any concession has been given. Even assuming that any concession has been given, on an erroneous view, on a question of law such a concession is not binding on the parties and it is always open to the appellate court to take a different view on the question of law.
12. For the aforesaid reasons, the appeal is allowed and the order passed by the learned single Judge is set aside and the orders passed by the Respondents 1 and 2 are quashed and it is made clear that benefit of the exemption under Notification 175/86 can be availed by the present appellant for the relevant year. No costs. Consequently, WAMP.No.4691 of 2003 is closed.
dpk
To
1. The Collector of Central Excise,
Chennai.
2. The Customs Excise & Gold (Control)
Appellate Tribunal,
New Delhi.