1955 (3) TMI 55 - HC - Indian Laws

Court upholds Excise Act validity, retrospective imposition, and recovery of excise duty post goods removal.

MEWAR TEXTILE MILLS LTD., BHILWARA Versus   UNION OF INDIA AND OTHERS

The court upheld the validity of the Excise Act, including its retrospective imposition, classification under Article 14, and the recovery of excise duty ... - Issues Involved:1. Retrospective Imposition of Excise Duty2. Classification and Discrimination under Article 143. Legislative Competence and Validity of the Act4. Recovery of Excise Duty after Goods RemovalDetailed Analysis:1. Retrospective Imposition of Excise Duty:The petitioner challenged the retrospective operation of the Excise Act, arguing it was illegal and void as it imposed additional excise duty on goods manufactured, packed, and issued before the Act's commencement. The court held that the retrospective imposition of taxes does not deprive them of their character as excise duties if Parliament has the power to enact such laws retrospectively. The court emphasized that the term 'excise duty' generally means a tax on home-produced goods intended for home consumption and can be imposed at any stage deemed convenient by the taxing authority. The court concluded that Parliament possesses the authority to levy excise duties retrospectively, provided it is within its legislative competence and does not violate the Constitution.2. Classification and Discrimination under Article 14:The petitioner argued that the Excise Act violated Article 14 of the Constitution by discriminating between mills that carried on both weaving and spinning and those that only did weaving. The court upheld the principle that the legislature has wide latitude in making classifications and that such classifications must be based on intelligible differentia with a reasonable relation to the legislative purpose. The court found that the classification was justified as the Act aimed to protect the handloom industry by restricting the production of mill-made dhoties. The court also addressed the petitioner's argument regarding the lack of provision for mills that expanded their equipment, concluding that the Act's provisions, particularly Section 3(2), allowed for suitable treatment of such mills.3. Legislative Competence and Validity of the Act:The petitioner contended that the Excise Act was not an excise duty but an attempt to regulate trade in dhoties, which was outside the Union's legislative competence. The court held that the duty imposed by the Act was indeed an excise duty as it was levied on manufacturers in respect of goods produced over the permissible quota. The court emphasized that Parliament has the exclusive competence to levy excise duties on goods manufactured in India under Entry No. 84 of List 1, Union List of the Seventh Schedule. The court also noted that Article 369 of the Constitution allowed Parliament to make laws relating to the production, supply, and distribution of cotton textiles for five years from the commencement of the Constitution, thus validating the Act.4. Recovery of Excise Duty after Goods Removal:The petitioner argued that excise duty could not be recovered after the goods had been lawfully removed from the place of manufacture. The court acknowledged that while excise duty is generally collected at the time of removal, exceptional cases like the present one are covered by Rule 10-A of the Central Excise and Salt Act, 1944, which allows for the recovery of any duty or deficiency in duty even after the goods have been cleared. The court concluded that the demand for additional excise duty in this case was valid and recoverable according to law.Conclusion:The court dismissed the petition, upholding the validity of the Excise Act, its retrospective imposition, the classification under Article 14, and the recovery of excise duty after goods removal. The demand made by the authorities was deemed just and proper, and the Excise Act was found to be constitutional and within the legislative competence of Parliament.