1986 (8) TMI 60 - SC - Central Excise

Notifications under Rule 8(1) Central Excise Rules, 1944 exempt only basic excise duty, not special or additional duties

The SC allowed the appeals and dismissed the writ petition, holding that notifications issued under Rule 8(1) of the Central Excise Rules, 1944 without ... Duty of excise - power to exempt under sub rule (1) of Rule 8 of the Central Excise Rules, 1944 - definition of 'duty' in clause (v) of Rule 2 - Rule 8(1) read with statutory provision levying special excise duty - declaratory legislationDuty of excise - power to exempt under sub rule (1) of Rule 8 of the Central Excise Rules, 1944 - definition of 'duty' in clause (v) of Rule 2 - Construction of the expression 'duty of excise' in Notifications dated 1st August 1974 and 1st March 1981 - HELD THAT: - Both notifications were issued under sub rule (1) of Rule 8 of the Central Excise Rules, 1944. The definition of 'duty' in clause (v) of Rule 2 - being 'the duty payable under Section 3 of the Act' - must be projected into Rule 8(1) and therefore governs the meaning of the expression 'duty of excise' used in notifications issued under that Rule. Absent any reference in the notifications to a separate statute making the Central Excises Act and rules applicable to other levies, a notification issued simpliciter under Rule 8(1) must be read as granting exemption only in respect of the excise duty payable under the Central Excises and Salt Act, 1944. It is not permissible to read such notifications as covering special, additional or auxiliary duties levied by subsequent or other enactments, particularly where those duties did not exist at the time of the notification. Where exemption from special or additional duties is intended, the recital ordinarily identifies Rule 8(1) read with the relevant statutory provision levying such duty; the notifications in question contain no such reference and accordingly cannot be construed to extend beyond basic excise duty under the Central Excises and Salt Act, 1944. [Paras 9, 10, 11, 12]Under the Notifications dated 1st August 1974 and 1st March 1981 the expression 'duty of excise' is limited to basic duty payable under the Central Excises and Salt Act, 1944 and does not include special, additional or auxiliary duties levied under other enactments.Declaratory legislation - Rule 8(1) read with statutory provision levying special excise duty - Constitutional validity of the Central Excise Laws (Amendment and Validation) Act, 1982 - HELD THAT: - Parliament enacted the Central Excise Laws (Amendment and Validation) Act, 1982 to lay down statutory rules for interpreting notifications granting exemption from payment of excise duty and to prescribe when such notifications should be read as extending to duties levied under other Central enactments. Given the court's construction that notifications issued solely under Rule 8(1) are limited to excise duty under the Central Excises and Salt Act, 1944, the 1982 Act operates as a legislative declaration of that legal position. The impugned enactment is therefore declaratory of the existing law rather than altering constitutional limits, and its constitutional validity cannot be successfully impugned on the grounds raised in these proceedings. [Paras 13, 14]The Central Excise Laws (Amendment and Validation) Act, 1982 is declaratory of the existing law and is constitutionally valid.Final Conclusion: Appeals allowed and writ petition dismissed; the notifications dated 8th November 1967, 1st August 1974 and 1st March 1981 confer exemption only in respect of the basic duty of excise leviable under the Central Excises and Salt Act, 1944 and not in respect of special, additional or auxiliary duties; the Central Excise Laws (Amendment and Validation) Act, 1982 is valid. Issues Involved:1. Interpretation of the term 'duty of excise' in Notifications No. 123/74-C.E. and No. 27/81-C.E.2. Constitutional validity of the Central Excise Laws (Amendment and Validation) Act, 1982.Detailed Analysis:1. Interpretation of the term 'duty of excise' in Notifications No. 123/74-C.E. and No. 27/81-C.E.The primary issue in these appeals and writ petition was the interpretation of the term 'duty of excise' in the two notifications issued under Rule 8(1) of the Central Excise Rules, 1944. The question was whether this term referred exclusively to the basic duty of excise levied under the Central Excises and Salt Act, 1944, or if it also encompassed special duty of excise, additional duty of excise, and any other kind of excise duty levied under various Finance Acts and other Central enactments.The court noted that the term 'duty' in the Central Excise Rules is defined in Rule 2(v) to mean 'the duty payable under Section 3 of the Act.' Therefore, the exemption granted under Rule 8(1) could only apply to the duty of excise payable under the Central Excises and Salt Act, 1944. The court emphasized that the language of the notifications must be interpreted in the context in which it appears. Since the notifications were issued under Rule 8(1), the term 'duty of excise' must be interpreted as referring to the duty of excise payable under the Central Excises and Salt Act, 1944.The court also considered the historical context, noting that when the first notification was issued on 1st August 1974, there was no special duty of excise on tyres. Special duty of excise was introduced later in 1978 through various Finance Acts. Therefore, it would be unreasonable to assume that the Central Government intended to grant exemptions for duties that did not exist at the time the notification was issued.Furthermore, the court observed that when the Central Government intended to grant exemptions from duties other than the basic duty of excise, it explicitly mentioned such intentions in the notifications. The absence of such specific language in the notifications in question indicated that the exemptions were intended only for the basic duty of excise.2. Constitutional validity of the Central Excise Laws (Amendment and Validation) Act, 1982The second issue was the constitutional validity of the Central Excise Laws (Amendment and Validation) Act, 1982. This Act was enacted to provide statutory rules for interpreting the term 'duty of excise' in exemption notifications and to limit the term to the basic duty of excise levied under the Central Excises and Salt Act, 1944.The court held that the Central Excise Laws (Amendment and Validation) Act, 1982, was merely declaratory of the existing law. Since the court had already interpreted the term 'duty of excise' in the notifications as referring only to the basic duty of excise, the Act did not introduce any new principles but merely clarified the existing legal position. Therefore, its constitutional validity could not be challenged.Conclusion:The appeals were allowed, and the writ petition was dismissed. The court set aside the judgment of the High Court and held that under the Notifications dated 8th November 1967, 1st August 1974, and 1st March 1981, the respondents were entitled to exemption only in respect of the basic duty of excise levied under the Central Excises and Salt Act, 1944. They were not entitled to claim any exemption in respect of special duty of excise, additional duty of excise, or auxiliary duty of excise. The respondents were ordered to pay the costs of the Union of India.