Excise licensing remains mandatory despite duty exemption, and unsubstantiated coercion will not justify quashing the licence process.

Exemption from excise duty did not dispense with the statutory requirement to obtain a manufacturing licence for goods covered by the First Schedule to the Central Excise law. The Court treated Section 6 and the related rules as mandatory and held that licensing was not contingent on duty being actually leviable at the time. The challenge that the licence application and grant were vitiated by threat or coercion also failed, as no sufficient basis was shown for writ interference. The writ petition was therefore rejected and the licensing obligation left intact.

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Issues: (i) Whether a manufacturer of goods included in the First Schedule to the Central Excise Tariff Act, 1985 is required to obtain a licence under Section 6 of the Central Excises and Salt Act even if the goods are exempt from excise duty; (ii) Whether the application for licence and the licence granted could be quashed on the ground that they were obtained under threat or coercion.

Issue (i): Whether a manufacturer of goods included in the First Schedule to the Central Excise Tariff Act, 1985 is required to obtain a licence under Section 6 of the Central Excises and Salt Act even if the goods are exempt from excise duty.

Analysis: Section 6 was treated as a mandatory provision governing manufacture of goods specified in the First Schedule. The Court held that exemption from payment of duty does not remove the statutory obligation to obtain a licence, and the licensing requirement is not made dependent on whether duty is actually leviable at a given time. Rule 173(Q) and Rule 174 were read consistently with that obligation.

Conclusion: The requirement to obtain a licence remained operative, and the issue was decided against the assessee.

Issue (ii): Whether the application for licence and the licence granted could be quashed on the ground that they were obtained under threat or coercion.

Analysis: The alleged coercion was not accepted as a ground for interference. The Court noted that the petitioner had time and opportunity to contest any prosecution or proceedings and that no sufficient basis was shown to treat the application and licence as involuntary. Writ interference was therefore unwarranted.

Conclusion: The challenge based on threat or coercion failed, and the issue was decided against the assessee.

Final Conclusion: The writ petition was rejected because the licensing requirement under the excise law was held to be mandatory and no coercive basis for quashing the application or licence was established.

Ratio Decidendi: Exemption from excise duty does not by itself dispense with a statutory licensing requirement for manufacture of goods covered by the excise schedule, and a writ court will not interfere absent a substantiated showing that the licence process was vitiated by coercion.

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