1973 (5) TMI 35 - HC - Central Excise

Court upholds excise duty on copra crushed in mills under Produce Cess Act, 1966.

The court dismissed the petitioners' challenge to the imposition of excise duty under the Produce Cess Act, 1966 on copra crushed in mills. The court held ... Copra - Cess Issues:Challenge to imposition of excise duty under Produce Cess Act, 1966 on copra crushed in mills.Analysis:The petitioners, millers who crush copra in their mills and sell the oil produced, challenged the Central Excise notices under the Produce Cess Act, 1966. The duty proposed was under Section 3 of the Act. The petitioners raised grounds against the constitutional validity of the imposition but did not press them. Their main argument was that the levy did not fall within the charging section and the relevant item in the Second Schedule of the Act.To understand the argument, it is crucial to examine Section 3(2) and the relevant item in Schedule II. The duty is levied on copra consumed in any mill in India for producing goods. The petitioners argued that the duty is limited to copra consumed in a mill with the intention to produce goods, not just oil. They claimed that since they only produce oil, the duty should not apply. However, the court rejected this argument, stating that the purpose of consuming copra in a mill is to produce goods, whether it be oil or other products like soaps. The legislative history also supports the view that the intention was to levy a cess on all copra consumed in a mill.The court found that the description in the relevant item is broad enough to include oil as a product of copra consumption in a mill. The argument that oil is not distinct from copra or that it does not fall under the term 'any goods' was deemed unsubstantial. The court held that the petitioners cannot succeed in their challenge, and the petitions were dismissed with no order as to costs.