1973 (4) TMI 51 - HC - Central Excise

Court upholds excise duty collection, rejects discriminatory claims, affirms legislative discretion in tax matters. Ownership changes do not impact duty rates.

The court dismissed the petitioner's challenge to excise duty collection exceeding a specified limit, rejecting claims of discriminatory classification ... SSI Exemption Issues:Challenge to excise duty collection exceeding specified limit based on discriminatory classification and change of ownership.Analysis:The petitioner, a match factory, filed a writ petition seeking to restrain the respondents from collecting excise duty exceeding Rs. 3.75 per gross of match boxes as per a specific notification. The petitioner argued that the notification was discriminatory as it classified factories based on production levels and wrongly rejected an exemption application. The factory was previously known as Prime Match Factory and was later purchased by M/s. Vani Match Factory. The dispute arose from the calculation of total matches produced for duty levy purposes, considering the production by the previous owner. The respondents contended that ownership change does not affect production assessment for duty purposes. The respondents denied the petitioner's entitlement to exemption, citing production exceeding 100 million matches in a financial year. The court emphasized that production in a factory, not ownership changes, determines duty rates. The court rejected the petitioner's discrimination claim, stating that the previous owner's concession did not automatically transfer to the petitioner.The court addressed the argument that the fixed date for duty imposition was arbitrary and violated constitutional principles. Referring to a Supreme Court decision and a Division Bench judgment, the court upheld the notification's classification based on production levels. The court highlighted the legislature's discretion in tax matters and upheld the notification's validity. The petitioner's claim of an agreement with the department for lower duty rates upon purchase was dismissed, emphasizing statutory rules over informal agreements. Ultimately, the court found no merit in the petition and dismissed it with costs, upholding the duty collection as per the notification.In conclusion, the judgment clarified that ownership changes do not impact duty assessment, production levels determine duty rates, and the notification's classification based on production levels is valid. The court emphasized the legislative discretion in tax matters and dismissed the petitioner's claim of an agreement for lower duty rates. The petition was dismissed with costs, affirming the duty collection as per the notification.