TaxTMI 
TaxTMI 
1991 (3) TMI 248
X X X X Extracts X X X X
X X X X Extracts X X X X
....d on 16-10-1980 that no duty was payable on the yarn produced by the assessee in its spinning and weaving mill and which was utilised for the purpose of weaving the fabrics manufactured by it. In paragraph 6 of the judgment, the Honourable High Court observed that if there was one single process, of manufacture then the mere fact that at some stage during that process an excisable commodity emerged, would not make it liable to excise duty, unless it was removed for the purpose of consumption or sale. It was also observed that in that context, consumption refers to the utilisation of the commodity for a different purpose and not the mere conversion of the same commodity into another product. In paragraph 6 of the judgment the discussions of the Honourable High Court were as follows : "6. We are of opinion that the contention of the learned counsel for the petitioners is well founded and directly covered by a number of earlier decisions of this court. As mentioned earlier, the contention of the petitioners is based on the decision in the case of The Delhi Cloth & General Mills Co. Ltd. [1978 (2) E.L.T. J 121] which has been earlier referred to. This case has been followed and the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Rules 9 & 49. To a similar effect is the position in the other writ petition and LPA referred to earlier. In the light of these decisions we are of opinion that in the present case the assessee's contention is well founded. The assessee is running a composite textile mill in which it is licensed to manufacture and produce man-made fabrics. There is only one process for which the assessee has been licensed and the entire factory is the place of manufacture the removal from which will attract excise duty. But there is no such removal within the meaning of the rule at all. The yarn produced by the petitioner company is passed on to the warp beams wherefrom are made to attribute several processes before the final fabric emerges. This, in our opinion, is a case where there is a single end-product, and the various processes are all towards the emergence of that end-product. No doubt if the yarn that is wound upon the cones is removed by the assessee for the purpose of sale or for the purpose of consumption otherwise the goods so removed would attract duty and that is not denied by the petitioner itself. But so long as the cone are not removed from the pipeline and they continue to wound ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ld Mohar Mills T.I. 18E Yarn 28-1-81 17-10-80 - 31-12-80 11. E/2281/84-D -do- 24-4-81 16-10-80 - 31-12-80 12. E/2282/84- D -do- 28-4-81 3-11-80 - 31-11-80 13. E/2283/84-D -do- 6-5-81 1-1--81 - 30-4-80 14. E/2284/84-D -do- 7-8-1-81 1-12-80 - 30-5-81 Amount Period time-barred AC's Order No. & Date (6) (7) (8) Rs.P. 1,25,542.41 Nil V(18 III)/18-1/87/6149 dt. 1-7-82 13,367.66 Nil V(18 III)/18-4/87/6147 dt. 1-7-82 72,12,496.32 April 74 to 4-2-81 V(18 E)/18-4/87/6133 dt. 1-7-82 35,13,419.00 1-1-78 to 8-12-80 V(18 III)18-2/87/6145 dt. 1-7-82 2,56,973.76 Nil V(18 E)/18-4/81/447 dt. 27-1-82 1,22,756.88 16-10-80 to 23-10-80 -do- 3,54,019.92 Nil -do- 2,20,204.60 Nil -do- 1,06,265.00 Nil -do- 2,83,540.80 1-1-78 to 5-7-80 V(18 E) 18-4/81/295 dt. 15-5-81 38,97,746.42 1-1-1-78 to 5-7-80 V(18 A) 18-2/81/371 dt. 16-5-81 1,32,406.74 1-1-78 to 5-7-80 V(18-A)18-1/81/273 dt. 16-5-81 7,52,584.80 1-1-78 to 5-7-80 V(18) 1/81/647 dt. 23-5-81 37,255.56 - V(18 E)18-15/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ous submissions made by the appellants. An intermediate product which by itself is an excisable article is liable to excise duty even though it is not removed from the factory [See 1978 (2) E.L.T. J-618 and 1979 (4) E.L.T. J. 581 (Del.)]. Similar view was held by the Allahabad High Court in the case of Central Distillery & Chemical Works v. Inspector of Central Excise. There is no doubt that the Central Excise Tariff (First Schedule) has specific tariff entries for the various yarns which are commercially identifiable commodities. In the circumstances, I hold that the duty was correctly paid on the yarns even if used captively for the manufacture of fabrics. Doubts, if any, have further been removed by the amendments of Rules 9 and 49, ibid, with retrospective effect vide Notification No. GSR-74(E) dated 20-2-1982 read with Section 51 of the Finance Act, 1982. These amendments make it clear beyond doubt that duty is leviable on the goods consumed or utilised within the factory of production itself. Further the validity of the amendments with retrospective effect has been upheld by the Delhi High Court in the case of M/s. J.K. Cotton Spinning & Weaving Mills - 1983 (12) E.L.T. 239 (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....les made thereunder are applicable. The provisions of Section 51 of Finance Act, 1982, being an independent provision, is not therefore, available for Levy and Collection of AED, (TTA) and SED. Hence, Levy and Collection of AED and SED have to be decided independent of Section 51 of Finance Act and in the light of judgment of Delhi High Court in J.K. Cotton Spinning and Weaving Mills Co., Ltd. [1982 (10) E.L.T. 887] for the period prior to 20-2-1982. Section 3(3) of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 makes provision that Central Excises and Salt Act, 1944 and Rules made thereunder will apply in relation to the Levy and Collections of duties of excise leviable under that Act Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 but not under the Finance Act, 1982 which has become part of the Central Excises and Salt Act, 1944. (ii) In any event and without prejudice to the aforesaid it is submitted that while Section 51(2) of the Finance Act, 1982 validates the collection of duties under the Central Excise Act before the 20th day of February, 1982 it does not validate the collection of duties like that leviable under Addit....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... as both sides wanted two months' time each, for obtaining the information and verifying the facts, respectively. These matters ultimately came up for hearing on 14-9-1990 before the same Bench. In the meantime, on 13th August, 1990, Shri Gopal Prasad, Counsel for the appellants filed an application enclosing therewith certain statements showing the break-up of the refund amounts into Basic, Special and Additional Duties of Excise. It was stated by the learned Advocate Shri Sridharan that the totals of these break-up tallied with the amounts claimed by the appellants in various refund applications. This shows that the appellants claimed refund not only of Basic Excise Duty, but also of Special and Additional Duties of Excise. This argument was not disputed by the learned Departmental Representative Smt. Zutshi. She also did not dispute the figures and the break up given in the statements. On 14-9-1990, Shri Sridharan and also Smt. Zutshi did not advance any further fresh arguments, but they adopted the arguments advanced by them before the Bench on 30-1-1990. In view of this, orders were reserved on all these appeals. 7. The grounds sought to be raised by the Miscellaneous Appli....
X X X X Extracts X X X X
X X X X Extracts X X X X
....i argued that Article 365 of the Constitution read with Entries 83 and 84 of List 1 of the 7th Schedule to the Constitution, refers to "duties" and not "duty". The preamble of the Central Excises and Salt Act also says "duties of Excise". Section 3 of the Act, which is the charging section for Central Excise Duty, also says "duties of Excise". The Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 also refers "Additional Duties of Excise". Therefore, she has argued, the Central Excise Duty referred to in Rules 9 and 49 and Section 51 of the Finance Act, 1982 covers Basic Excise Duty, Special Excise Duty and the Additional Excise Duty. Referring to sub-section (3) of Section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, she has argued that this sub-section incorporates the Central Excises and Salt Act and Central Excise Rules, 1944 in this Additional Duties of Excise Act, 1978. In support of this argument, she referred to Page 16 of the Principles of Statutory Interpretation by Justice G.P. Singh, 4th Edition, which deals with incorporation of an earlier Act, into a later Act by reference. She has, therefore, contended that the re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce or premises specified in this behalf, or from a store-room or warehouse duly approved, appointed or payable thereon and such account shall be settled at interval, not exceeding one month and the account-holder shall periodically make deposit therein sufficient in the opinion of the Collector to cover the duty due on the goods intended to be removed from the place of production, curing, manufacture or storage. [(1A) Where a person keeping an account-current under the third proviso to sub-rule (1) makes an application to the Collector for withdrawing an amount from such account-current, the Collector may, for reasons to be recorded in writing, permit such person to withdraw the amount in accordance with such procedure as the Collector may specify in this behalf.] (2) If any excisable goods are, in contravention of sub-rule (i) deposited in or removed from any place specified therein, the producer or manufacturer thereof, shall pay the duty leviable on such goods upon written demand made (within the period specified in Section 11A of the Act, by the proper officer, whether such demand is delivered personally to him, or is left at his dwelling house, and shall also be liable t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Notification is as follows : - Notifn. No. 20/82-C.E., dated. 20-3-1982 In exercise of the powers conferred by section 37 of the Central Excises and Salt Act, 1944 (1 of 1944), the Central Government hereby makes the following rules further to amend the Central Excise Rules, 1944, namely: - 1. (1) These rules may be called Central Excise (4th Amendment) Rules, 1982. (2) They shall come into force on the date of their publication in the Official Gazette. 2. In Rule 9 of the Central Excise Rules, 1944 (hereinafter referred to as the said rules), the following Explanation shall be inserted at the end, namely :- "Explanation. - For the purposes of this rule, excisable goods produced, cured or manufactured in any place and consumed or utilised - (i) as such or after subjection to any process or processes; or (ii) for the manufacture of any other commodity, whether in a continuous process or otherwise, in such place or any premises appurtenant thereto, specified by the Collector under sub-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ys been, for all purposes, as validly and effectively taken or done as if the amendments referred to in sub-section (1) had been in force at all material times and, accordingly, notwithstanding anything contained in any judgment, decree or order of any Court, Tribunal or other Authority, - (a) all duties of excise levied, assessed or collected or purporting to have been levied, assessed or collected before the 20th day of February, 1982 on any excisable goods under the Central Excise Act, shall be deemed to be, and shall be deemed to have always been, as validly levied, assessed or collected as if the amendments referred to in the sub-section (1) had been in force at all material times; (b) no suit or other proceeding shall be maintained or continued in any court for the refund of, and no enforcement shall be made by any court of any decree or order directing the refund of, any such duties of excise which have been collected and which would have been validly collected if the amendments referred to in sub-section (1) had been in force at all material times; (c) refund shall be made of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e. Special Excise Duty is levied at a percentage of the Basic Excise Duty, from time to time by the provisions of the respective Finance Act. In this context, we refer to Section 50 of the Finance Act, 1982, which relates to levy of Special Duties of Excise during the Financial year 1982-83. The text of this Section is as follows : "50. SPECIAL DUTIES OF EXCISE. - (1) In the case of goods chargeable with a duty of excise under the Central Excises Act, as amended from time to time, read with any notification for the time being in force issued by the Central Government in relation to the duty so chargeable, there shall be levied and collected a special duty of excise equal to ten per cent of the amount so chargeable on such goods. (2) Sub-section (1) shall cease to have effect after the 31st day of March, 1983, except as respects things done or omitted to be done before such cesser; and Section 6 of the General Clauses Act, 1897 (10 of 1897), shall apply upon such cesser as if the said sub-section had then been repealed by a Central Act. (3) The special duties of excise referred to in sub-section (1) shall be in addition to any duties of excise chargeable on such goods under....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and the proceeds thereof shall be distributed among the States." "(3) The provisions of the Central Excises and Salt Act, 1944 (1 of 1944), and the rules made thereunder including those relating to refunds and exemptions from duties, shall, so far as may be, apply in relation to levy and collection of the duties of Excise leviable under this Section in respect of any goods as they apply in relation to the levy and collection of the Duties of Excise on such goods under that Act or those rules." Section 50(4) of the Finance Act in the case of Special Duties of Excise, as well as Section 3(3) of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, incorporated by reference the provisions of the Central Excises and Salt Act, 1944 and the rules made thereunder in those sections for the purpose of levy and collection of Special Excise Duty and Additional Excise Duty. The effect of incorporation of an earlier Act, into a later one by reference has been very lucidly discussed by Justice G.P. Singh, Chief Justice of Madhya Pradesh High Court, as he then was, in his book "Principles of Statutory Interpretation", 3rd edition at pages 219 - 221 of the said book. The r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ni Ores Ltd. v. State of Orissa, AIR 1975 SC 17, p. 29; Mahindra and Mahindra Ltd. v. Union of India, AIR 1979, SC 798, pp. 810,811]. Ordinarily if an Act is incorporated in a later Act, the intention is to incorporate the earlier Act, with all the amendments made in it upto the date of incorporation. [State of Maharashtra v. Madhavarao Damodar Patil, AIR 1968 SC 1395 p. 1400.] The rule that the repeal or amendment of the Act which is incorporated by reference in a later Act is not applicable for purposes of the later Act is subject to qualifications and exceptions. [See text and footnotes 28 to 36 at pp. 225 to 228]. 13. A similar point came up for consideration before the Honourable Supreme Court in the case of Ujagar Prints etc. etc. v. Union of India and Others, reported in 1988 (38) E.L.T. 535 (SC). In the said case, the Honourable Supreme Court examined the effect of Section 3(3) of the Additional Duties of Excise (Goods of Special Importance) Act, 1957. Sub-section (3) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 reads as follows : "(3) The provisions of the Central Excises and Salt Act, 1944 (1 of 1944) and the Rules made the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ther needed was the applicability of the procedural provisions of the 1944 Act. Here, however, the 1957 Act is incomplete as to the basis of the charge and its provisions would become totally unworkable unless the concepts of "manufacture" and "assessable value" as determined under the 1944 Act are carried into it. 50. In the circumstances, I agree that we should give full and literal effect to the language of S. 3(3) and hold that it has the effect not only of attracting the procedural provisions of the 1944 Act but also all its other provisions, including those containing the definition. In the concluding sub-paragraph of Para 24 of the said judgment, the Honourable Supreme Court also observed as follows: "What appears, therefore, clear is that what applies to the main levy, applies to the Additional Duties as well." 14. In the light of the above, we hold that in view of Section 3(3) of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 and the relevant provision of the Finance Act, 1982, viz., Section 50(4) of the Finance Act, 1982, all the provisions of the Central Excises and Salt Act, 1944 and the rules made thereunder are applicable to the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the decisions is the Supreme Court's judgment in the case of Associated Cement Co. Ltd. v. Director of Inspection, Customs and Central Excise, reported in 1985 (20) E.L.T. 239 (SC). This judgment was delivered by the Honourable Supreme Court on 29-3-1985 and it related to the grant of tax credit certificate under Section 280ZD(1) of the Income Tax Act. This section entitled a manufacturer of the relevant goods to a tax credit certificate for an amount calculated at the rate not exceeding 25% of "the amount of duty payable by him" on that quantum of the goods cleared by him during the relevant financial year which exceeds the quantum of goods cleared by him during the base year. Clause (b) of sub-section (6) of Section 280ZD defines the expression "duty of Excise" for the purpose of the aforesaid provision and it meant the duty of excise leviable under the Central Excises and Salt Act, 1944. In the said case, the Supreme Court held that the Special Excise Duty which was levied under Section 80 of the Finance Act, 1965 cannot be regarded as having been levied under the Excise Act. In the judgment reported in 1986 (25) E.L.T. 849 (SC), Union of India and Others v. Modi Rubber Limited....