1. This is a revision application (hereinafter called "appeal") filed before the Central Government which under Section 35P of the Central Excises and Salt Act, 1944, stands transferred to this Tribunal to be disposed of as if it were an appeal presented before the Tribunal.
2. The appeal arises out of the appellants' claim for refund of special excise duty amounting to Rs. 19,504.92 paid by them on coated cotton fabrics during the period 12-3-80 to 31-3-80. It was their contention that during the above period the goods were exempt from special excise duty in terms of Notification No. 12/80 dated 12-3-80. On their claim being rejected by the Assistant Collector, they filed an appeal to the Appellate Collector which was also rejected. The matter has now come before us.
3. Appearing before us for the appellants, Dr. Gauri Shankar stated that he was not pressing the claim on the ground advanced before the authorities below. He however wished to press the claim on the basis of a new ground, namely that the levy of special excise duty on the goods in terms of the declaration under the Provisional Collection of Taxes Act appended to the Finance Bill, 1980, did not authorise the levy of the special excise duty. (Shri Sachar, the representative of the department, objected that this ground was an entirely new one and had not been taken before the authorities below. While this was factually correct, we held that, the ground being one based purely on a question of law, it could be taken before us).
4. Dr. Gauri Shankar's argument in brief was that Section 3 of the Provisional Collection of Taxes Act, 1931, authorised the Central Government to insert in a Bill a declaration under that section, where such a Bill "provides for the imposition or increase of a duty of customs or excise". According to him, a duty of excise within the meaning of that section would refer only to duties of excise under the Central Excises and Salt Act, 1944, or what are commonly known as "basic excise duties". Such a declaration could not be validly issued with reference to any other excise duty, levied in terms of a Central law other than the Central Excises and Salt Act. In this connection, Dr. Gauri Shankar referred to the Central Excise Laws (Amendment and Validation) Act, 1982, in which a distinction has been drawn between the Central Excises and Salt Act, 1944 on the one hand and Central Acts other than the Central Excises and Salt Act, 1944, on the other hand.
According to him, this clearly showed that the excise duties levied under Acts other than the Central Excises and Salt Act should be considered as a different kind of duties and therefore was not covered by the general expression "duty of excise" in the Provisional Collection of Taxes Act.
5. In support of his contention, Dr. Gauri Shankar relied on two judgments of the Delhi High Court. One is the judgment in the case of Associated Cement Company Limited. v. Director of Inspection, Customs and Central Excise, New Delhi, reported in ITR Volume 84 of 1972. The other is the judgment in the case of Orient Paper Mills Ltd. v. Deputy Director of Inspection, Customs and Central Excise and Ors. (1982 E.L.T. 247).
6. With reference to his reliance on the provisions of the Central Excise Laws (Amedment and Validation) Act, 1982, it was pointed out to Dr. Gauri Shankar by the Bench that the said Act had a very specific purpose, which was quite clear from its provisions. This was to regulate the interpretation of exemption notifications and orders under the Central Excises and Salt Act or the Central Excise Rules, where the wording of the notifications or orders was such as to lead to an interpretation different from what had been intended. Dr. Gauri Shankar replied that he was fully aware of the genesis of this legislation, which followed the judgment of the Delhi High Court in the case of Modi Rubber Ltd. v. Union of India and Ors. (1983 E.L.T. 24). But whatever the genesis of it, it was quite clear from this legislation that basic excise duties were different in nature from other excise duties.
7. On the strength of the two judgments of the Delhi High Court as well as the terms of the 1982 Act, Dr. Gauri Shankar contended that special excise duty could not be levied on the goods of the appellants during the period in question, and that accordingly their appeal was entitled to succeed.
8. For the department, Shri Sachar submitted that the arguments of the learned counsel for the appellants amounted to saying that the legislation and/or the declaration under the Provisional Collection of Taxes Act was invalid. He submitted that the Tribunal could not go into such a question.
9. We find that there is substance in the submissions of Shri Sachar.
Clause 5(1) of the Finance Bill, 1980 reads as follows :- "In the case of goods chargeable with a duty of excise under the Central Excises and Salt Act, 1944 (1 of 1944), as amended from time to time (hereinafter referred to as the Central Excises Act), 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 five per cent of the amount so chargeable on such goods," The declaration under the Provisional Collection of Taxes Act, 1931, inserted in the same Bill reads as under :- "It is hereby declared that it is expedient in the public interest that the provisions of Clauses 4 and 5 of this Bill shall have immediate effect under the Provisional Collection of Taxes Act, 1931 (16 of 1931)." Sections 3 and 4(1) of the Provisional Collection of Taxes Act, 1931 read as under :- "3. Where a Bill, to be introduced in Parliament on behalf of Government, provides for the imposition or increase of a duty of customs or excise, the Central Government may cause to be inserted in the Bill a declaration that it is expedient in the public interest that any provision of the Bill relating to such imposition or increase shall have immediate effect under this Act.
4. (1) A declared provision shall have the force of law immediately on the expiry of the day on which the Bill containing it is introduced." The combined effect of the Provisional Collection of Taxes Act, Clause 5 of the Finance Bill, 1980, and the declaration inserted in the Bill is that Clause 5 of the Bill, providing for the levy and collection of special duty of excise equal to 5% of the amount of basic excise duty chargeable on any goods, shall become leviable and chargeable immediately on the expiry of the day on which that Bill was introduced.
For us to adopt an interpretation that the declaration under the Provisional Collection of Taxes Act did not have this effect would amount to saying that we were holding this declaration or Clause 5 of the Bill, or both, to be invalid. Shri Sachar appears to be right in saying that it is not open to us to do so. However, since we have come to the conclusion that even otherwise Dr. Gauri Shankar's contention is not acceptable, we need not stop with this.
10. As we have already said, Dr. Gauri Shankar relied on two judgments of the Delhi High Court. Both of them related to the question of grant of tax credit in respect of excise duty, on increased production of goods, The relevant provision was contained in Section 280ZD of the Income Tax Act, 1961, as inserted by the Finance Act, 1965, It provided for the grant of a tax credit certificate for an amount not exceeding 25% of the amount of the duty of excise payable by the assessee on the quantum of goods cleared by him during the relevant financial year which exceeded the quantum of goods cleared by him during the base year. In the same section it was provided that "duty of excise" meant the duty of excise leviable under the Central Excises and Salt Act, 1944. The petitioners in the case, M/s. Associated Cement Company Ltd., had contended that they were entitled to the grant of a tax credit certificate to the extent of 25% of the total excise duty levied on them, namely the special excise duty under Section 80 of the Finance Act, 1965, as well as the basic excise duty under the Central Excises and Salt Act. This contention was rejected by the High Court, having regard to the meaning given to the expression "duty of excise" in Sub-section (6) of Section 280ZD of the Income-tax Act (quoted above).
11. In their subsequent judgment in the case of Orient Paper Mills, which inter alia raised the same point, their Lordships of the Delhi High Court took the same view, following and approving their earlier decision in the case of Associated Cement Company Ltd. 12. It would thus be seen that in the two cases cited by the learned counsel for the appellants, the Delhi High Court was guided by the specific definition of the expression "duty of excise" contained in Section 280 ZD of the Income-tax Act. This definition would not be applicable to other enactments where the expression "duty of excise" has not been so defined. Section 3 of the Provisional Collection of Taxes Act does not contain any such definition or limitation, as it refers to "a duty of customs or excise". Further the judgment of the Delhi High Court in the case of Modi Rubber Ltd. (1983 E.L.T. 24), which as Dr. Gauri Shankar has pointed out, led to the enactment of the Central Excise Laws (Amendment and Validation) Act, 1982 lays down very clearly that where the words "duty of excise" are used without further definition, they should be taken to cover all duties of excise and not merely the basic excise duty under the Central Excises and Salt Act, 1944. We give below some details of this judgment.
13. What was at issue was Notification No. 123/74-Central Excise, dated 1-8-74, which read as follows :- "In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts tyres for motor vehicles falling under sub-item (1) of Item No. 16 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from so much of the duty of excise leviable thereon as is in excess of fifty-five per cent ad valorem." It was contended by petitioners, M/s. Modi Rubber Limited, that this notification had the effect of exempting the tyres in question from all duties of excise whether basic, special, additional or auxiliary, in excess of a total of 55% ad valorem. As against this it was the contention of the Government that the exemption applied only to the basic excise duty leviable under the Central Excises and Salt Act.
14. The Court referred to the meaning of the expression "duty of excise". It held that an auxiliary duty of excise could not be apart from or distinct from duty of excise. Similarly, an additional duty of excise would also be a duty of excise. In para 12 of its judgment the High Court made the following clear pronouncement :- "In our opinion, the duty of excise may be referred to by different terms, such as basic duty of excise, special duty of excise or additional duty of excise or auxiliary duty of excise, but nature of all these duties of excise remains the same and these are all duties in respect of manufacture or production of goods known as "duty of excise." 15. The effect of this judgment was that where an exemption notification was not worded with sufficient precision to make it clear that the exemptoin was only in respect of duties of excise leviable under the Central Excises and Salt Act, that exemption became available in respect of all duties of excise, by whatever name called. Such a difficulty would not arise where the wording was more precise, and made it clear that the exemption was available only in respect of the duty of excise leviable under the Central Excises and Salt Act. It appears that it was in order to safeguard the position of the revenue and ensure that all exemption notifications issued earlier with the imprecise wording were interpreted in accordance with the Government's intention (namely that they should grant exemption only from the basic duty) that Government sponsored the Central Excise Laws (Amendment and Validation) Act, 1982, which replaced an ordinance issued earlier. In this Act, as already stated, a distinction has been drawn between the Central Excises and Salt Act on the one hand and any other Central Act (referred to as Central Law) on the other hand. This Act covers a number of different situations, though all of them are basically alike.
We reproduce below the provisions of Section 2(3) (b) of this Act :- "(3) Where any Central law providing for the levy and collection of any duty of excise makes the provisions of the Central Excises Act and the rules made thereunder applicable by reference to the levy and collection of the duty of excise under such Central law, then,- * * * * (b) no notification or order issued or made under the Central Excises Act or the said rules (whether issued or made before, on or after the 24th day of September, 1982 and whether or not in force on such date) granting any exemption from any duty of excise or fixing any rate of such duty shall have the effect of, or be construed as, providing for exemption from the duty of excise leviable, or, as the case may be, fixing the rate of duty, under the said Central law, unless such notification or order- (i) expressly refers to the provisions of the said Central law in the preamble ; or (ii) by express words, provides for an exemption from the duty of excise leviable, or, as the case may be, fixes the rate of duty under the said Central law;" It will be seen from the above section that by the provisions of this Act an exemption which would otherwise be available in respect of all duties of excise is confined to the basic duty of excise.
16. It is important to note that Section 2(1) which defines "Central Excises Act" and "Central Law", in the manner indicated above, starts with the words "In this section". Thus, the definitions contained therein are with reference to a very special piece of legislation (which was made retrospective without limit of time), arising out of a very special situation. In our view it would not be proper to take a definition given for such a special purpose as having general application. In the absence of any special provision in the Provisional Collection of Taxes Act, the expression "duty of excise" contained therein would have to be interpreted, not in the light of the special definition given in the 1982 Act, but in the light of the ordinary understanding of that expression. So far as the ordinary understanding goes, we have not only the layman's idea, which would be that a special excise duty is also comprehended in the expression "excise duty"; we also have the very clear and authoritative pronouncement of the Delhi High Court in the Modi Rubber case.
17. In the light of the position as explained above, we find that the expression "duty of excise" in the Provisional Collection of Taxes Act would clearly apply to any duty of excise, including what is called a special duty of excise ; and the declaration under the Provisional Collection of Taxes Act would apply with equal force to a clause imposing such a duty. We therefore do not find substance in the argument advanced by the learned counsel for the appellants in this case. We accordingly reject the appeal.