1. This Writ Petition under Article 226 of the Constitution of India seeks a writ of certiorari for quashing the order dated 10-11-1972 of the Superintendent of Central Excise refusing to allow rebate as claimed and also against refusal to refund Rs. 3,19,338.93 claimed through applications dated 30-4-73 and 17-3-73.
2. M/s. Madras Rubber Factory Limited, having their registered office at Madras, being desirous of setting up a new Industrial Undertaking in Goa for the manufacture of automobile tyres and tubes, on or about 27-4-71 applied to the Government of India, Ministry of Industrial Development for a licence, under Rule 7 of the Registration and Licencing Industrial Undertakings Rules, 1952, Government of India issued a licence (vide Annexure 'B') dated 23-11-72. Earlier the petitioner had obtained approval of the Ministry of Industrial Development, Government of India, for collaboration with M/s. Mansfield Tyres and Rubber Co., U.S.A. On or about the 28th of July, 1972, the petitioner applied in form L-4 for a Central Excise Licence, to the Assistant Collector of Central Excise, respondent no. 3, Goa, for the manufacture of automobile tyres and tubes at Usgao Village at Ponda Taluka, in Goa. The Assistant Collector of Central Excise, Goa, issued to the petitioner the licence dated 9-10-72, Annexure 'E'. The factory at Usgao was commissioned in September, 1972 for trial runs. On 29th August, 1972 the petitioner submitted to the Superintendent of Central Excise, Panaji, the classification list of excisable goods produced as per rule 173B of the Central Excise Rules. In that the said application the petitioner claimed that the rate of duty leviable would be as follows :- Basic excise duty of 40% for the first clearance of Rs. 1.25 crores value and 50% on balance and that no special excise duty on basic duty would be leviable. On the said application the respondent no. 2 passed an order dated 10-11-72 saying that the rate of duty is 50% ad valorem on all clearances as the manufacture at Madras and Goa is the same. It is the above order which is challenged in this writ petition.
3. According to the case of the petitioner. U/R. 8(1) of the Central Excise Rules, a Notification was published bearing no. 47/1972, dated 17-3-1972 vide Annexure 'G' granting a concessional rate of 40% ad valorem as against the tariff rate of 50% ad valorem. The condition for eligibility of this concession as incorporated under notification no. 47/1972, column 3, is as follows :-
'If the total value of the tyres for motor vehicles cleared by a manufacturer during the preceding financial year for home consumption did not exceed Rs. 4 crores............'.
The respondent no. 2 mis-constructed the word 'manufacturer' to consider the clearance made by the Madras factory of the petitioners as of the same manufacturer for the purpose of the said notification. The petitioners had not applied for expansion of their industrial undertaking at Madras or for the production or manufacture of a new article included in Schedule Industry specified in the First Schedule of the Act. They had applied for a licence under the Registration and Licensing Undertaking Rules, 1952 framed under the Industrial Development and Regulation Act, 1951 for establishment of a new Industrial Undertaking and therefore the respondent no. 2 has wrongly held that the manufacturer at Goa and Madras is the same. The licence No. 1/Tyres and Tubes/72, issued by the 3rd respondent under Rule 174 of the Central Excise Rules is only in respect of the operation confined to the licensed premises at Usgao village, Goa. They held another licence bearing no. 1/61 (Tyres and Tubes) in respect of the operations confined within the licensed premises at Tiruvettiyur, Madras. For the purpose of law, the petitioner while operating in Goa are different manufacturers and hence they are entitled to the concession granted under Notification no. 47/1972. If the word 'manufacturer' in Rule 174 had to be construed as the respondent no. 2 did in this order dated 10-11-72, the petitioners would not require a different licence to operate their factory in Goa. The word 'Manufacturer' in the Notification no. 47/1972 cannot have a different meaning from the one which is to be assigned under Rule 174. Section 6 of the Central Excises and Salt Act, stipulates that the Central Government may by Notification in the Official Gazette provide that from such date as may be specified in the notification no person shall except under the authority and in accordance with the terms and conditions of a licence granted under the Act engage in the production or manufacture or any process of the production or manufacture of any excisable goods or of salt, etc. Sec. 7 of the said Act provides that every licence under Sec. 6 shall be granted for such area, if any for such period, subject to such restrictions and conditions, and in such form and containing such particulars as may be prescribed. Rule 174 is framed to regulate Secs. 6 and 7 of the said Act. Sec. 7 specifically provides that any licence issued under Sec. 6 shall be granted for such area as specified in the licence. The word 'manufacturer' used in the rule 174 has to be construed bearing in mind the provisions of Secs. 6 and 7 of the Central Excises and Salt Act, 1944 and hence cannot have any other meaning but a person manufacturing goods in a specified area according to the licence issued U/s. 7 of the said Act. Whereas the petitioners are holding different licences to operate in Madras and in Goa it follows that the petitioners are different manufacturers in their activities in Goa and in Madras. The further contention of the petitioners is that when one department of the Central Government has accepted the establishment of a new Industrial Undertaking, another department of the said Government cannot refuse to accept it is a separate entity. The petitioner has, therefore, submitted that the order dated 10-11-72 being arbitrary and contrary to law is liable to be set aside.
4. In the returns filed in the shape of an affidavit, sworn in by Shri C. C. Karikatti, respondent no. 3, it has been stated that under the provisions of Rule 175(3) of the Central Excise Rules, 1944, each place of manufacture has to be licensed separately and since Madras and Goa cover separate areas in two different Central Excise Collectorates, a separate Central Excise Licence in the form L-4 was issued to the petitioner in respect of their factory in Goa. The petitioners are not covered by the Notification No. 47/1972, dated 17-3-72. The correct rate of duty on tyres for motor vehicles under Tariff Item No. 16(1) is 50% ad valorem and not 40% ad valorem as claimed by the petitioner while filing the classification list on 29-8-72. The rate of Central Excise duty of 40% ad valorem would be applicable only in those cases where the total value of the tyres of motor vehicles cleared by a manufacturer for home consumption during the preceding financial year did not exceed Rs. 4 crores. The total clearance for home consumption in respect of the petitioner's factory at Madras exceeded Rs. 4 crores and as such the petitioner cannot claim the advantage of the notification no. 47/12, dated 17-3-72. It has been rightly held by the Department that the manufacturer at Goa and Madras is the same, that is to say, Madras Rubber Factory Limited. The petitioner is trying to set out a fiction of two industrial undertakings although the petitioner is the owner of both the units at Madras and Goa. Rule 174 relied upon by the petitioner is not applicable to the facts of the case, and sections 6 and 7 of the Act have also no bearing to the petitioner's case. These two section are to be read with rule 175(3) which clearly lays down that a manufacturer is to be issued with two separate licences when he operates in two separate areas. The petitioner, in the premises as stated, are not entitled to any relief including the relief for refund.
5. In another affidavit sworn by Rajesh Dhingra, respondent no. 3 on 5-4-1980, it has been said that after the Notification No. 198/76, dated 16-6-76, was amended by another Notification No. 20/77, dated 8th February, 1977, amending the earlier one, the petitioner filed Civil application no. 501 of 1978 in the High Court of Delhi and obtained the benefit of the aforesaid Notification. During the year 1976-77 there was power cut in the Madras factory and therefore the petitioner applied on 11-2-1977 to the Collector of Central Excise, Madras to de-link its Madras factory reference to the Notification No. 20/77, dated 8-2-77. The said application was considered by the Collector of Central Excise on 15-4-77 when he issued orders delinking the petitioner's Madras factory from its Goa factory. But as refund was not allowed the writ petition was filed and it was allowed. It appears clear therefrom that the manufacturer in Goa as well as in Madras is the same and the production in both factories was linked together by the petitioners themselves until the factory at Madras was delinked from Goa factory from 15-4-1977.
6. The question which arises for determination is whether the Notification granting exemption gives such an exemption in respect of each of several factories even in cases where all the factories are owned by a single manufacturer. The Notification is in these terms :-
GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE & INSURANCE)
New Delhi, the 17th March, 1972 ---------------- 27th Phalguna, 1893 Saka
GSR. 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 of the description specified in column (1) of the Table hereto annexed and falling under sub-item (1) of item 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 the duty specified and subject to the conditions laid down respectively in the corresponding entries in columns (2) and (3) of the said Table.
THE TABLE-----------------------------------------------------------------Description Duty Conditions-----------------------------------------------------------------(1) (2) (3)-----------------------------------------------------------------Tyres for motor Forty per cent If the total value of thevehicles. ad valorem. tyres for motor vehiclescleared by the manufacturerduring the precedingfinancial year for homeconsumption did not exceedRs. 4.00 crores :-----------------------------------------------------------------Provided that such exemption shall apply only in relation to the first clearance of such tyres for home consumption during any financial year upto a total value of Rs. 1.25 crores.
Provided further that in relation to the period commencing on the 17th March, 1972 nothing contained in this notification shall apply to a manufacturer of tyres for motor vehicles who has already availed of the concession under the notification of the Government of India in the Ministry of Finance (Department of Revenue and Insurance) No. 34/71-Central Excises, dated 7-4-1971 during the period when that notification was in force.
Sd/- (B.K. Agarwal) Under Secretary to the Govt. of India.'
7. As earlier stated the department by the impugned order have refused to give the exemption on the sole ground that the manufacturers at Madras and Goa are the same. It will be seen that the exemption contemplated is in respect of tyres for motor vehicles cleared by the manufacturer. It is argued by U. P. Ramani that when there are two separate licences granted by the Excise Authority for the two factories, the exemption, if it is to be properly construed should apply to each factory separately. For this reliance has been placed on Sections 6 and 7 of the Excise and Salt Act and Rule 174 framed thereunder. The argument would have been no doubt acceptable had the exemption clause been worded differently. The exemption, as it appears, does not refer to any licensed premises where tyres are manufactured. Exemption is granted only to the manufacturer taking into consideration that a single manufacturer may have more than one factory under his ownership and control. So on a strict interpretation of the terms of the Notification referred to above, it will appear that the exemption is accorded to the manufacturer and not to the area in which the factory is situated. That a manufacturer and take separate licences in respect of separate premises will not help the petitioners in enlarging the scope of the Notification granting the exemption.
It is not in dispute that both the factories are owned by a single manufacturer, i.e., the petitioners. It that is correct and the view that the exemption is available only to the manufacturer and not to the premises or area in which the factory is situated conclusion is bound to follow that the petitioners are not entitled to claim exemption under the said Notification. The fact that the petitioners have been allowed by the Central Government a licence for establishing a new Industrial Undertaking in Goa for manufacture of automobile tyres and tubes under Rule 7 of the Registration and Licencing Industrial Undertakings Rules, 1952, and subsequent developments taking thereunder or in that connection could not also be pressed into service for claiming the exemption. The question of the claim for exemption is to be decided with reference to law contained in the Central Excise Act. No aid could also be derived from the Notification, similar to the one in the case, issued granting exemption as pointed out during the course of arguments and as contained in (x) of paragraph 6 the writ petition.
8. For the reasons stated above I am therefore unable to hold that the interpretation put by the Revenue on the Notification dated 17-3-1972 is in any way erroneous.
9. In the result, the petitioners are not entitled to any of the reliefs asked for in this writ petition which is accordingly dismissed with costs as admissible.