1. This petition raises a question about the construction of a Notification which was issued by the Govt. of India, granting certain exemptions in respect of goods which are subject to levy of excise duties. The notification exempts specified quantities of goods which are cleared by the manufacturers for home consumptions. The notification had been issued initially on 1st October, 1960, the opening part of which reads as follows :
'Ministry of Finance (Department of Revenue) Notification Central Excise, No. 137/60, dated 1-10-1960.
In supersession of the notification of the Government of India, Ministry of Finance (Department of Revenue No. 38, dated the 1st August, 1955) and CER-8(12)/56, dated the 1st March, 1956, the Central Government hereby exempts the goods specified in column 1 of the Table below, which are cleared by any manufacturer for home consumption on or after the first day cleared by any manufacturer for home consumption on or after the first day of April of any financial year, in the circumstances and to the extent specified in the corresponding entries in columns 2 and 3 respectively of the said Table, from so much of the duty leviable thereon as is in excess of the amount specified in the corresponding entries in column 4 thereof.
Provided that where a factory producing any such goods is run at different times of any financial year by different manufacturers, the Nil and the concessional rates of duty shall apply only to the quantities not exceeding the limits specified in column 3 of the said Table.
Provided further that for the period from 1st October, 1960 to 31 March, 1961, the Nil or the concessional rates of duty, as the case may be, shall be restricted to 50 per cent of the quantities specified in column 3 of the said table.'
We are not concerned with all the entries in the Table. We are concerned only with the entry relating to Oil Paints and Enamels, which is at Serial No. 3 in the Notification and at the material time, it reads as follows :
TABLE-----------------------------------------------------------------Description of Circumstances in which goods are Extent ofgoods eligible for exemption exemptionAmount-----------------------------------------------------------------(3) Oil Paints The output of all oil paints && Enamels enamels for the year does notexceed 3000 metric tonnes.-----------------------------------------------------------------
2. The petitioners, admittedly, are manufacturers of Oil Paints and Enamels, having two factories, one at Panvel near Bombay and the other is at Calcutta. The petitioners claim that exemptions from excise duty which is permissible on the first 750 Tonnes on all the Oil Paints and Enamels taken together, could be availed of by the petitioners independently in respect of each of the two factories at Panvel and Calcutta. The petitioners have received a notice of demand in respect of the quantity cleared for home consumption which, according to the Department, was in excess of what permissible for a period from 1-4-1973 to 28-2-1974. The demand for Rs. 68473.50 was in respect of differential duty and the reason given was as follows :
'As you are not entitled for the concessional rate of duty vide Notification No. 41/72, dated 17-3-1972 on Stiff paints and Ready mixed paints during the above period due to the fact that you are having another unit at Calcutta registered in the same name and the total quantities of Stiff paints and Ready, mixed paints mentioned under aforesaid notification thus barring you from availing the concessional rates as mentioned in the notification in question.'
The petitioners challenged this demand by an Appeal which came to be heard by the Assistant Collector of Central Excise who took the view that the demand was justified. The Assistant Collector also took the view that as the concession under the Notification was applicable to the manufacturer, the production of M/s. Jenson and Nicholson (India) Limited i.e., the petitioners, in their factory at Calcutta, had also to be taken into account before allowing them to clear their products from Panvel Factory and the quantities of both these units taken together exceed the exemption limits permissible to the factories vide notification No. 137/60, dated 1st October, 1960 as amended by the Notification No. 4/72 dated 7th March, 1972, the demand for Rs. 68,472.50 had to be confirmed. The petitioners' further appeal against this order came to be decided by the Appellate Collector of the Central Excise, Bombay. The Appellate Collector took the view that :
'Whatever concessions are available in Central Excise Law, they are normally applicable to a manufacturer and if he has more than one factory, the production of all the factories have to be clubbed together.'
These orders are now challenged by the petitioners in this petition.
3. Mr. Bhat, the learned counsel for the petitioners, has referred to the opening part of the Notification and has contended that the Notification in the opening part, though it does not refer to a factory, for the purposes of Notification each factory has to be treated separately as a separate entity and reliance was placed on the fact that both the factories are run under two separate licences and duty is collected separately in respect of the goods manufactured in these two factories. According to Mr Bhat, where the authority issuing the Notification wanted specifically to make a reference to a factory, it has been so made as in a the case of the first proviso to the said Notification. In aid of the same argument, our attention has been invited to certain other notifications which were issued by the Government of India in respect of Mosaic Tiles, Steel Furniture and Metal Containers, the three notifications being respectively dated 29th May, 1971, 1st April, 1971 and 1st May, 1970. The opening part of all these three notifications are identical and as illustration we will reproduce the opening part of the Notification, dated 29th May, 1971 relating to Mosaic Tiles which reads as follows :
'Under Government of India, Ministry of Finance (Department of Revenue and Insurance) Notification No. 97/71, Central Excises, dated the 29th May, 1971, the Central Government hereby exempts mosaic tiles, falling under item No. 23 D of the first schedule to the Central Excises and Salt Act, 1944 (1 of 1944) up to a value not exceeding fifty thousand rupees, cleared for home consumption on or after the first day of April in any financial year by or on behalf of a manufacturer from one or more factories, from the whole of the duty of excise leviable thereon :
Provided that ..............
Having thus set out notifications, it is necessary now to refer to the Notification which is in question i.e., one, dated 1st Oct., 1960. The scheme of that Notification is that certain goods which had been cleared by the manufacturer for home consumption on or after the 1st of April of any financial year, are exempted from duty subject to certain conditions. The Notification refers to the circumstances in which goods are eligible for exemption and the extent to which such exemption relates.
4. The table which is a part of the Notification refers to column 2 to the circumstances in which goods are eligible for exemption. So far as the goods manufactured by the petitioners are concerned, the Petitioners must show in order to avail of the exemption that the output of Oil Paints and Enamels for the financial year, does not exceed 3000 Metric Tonnes, that there is a partial exemption in the sense that on the first 750 Metric Tonnes of Oil Paints and Enamels taken together, no duty is chargeable. In other words, the effect of the Notification is that the manufacturers, whose output is less than 3000 Metric Tonnes in a financial year, is entitled to exemption from excise duty in respect to the output which has been cleared for home consumption only on the first 750 Tonnes of the output.
5. Now, according to the petitioners, when it has been decided whether the conditions in the 2nd column are satisfied, the output will have to be considered in respect of each of the two factories at Panvel and Calcutta and since in respect of each of the two factories, the total output did not exceed 3000 Metric Tonnes from each of the two factories at Panvel and Calcutta. On the other hand, it is contended on behalf of the Union of India by Mr. Manjrekar that it is irrelevant for the purposes of the Notification whether the production is from one factory or more than one factory and, according to him, all that has to be found out is whether the output of 'a manufacturer' exceeds 3000 Metric Tonnes or not. It is argued that both the Panvel and Calcutta Factories are owned by the petitioners. Therefore, the manufacturer in both the factories is the same and if the total output of this manufacturer exceeds 3000 Metric Tonnes, then the manufacturer will not be entitled to any exemption as contemplated by column No. 3. There is no dispute that the Rules provide for a separate licence in respect of each factory. Under R 172 which provides a procedure for obtaining licence, it is provided that :
'Every person referred to in Rule 174 shall make an application for the grant or renewal, at the time and in the manner provided for in rule 176 to the authority who shall be such officer as the Central Board of Excise and Customs may authorise in this behalf.'
Rule 174 refers to a person requiring a licence and it is provided that :
'Every manufacturer, trader or person hereinafter mentioned, shall be required to take out a licence and shall not conduct his business in regard to such goods otherwise than by the authority, and subject to the terms and conditions of a licence granted by a duly authorised officer in the proper form.'
Therefore, the licence refers to a manufacturer. Now under sub-R. (2) of R. 175, if the same person desires to have licences for carrying on business in more than one capacity, he has to submit separate applications. Under sub rule (3), it is provided that where the applicant has more than one place of business, he shall obtain a separate licence in respect of each such place of business. There is therefore no doubt that if the same manufacturer has to carry on business at more than one place, he must have separate licences.
6. However, when we came to the Notification in question the meaning to be given to that Notification must depend primarily on the terminology used in that Notification and meaning to be given to the words will not be controlled by any rule which requires the same manufacturer to have separate licences for separate places of business. As already pointed out, there is no reference to a factory in the opening part of the Notification. All that Notification provides is that the exemption is available only in certain circumstances where the goods are cleared by a manufacturer for home consumption. The person who is supposed to clear goods for home consumption has been clearly and unambiguously described as 'manufacturer'. Therefore, all that is relevant for ascertaining whether exemption can be availed of in respect of certain goods, will be whether the manufacturer referred to in the opening part has an output which does not exceed 3000 Metric Tonnes. There is no dispute that the 'output' referred to in column 2 of the Notification is the output of the manufacturer. It is not possible to import the concept of output from a particular factory belonging to a manufacturer, if such a concept cannot be inferred on the terminology used in the notification. One has merely to look at the Notification and to decide whether the output of a manufacturer is less than 3000 Metric Tonnes and then if it is so whether he has cleared any goods for home consumption and if any goods have been cleared for home consumption, then the limited quantity of 750 Metric Tonnes is liable to exemption.
7. It is no doubt true that in the first proviso, a positive reference is made to 'a factory'. The first proviso provides for a special case where the same factory is run at different times for a financial year by different manufacturers. A question which would necessarily arise in such a case is whether each of the manufacturers will be entitled to the exemption which is contemplated by the Notification. If the proviso was not there and if the same factory is run by different individuals at different times in a financial year, possibly each manufacturer being a different person, it would have been permissible for him to make a claim for exemption on the ground that his total output does not exceed what is specified in the Notification. This would positively have resulted in placing a premium on the factory run by different persons at different times and a benefit of exemption would have accrued to the manufacturer, merely because he happens to be a person different from one who had earlier run the factory in the same financial year. The result would have been that such a benefit would have accrued to more than one person in the course of the same financial year, though in the case of a manufacturer to whom the first part applies, the benefit would have been comparatively less. The first Proviso, it appears to us, is designed to prevent every manufacturer, who runs the same factory at different periods of time in the financial year, from claiming the special exemption individually. That is why a special provision has been made and the exemption is restricted not on the basis of a manufacturer but on the basis of the production. In other words, the benefit is limited to the quantity and not on the basis whether the manufacturer is the same or not. The Proviso, therefore, provides for entirely different circumstances than the one contemplated by the main part of the Notification. Since the proviso deals with the goods produced by different manufacturers in the same factory, reference to 'a factory' has been made in that Proviso. That, however, is no reason why the main part of the Notification should be construed in the manner canvassed by the petitioner. Since the Notification read with the Table clearly, in our view, contemplates that the total production of a manufacturer has to be taken into account and since it is not specified as to whether the production should be from one factory or more than one factory expressly, it will not be possible to hold that the benefit was based on the basis of the goods manufactured in each factory separately. It is no doubt true that in certain Notifications which have been pointed out to us, it is made expressly clear that the manufacture from one or more factories has to be treated collectively for the purposes of the Notification but such reference to more than one factory does not mean that clearance of the goods referred to in the Notification in dispute must be read as clearance from each factory separately. It also appears to us that by using words 'from one or more factories', the position which was implicit in the Notification in the Notification in question where the word 'Manufacturer' was used as to identify the person who had cleared the goods for home consumption was made expressly clear in the later Notifications. The later Notifications in our view, were so worded more for the purpose of clarity than for making any fresh or additional provision.
8. We may point out that we are supported in the view, which we have taken by the decision of the Calcutta high Court in : AIR1958Cal283 - Tincori Oil Mill v. Collector of central Excise. The Notification in that case was substantially identifiably worded and was as follows :
'In exercise of the powers conferred by Rule 8 of the Central Excise Rules, 1944, as in force in India, and as applied to the State of Pondicherry, the Central Government hereby exempts from the duty leviable thereon (i) the first 125 tons of Vegetable Non-Essential Oils cleared by any manufacturer for home consumption on or after the first day of April in any financial year; (ii) Vegetable Non-Essential Oils cleared up to a maximum of 10 tons by any manufacturer for home consumption during the month of March 1956.'
Construing this Notification, the learned Judge held that :
'the words 'any manufacturer' meant any one manufacturer. In other words, if the manufacturer was common, then it did not matter how many factories he had got but the exemption was not per factory but was consolidated one.'
We are therefore, of the considered view that where the same manufacturer produces goods in more than one factory, the benefit of the Notification of exemption in question can be claimed only on the basis of consolidated output of all the factories.
9. In this view of the matter we do not find any infirmity in the demands made on behalf of the Central Excise Authorities and the orders passed by the Appellate Authority, confirming those demands. The Petition must, therefore, fail and is dismissed with costs.