Prakash Narain, C.J.
1. In these four appeals under Clause X of the Letters Patent (L.P. As 127 to 130 of 1970) and the petition under Article 226 of the Constitution of India (C.W. No. 776 of 1971) two common questions of law arises for determination. The two questions are :
1. Whether the special duty of excise imposed on certain goods by Section 80 of the Finance Act 10 of 1965 was a distinct duty imposed or was in the nature of a surcharge on excise duty livable under the Central Excises and Salt Act, 1944.
2. Whether the amount of the duty of excise payable by a manufacturer mentioned in Section 280ZD for the purposes of tax credit certificate postulated by that section and Section 280ZE of the Income-tax Act, 1961 means excise duty actually paid or excise duty livable under the Excise Act.
2. It is not necessary to set out the facts of the cases at any great length. Suffice it to note that the financial years relevant in the five cases are 1965-66 to 1969-70. The case of the Orient Paper Mills Ltd. in each year is that with the base year being 1964-65 the tax credit certificates in each year have been given for a lesser amount than what was enjoyed by law and in excise duty payable the special excise duty levied by the Finance Act had also to be taken into account.
3. The learned single judge against whose judgments the four appeals have been filed has rejected both the contentions. On the question as to whether the special duty imposed by the Finance Act 10 of 1965 was excise duty, the learned Judge has followed a Bench decision of this Court in The Associated Cement Co. Ltd. v. Director of Inspection, I.L.R. 1971 Del 556. On the other question the learned Judge has observed 'Counsel has laid great stress on the word 'payable' as used in Section 280ZD of the Income-tax Act. I cannot accept this submission. The duty which the paper mills had to pay actually was the duty as provided in the Tarrif Schedule to the Central Excises Act as modified by the notification dated 1st October, 1965. Can it be legitimately said that for the purpose of income tax credit certificate I should look only at the Tariff Schedule and turn a blind eye to the notification Both have to be read together. It is true that the word used in the Section 280ZD is 'payable' and not paid as the counsel contends. But the counsel's argument is a mere play on words. Nothing much will turn on this.'
4. On the question whether the Finance Act 10 of 1965 imposed a surcharge on excise duty or a separate distinct duty, it was urged that a plain meaning has to be given to the words used by the statute. According to Section 3 of the Excise Act 'there shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in India....' Section 80 of the Finance Act, 1965 reads as under :-
'80. (1) When goods of the description mentioned in this section, chargeable with a duty of excise under the Central Excises Act (as amended by this Act or any subsequent Act of Parliament) read with any notification for the time being in force issued by the Central Government in relation to the duty so chargeable, are assessed to duty, there shall be levied and collected -
(a) as respects goods comprised in Items Nos. 6, 8, 9, 14D, 22A, 23A except sub-item (1) thereof, 233, 28, 29, sub-items (2) and (3) of Item No. 31 and Item No. 32 of the First Schedule to the Central Excises Act, a special duty of excise equal to 10 per cent of the total amount so chargeable on such goods :
(b) as respects goods comprised in Items Nos. 2, 3(1) sub-items 1, II(2) and II(3) of Item No. 4, Item Nos. 13, 14, 14F, 15, 15A, 15B, 16, 16A, 17, 18A(2), 21, 22, 23, 23A(1), 27, 30, 31(1), 33, sub-items (1), 3(a) and 4 of Item No. 34 and Item No. 37 of that Schedule, a special duty of excise equal to 20 per cent of the total amount so chargeable on such goods; and
(c) as respects goods comprised in Items Nos. 4-II(1), 18, 18A(1), 18B, 20, 29A, 33A, sub-items (2) and (3) of Item No. 34 and radiograms comprised in Item No. 37A of that Schedule, a special duty of excise equal to 33.1/3 per cent of the total amount so chargeable on such goods.
(2) Sub-section (1) shall cease to have effect after the 31st day of March, 1966 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 duties of Excise referred to in sub-section (1) in respect of the goods specified therein shall be addition to the duties of excise chargeable on such goods under the Central Excises Act or any other law for the time being in force and such special duties shall be levied for purposes of the Union and the proceeds thereof, shall not be distributed among the States.
(4) The provisions of Central Excises Act and the rules made there under, including those relating to refunds and exemptions from duties, shall as far as may be, apply in relation to the levy and collection of the duty of excise livable under this section 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 280ZD of the Income-tax Act reads as under :-
'280ZD. (1) Subject to the provisions of this section, a person, who during any financial year commencing on the 1st day of April, 1965, or any subsequent financial year (not being a year commencing on the 1st day of April, 1970, or any financial year thereafter) manufactures or produces any goods, shall be granted tax credit certificate for an amount calculated at a rate not exceeding twenty-five per cent of the amount of the duty of excise payable by him on that quantum of the goods cleared by him during the relevant financial year which exceeds the quantum of the goods cleared by him during the base year, whether the clearance in either case is for home consumption or export.
(2) The goods in respect of which a tax credit certificate shall be granted under sub-section (1) and the rate at which the amount of such certificate shall be calculated shall be such as may be specified in the scheme; provided that different rates may be specified in respect of different goods.
(3) In specifying the goods and the rates under sub-section (1), the Central Government shall have regard to the following factors, namely :-
(a) the need for stimulating industrial output;
(b) the need for financial assistance to industrial undertakings engaged in the manufacture or production of such goods;
(c) any other relevant factor.
(4) Where any undertaking begins, after the 1st day of April, in the base year, to manufacture or produce any goods in respect of which a tax credit certificate may be granted under sub-section (1), the quantum of goods cleared in that year shall, for the purposes of that sub-section, be determined in such manner as may be provided in the scheme.
(5) The amount shown on a tax credit certificate granted to any person under this section shall, on the certificate being produced before the Income-tax Officer, be adjusted against any liability of that person under the Indian Income-tax Act, 1922 (11 of 1922), or this Act existing on the date on which the certificate was produced before the Income-tax Officer and where the amount of such certificate exceeds such liability, or where there is not such liability, the excess or the whole of such amount, as the case may be shall, notwithstanding anything contained in Chapter XIX, be deemed, on the said date, to be refund due to such person under that Chapter and the provisions of this Act shall apply accordingly :
Provided that the adjustment or refund, as the case may be, under this sub-section shall be only for such amount, not exceeding the amount of the certificate, as is used within such period as may be specified in the scheme -
(i) for repayment of loans taken by the person from any of the financial institutions notified in this behalf by the Central Government, or
(ii) for the acquisition of any capital asset in India, including the construction of any building, for the purposes of his business, or
(iii) where the person is a company, also for redemption of its debentures.
(6) In this section :-
(a) 'base year', in relation to an existing undertaking which manufactures or produces the goods referred to in sub-section (1), means the financial year commencing on the 1st day of April, 1964, and in relation to any other undertaking, the financial year in which such undertaking begins to manufacture or produce such goods;
(b) 'duty of excise' means the duty of excise livable under the Central Excises and Salt Act, 1944 (1 of 1944).'
5. Section 280ZE empowers the Central Government by notification the Official Gazette to frame one or more scheme or schemes to be called tax credit certificate scheme or schemes in relation to tax credit certificates to be granted under Chapter XXII-B of the Income-tax Act, 1961. It is common ground that a scheme was prepared regarding tax credit certificates to be issued and promulgated in November, 1965. It is urged that in computation of the amount for grant of tax credit certificate while considering the total excise duty the special excise duty levied under Section 80 of the Finance Act, 1965 should also be taken into account and not merely the duty levied under the Excise Act. The question is whether the excise duty under the Excise Act is the same or similar duty to the duty of excise mentioned in Section 80 of the Finance Act. In the Associated Cement Co. Ltd.'s case a Bench of this Court has come to the conclusion that these are two different types of duties. It has been observed that, 'to hold otherwise, would have the effect of making a dead letter of clause (b) of sub-section (6) of Section 280ZD which defines the expression 'duty of excise' for the purposes of that section. We are in full agreement with this observation and, thereforee, uphold the decision of the learned Single Judge of this Court.
6. With regard to the other contention that it is the duty 'leviable' which has to be considered rather than the duty actually 'paid' once again, we are in full agreement with the views of the learned Single Judge. It has been urged that Section 3(1) of the Excise Act speaks of levy and collection. Rule 8 of the Excise Rules authorises exemption of collection and make a distinction between levy and collection. Levy and collection are two distinct processes. Section 3(2) of the Excise Act permits alteration of levy. Section 3(2) and 3(3) do not deal with collection at all. Regarding Section 3 read with rule 8 it is urged that there is power to exempt collection. Thus, it is urged levy and collection are two distinct things. thereforee, when the relevant provisions speaks of duty which is 'leviable' is has to mean something distinct from duty actually paid or collected.
7. Reliance has been placed on J.K. Steel Ltd. v. Union of India and others, : 1978(2)ELT355(SC) ; N.B. Sanjana, Assistant Collector of Central Excise, Bombay and others v. The Elphinstone Spinning and Weaving Mills Co. Ltd., : 1973ECR6(SC) and Assistant Collector of Central Excise, Calcutta v. National Tobacco Co. of India Ltd., : 1978(2)ELT416(SC) .
8. In J.K. Steel Ltd.'s case the point in issue was as to what was the duty livable on the wires manufactured by the assessed out of steel rods which had already been imported. In that context it was observed that the effect of the Finance Act 2 of 1962 and the various notifications issued for the purpose of implementing the scheme under the Act was that excise duty is livable at the rate mentioned in column 3 of Item 26AA on pig iron or steel ingot used in the production of the article on which duty under entry 26AA is ought to be levied but to the extent any excise duty or countervailing custom duty had been paid on any of the material used in the manufacture of any of that article, the same was exempt. From this scheme, it was held, it was clear that when Item 26AA speaks of 'the excise duty for the time being livable on pig iron or steel ingots as the case may be' it refers to the excise duty payable on the steel ingots used in the production of the article dutiable under that item. 'We cannot from this judgment find any support for the contention raised before us'.
9. In N.B. Sanjana's case what was mentioned was that the expression 'levy' in rule 10 means actual collection of some amount. The charging provision, Section 3(1) specifically says 'There shall be levied and collected in such manner as may be prescribed duties of excise....' It is to be noted that sub-section (1) uses both the expressions 'levied' and 'collected' and that clearly shows that the expression has not used in the Act of the Rules as meaning actual collection.
10. In Assistant Collector of Central Excise, Calcutta v. National Tobacco Co.'s case also the distinction between levy and collection was pointed out. It was said that the term 'levy' appears to be of wider import than the term 'assessment' and to be distinguished from actual collection.
11. In view that we are going to take, none of these authorities are relevant.
12. We already read the provisions of Section 280ZD. The tax credit certificate which is to be given under this provision is for an amount calculated at a rate not exceeding twenty-five per cent of the amount of the duty of excise payable on that quantum of the goods cleared during the relevant financial year which exceeds the quantum of the goods cleared by the said party during the base year, whether the clearance is for home consumption or export. As we understand it, the contention of the paper mills is that 'payable' should be read as livable and not as paid. The Excise Act, as noticed earlier, talks of levy and collection of duty. It does not speak of paid or payable duty. thereforee, in the context in which it is used the word 'payable' must mean what is paid lawfully. What is paid lawfully would be the same thing as what is payable. Indeed, the paper mills pay lesser duty on account of exemption notification. It would not only be inequitable but dishonest to claim a tax credit certificate on the duty that is livable when what is actually paid or is legally payable is a lesser amount.
13. We may look at it from another angle also. Whenever there is an exemption notification, the duty livable gets reduced in terms of the exemption notification and to that extent the exemption notification has to be read as forming part and parcel of the statute of the relevant provision authorising the levy. In Orient Weaving Mills (P) Ltd. and another v. Union of India and others, : 1978(2)ELT311(SC) a Constitution Bench of the Supreme Court was concerned with the applicability of an exemption notification under the Excise Act to a co-operative society of weavers. It was observed that, 'The exemption must, thereforee, have reference to the same kind of tax which would otherwise have been livable but for the exemption. From the notifications set out above, it is manifest that the Government has exempted cotton fabrics produced on powerlooms owned by a co-operative society, and in the present instance owned by the members of the Co-operative Society..... Hence, the exemption granted is within the terms of the notification aforesaid, which have effect as if enacted as a part of the statute....' thereforee, if the exemption notification in the case of paper mills is read as part of the statute the rate of the levy gets reduced and the distinction between livable and payable as put forward by the paper mills becomes meaningless.
14. The result is that we find no force in the four appeals before us on in the writ petition. The appeals are dismissed. In the writ petition, we discharge the rule and dismiss the same. Keeping in view the peculiar circumstances of the case, parties are left to bear their own costs.