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Madras Rubber Factory Limited (Mrf Limited), Madras Vs. Rubber Board, Kottayam and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtKerala High Court
Decided On
Case NumberO.P. No. 396 of 1981-D
Judge
Reported inAIR1982Ker257; 1984(3)ECC328; 1984(17)ELT81(Ker)
ActsRubber Act, 1947 - Sections 3, 12, 12(1) and 12(2); Rubber Rules, 1955 - Rule 33D; Constitution of India - Article 14
AppellantMadras Rubber Factory Limited (Mrf Limited), Madras
RespondentRubber Board, Kottayam and ors.
Appellant Advocate K.C. John,; George Varghese and; K.K. John, Advs.
Respondent Advocate Joseph,; Kuriyan,; S. Siri Jagan, Advs.,;
DispositionPetition dismissed
Cases ReferredV. Venugopala Ravi Varma Rajah v. Union of India
Excerpt:
excise - rubber act--legislative powers--scrap rubber, whether rubber and excise duty can be levied on scrap rubber--assessee buying scrap rubber, getting such scrap rubber processed through other factories and using crepe rubber produced in such process--whether liable to excise duty only on quantity of crepe rubber used and not on scrap rubber purchased--milling waste, whether to be excluded while levying duty on scrap rubber--provisions of section 12(1) of rubber act, whether discriminatory and arbitrary and violative of article 14--assessee claiming that in another assessee's case rubber board allowed deduction of milling waste while levying duty on crepe rubber and that assessee has been discriminated against--no evidence--validity of complaint--construction of statutes--words and.....orderu.j. bhat, j. 1. this is a petition filed by the madras rubber factory limited under article 226 of the constitution of india for a declaration that section 12(1) of the rubber act 24 of 1947 (for short the 'act') is violative of article 14 of the constitution if construed as conferring power to levy cess in some cases on the weight of rubber including moisture and foreign materials and in other cases by excluding the foreign materials and moisture; to declare that notification, ext. p-11 is violative of article 14 of the constitution; to declare that the petitioner company is liable to pay cess only on the dry rubber contents of the scrap rubber purchased after excluding milling waste; and to issue a writ of certjorari quashing demand notices exts. p-t to p-9 in relation to levy of.....
Judgment:
ORDER

U.J. Bhat, J.

1. This is a petition filed by the Madras Rubber Factory Limited under Article 226 of the Constitution of India for a declaration that Section 12(1) of the Rubber Act 24 of 1947 (for short the 'Act') is violative of Article 14 of the Constitution if construed as conferring power to levy cess in some cases on the weight of rubber including moisture and foreign materials and in other cases by excluding the foreign materials and moisture; to declare that notification, Ext. P-11 is violative of Article 14 of the Constitution; to declare that the petitioner company is liable to pay cess only on the dry rubber contents of the scrap rubber purchased after excluding milling waste; and to issue a writ of certjorari quashing demand notices Exts. P-t to P-9 in relation to levy of cess on scrap rubber and to call for the records relating to poceedings in O. P. Nos. 528 of 1976, 529 of 1976, 167 of 1977, 637 of 1977, 139 of 1978, 184 of 1979, 269 of 1979, 468 of 1979 and 27 of 1980 which culminated in Ext. P-10 common order of the 3rd respondent, District Judge, Kottayam and to quash the same.

2. Petitioner is a company incorporated under the Companies Act and having factories in several places in Kerala and outside and engaged in the manufacture of tyre and other rubber products. Petitioner company has been purchasing different varieties of rubber such as sheet rubber, crepe rubbes, scrap rubber, etc. for the purpose of manufacture of rubber products. All these types of rubber are 'rubber' as defined in Section 3(h) of the Act. Section 12(1) of the Act entitles the Rubber Board to levy cess at a rate not exceeding 50 ps. per kilogram on all rubber produced in India as notified by the Central Government. The cess may be collected in accordance with the Rubber Rules, 1955 (for short the 'Rules') either from the owner of the estate in which rubber is produced or from the manufacturer by whom such rubber is used. Rule 33-D of the Rules empowers the Rubber Board to levy cess on the rubber acquired by the manufacturers by demand notice issued to the manufacturer and collect the same from them. For the nine half years beginning from 1-4-1975 and ending with 30-9-1979 Rubber Board issued Exts. P-1 to P-9 demand notices to the petitioner company requiring the company to remit cess at the rate of 40 Ps. per kilogram (at the rate notified as per Ext. p-11 by the Central Government) before the dates fixed in those notices. Petitioner raised a contention that in taking into consideration the quantity of scrap rubber acquired by the petitioner for its use, the Rubber Board has illegally included milling waste also. Petitioner, it is said, purchases different types of rubber including scrap rubber. Scrap rubber cannot be used for the manufacture of tyre and other rubber products manufactured in the petitioner's factories unless it is converted into crepe rubber which is got done through other processors. In the process of such conversion of scrap rubber into crepe rubber, according to the petitioner, moisture and waste materials to the extent of 15% to 20% are removed and the actual rubber used by the petitioner in the manufacturing process is only the net weight of crepe rubber. Petitioner obtained certificates from the institutions from where the scrap rubber consignments were converted into crepe rubber to show the gross weight of scrap rubber and the weight of milling waste and the net weight of crepe rubber obtained. Petitioner contended that cess under Section 12(1) of the Act can be levied only on the weight of crepe rubber in so far as scrap rubber is concerned. This contention was not accepted by the Rubber Board. The petitioner preferred appeals by way of petitions before the District Judge, Kottayam as provided in Section 12(6) of the Act in regard to all the nine half years. The original petitions were heard together and disposed of by a common order Ext P-10 by the District Judge, Kottayam, who rejected the contentions of the petitioner. The petitions were dismissed but without costs. It is in this background that the present original petition has been filed.

3. The learned counsel for the petitioner has urged the following contentions :

(i) Scrap rubber, which is the commodity in question in this case is not rubber at all but only source of rubber and therefore excise duty cannot be levied on it under the Act.

(ii) Petitioner company does not use scrap rubber, but uses only crepe rubber, which is obtained after getting the scrap rubber processed through other factories and as such the petitioner company cannot be said to use scrap rubber in the manufacture of rubber products. Hence what is excisable is only quantity of crepe rubber used and not quantity of scrap rubber acquired.

(iii) 'Rubber' as defined in Section 3(h) of the Act and dealt with in Section 12 of the Act must be so construed as to exclude milling waste in so far as scrap rubber is concerned, in which case the assessments made by the Rubber Board are contrary to law.

(iv) If the above construction is not accepted, the provision in Section 12(1) of the Act and Ext. P-11 notification fixing cess at 40 ps. per kilogram of rubber are discriminatory and arbitrary and are liable to be struck down as being violative of Article 14 of the Constitution in which case also the assessments are illegal, and

(v) In the assessment made on Dunlop India Limited in regard to scrap rubber, the Rubber Board has allowed deduction of the milling waste and levied assessment only in regard to the weight of crepe rubber; thereby the Rubber Board has shown discrimination against the petitioner and therefore also the assessments are illegal.

4. In order to decide the first contention raised viz., whether scrap rubber is rubber for the purpose of the Act, we have to look into the definition of 'rubber' given in Section 3(h) of the Act. Definition of 'Rubber' occurring in Section 3(h) of the copy of the Act printed in Government of India Press, New Delhi and published by the Manager of publications, Delhi is as follows :

'3. (h) 'rubber' means-

(i) crude rubber, that is to say, rubber prepared from the leaves, bark or latex of any rubber plant;

(ii) the latex of any rubber plant, whether fluid or coagulated, in any stage of the treatment to which it is subjected during the process of conversion into rubber;

(iii) latex (dry rubber content) in any state of concentration.and includes scrap rubber, sheet rubber rubber in powder and all forms and varieties of crepe rubber, but does not include rubber contained in any manufactured article;''

'Rubber' is defined as meaning something and also including something. It may be that scrap rubber may not fall within Sub-clause (i), (ii) and (iii) of Section 3(h) of the Act; but it is roped in by the inclusive definition of rubber. It is argued that scrap rubber is only a source of crepe rubber and not 'rubber' by itself. The same argument would with greater legitimacy apply to latex which certainly is a source of rubber and not rubber as such. In view of the specific inclusion of scrap rubber in the definition of 'rubber' by virtue of the inclusive definition, the petitioner cannot contend that scrap rubber is not rubber, but only source of rubber for the purpose of the Act.

5. It is also argued that scrap rubber is not produced 'by intervention of human agency and therefore the same is not excisable. What Section 12(1) of the Act contemplates is 'duty of excise on all rubber produced in India'. It is contended that scrap rubber is not something produced. In page 5 of Central Excise Duties and Economic Development in India by Sivakumar Singh it is stated :

'Ordinarily excise means a tax or duty on home produced goods either at some stage of production or before their sale to home consumers......

An excise duty may be levied on raw materials or at any intermediate stage of their production or when the articles are ready for consumption.'

Entry 84 in List 1 of Schedule VII of the Constitution mentions duties of excise on goods manufactured or produced in India. Article 366(12) defines 'goods' as including raw materials, commodities and articles. In Aluminium Corporation of India v. Coal Board, (AIR 1959 Cal 222) the question arose whether coal is a commodity produced and the question was answered in the affirmative. Calcutta High Court stated thus (para 17):

'Although coal is undoubtedly a natural product, the operations required to bring it up to the surface and to make it marketable or even usable is so elaborate and expensive that to speak of the mining and condition of coal as its production is wholly appropriate. ..... Entry No. 84 appears to contemplate some expenditure of human skill and labour in bringing the goods concerned into the condition which would attract the duty. It is not required that the goods should be manufactured in the sense that raw material should be used to turn out something altogether different, but ii is still required that they should be produced in the sense that some human activity should be spent on them and they should be subject to some processes in order that they may be brought to the state in which they may become fit for consumption. ..... Coal has to beraised from the bowels of the earth, broken, sifted and graded before it can be offered to consumers. .....'

6. On the same reasoning, which appears to be wholesome, it has to be held that scrap rubber is also goods produced in India. This is so in regard to all forms of natural rubber, whether it is latex or scrap rubber, or cup lace, etc. Latex which is milky juice of rubber tree called 'Hevea brasiliensis' obtained on cutting the bark of the tree is the source of all forms of natural rubber including scrap rubber, cup lace, etc. Latex vessels in the bark are cut and the milky juice tapped and collected in cups attached to the rubber tree. The latex so collected in the cups is Utter on transferred to other vessels. There will be dry strips of rubber in the old cuts. There will be lumps of coagulated latex found in the cups used previously for tapping. These are called tree lace and cup lump respectively. Some part of the latex may fall at the bottom of the tree and that is also collected and it is called earth scrap. Similarly there is bark scrap recovered from the bark removed for tapping. Table 1 at page 14 of the Vanderbelt Rubber Handbook shows !he various types of sources of natural rubber, such as chemically coagulated latex, cup lump, tree lace, bark scrap, earth scrap, etc. Smoked sheets are the international types of rubber obtained from latex; estate brown crepes are obtained from cup lump and tree lace. Thin brown crepes are obtained from bark scrap and flat bark scrap is obtained from earth scrap. It is seen that 80% of the natural rubber is derived from coagulated latex.

7. Thus, it could be seen that coagulated latex, tree lace, cup lump and scrap rubber are all derived from latex. Coagulated latex is latex which is chemically treated whereas other forms are naturally coagulated latex. Field latex, which is juice obtained from the rubber tree is the natural product of the tree; just as coal is the natural underground phenomenon existing in earth. Just as coal existing underneath the earth cannot be used by any consumers without human agency bringing it out and reducing it to consumable forms, juice inside the rubber trees cannot be used by consumers unless it is brought out by human agency. The process of bringing out juice from the rubber tree is also an elaborate and expensive process for which human agency is absolutely necessary. It is human activity and ingenuity through a highly skilful process that makes latex available to the consumers. This process can certainly be regarded as process of production of latex, either in the uncoagulated form or in the coagulated form. Scrap rubber is nothing but naturally coagulated form of latex. It has, therefore, to be held that scrap rubber is rubber 'produced' in India.

8. Section 12* of the Act deals with the imposition of rubber cess and it reads as follows:

'12. Imposition of rubber cess: (1) With effect from such date as may be notified by the Central Government in this behalf, there shall be levied and collected as a cess for the purposes of this Act a duty of excise on all rubber produced in India at such rate not exceeding one anna per pound of rubber so produced as the Central Government may by 'the same or a like notification, from time to time fix.

(2) The said duty of excise shall be payable by the owner of the estate on which the rubber is produced, and shall be paid by him to the Board within one month from the date on which he receives a notice of demand therefor from the Board.

(3) The said duty of excise may be recovered as if it were an arrear of land revenue.

(4) For the purpose of enabling the Board to assess the amount of the duty of excise payable by the owner of an estate under thissection-

(a) the Board shall, by notification in the Gazette of India, fix the period in respect of which assessments shall be made, and

(b) without prejudice to the provisions of Section 20, every owner of an estate shall furnish to the Board a return stating the total amount of rubber produced on the estate in each such period, not later than fifteen days after the expiry of the period to which the return relates:

Provided that in respect of an estate situated only partly in India the owner shall in the said return show separately the amounts of rubber produced within and outside India. (5) If any owner of an estate fails to furnish in due time the return referred to in Sub-section (4) or furnishes a return which the Board has reason to believe is incorrect or defective, the Board may assess the amount payable by that owner in such manner as may be prescribed.

(6) Any owner of an estate aggrieved by an assessment made under this section may within three months of the service of the notice under Sub-section (2) apply to the District Judge for the cancellation or modification of the assessment, and the District Judge shall, after giving the Board an opportunity of being heard, pass such order (which shall be final) as he thinks proper.

(7) The proceeds of the duty of excise collected by the Board and any of the fees levied under this Act (all of which shall form part of the Consolidated Fund of India) reduced by the cost of collection as determined by the Central Government, shall, if Parliament by appropriation made by law in this behalf so provides, be paid to the Board for being utilised for the purposes of this Act.'

Section 20 of the Act requires every ownes, manufacturer and holder of special license to submit to the Board such returns as may be prescribed and maintain true and correct accounts and other records, etc. Section 25 of the Act empowers the Central Government to make rules to carry out the purposes of the Act. Rule 33-D provides for duty to be assessed on the quantity of rubber acquired by the manufacturers during the period specified in Rule 33 (e), viz., respective half years.

9. The argument advanced on behalf of the petitioner is that only the quantity of the rubber actually used by the manufacturer is excisable and not the quantity of rubber acquired. The petitioner company acquires scrap rubber and sends it for processing to other processors and obtains back crepe rubber. In the processing of scrap rubber, impurities are, to a great extent, removed. These impurities are called milling waste. Milling waste is not used by the manufacturer in the manufacture of rubber products. Therefore, it is submitted that in assessing cess the Rubber Board has to deduct milling waste from the quantity of scrap rubber purchased; in other words, the Rubber Board should take into consideration only the quantity of crepe rubber put to use by the petitioner. This distinction between 'acquire' and 'use' has been rebutted by a Division Bench of this Court in the decision reported in Ruby Rubber Works v. Rubber Board, ((1965) Ker LT 1159). This Court pointed out that a combined reading of Section 12 of the Act with R. 33-D of the Rules would clearly indicate that the Act gives an option to collect duty from the owner or the manufacturer and that option has been exercised in framing the rules contained in R. 33-D which clearly indicates that duly has to be collected from the manufacturer. This Court also pointed out that in Section 12(2) of the Act what is meant by stating 'from the manufacturer by whom such rubber is used' is 'from the manufacturer by whom such rubber is acquired'. The mere acquisition of rubber as defined in the Act in whatever form it may be, for the purpose of manufacture would amount to the use of the rubber by the manufacturer. It may he that the manufacturer will have to subject the rubber to processes or purity it: nevertheless, what he uses is the rubber which he acquires and not merely the purified or processed rubber he obtains. The petitioner does not conduct any process by which scrap rubber is purified into the form of crepe rubber. Suppose the petitioner company itself undertakes the process and thereafter uses the crepe form of the rubber in the manufacture of rubber products, there would be no doubt that it can be said to have used the scrap rubber and not merely the crepe rubber. Merely because the petitioner company does not undertake the processing work itself, but gets it done through other processors cannot change the position. It is pointed out that the incidence of excise duly on scrap rubber can be successfully avoided by the petitioner company by purchasing crepe rubber and not scrap rubber. That may be; but then, the petitioner company may have to pay higher price for crepe rubber. The reason why the petitioner company purchases scrap rubber and not crepe rubber is understandable. Obviously, cost factor in the former is in favour of the petitioner. In any event, this is not a valid reason to hold that the petitioner company does not use scrap rubber, but uses only crepe rubber. I hold that the petitioner company having acquired scrap rubber for manufacture of rubber products has used it in such manufacture and the same is liable for excise duty.

10. The third contention urged by the learned counsel for the petitioner it that 'rubber' as defined in Section 3 of the Act and dealt with in Section 12 of the Act must be so construed as to exclude milling waste in so far as scrap rubber is concerned, in which case the assessments made by the Rubber Board are contrary to law. This argument is built around the construction ought to toe given to the inclusive definition contained in Section 3(h) of the Act. In a private publication of the Act referred to by the learned counsel for the petitioner, the inclusive definition beginning from 'and includes scrap rubber' to 'in any manufactured articles'; occurs in continuation of the last words, 'in any state of concentration' in Sub-clause (iii) of Clause (b) of Section 3 of the Act. It is, therefore, argued that the inclusive definition is part of sub-clause (in) and not part of sub-clause (h) as a whole. But this is not how it occurs in the Act published by the Government of India press at Delhi, as also in the gazette publication. In the latter the inclusive definition does not appear in continuation of sub-clause (iii), but it appears below it after a comma. It is, therefore difficult to accept that the inclusive definition is an appendage to sub-clause (iii) and not appendage to Clause (h) as a whole. 'Rubber' has been defined in two ways i.e. 'rubber' means the things mentioned in Clause (i) to (iii) of Section 3(h) and also 'rubber' includes scrap rubber etc. No doubt, with reference to latex in any state of concentration, in sub-clause (iii), the words 'dry rubber content' occur in brackets. This only means that in the ease of latex it is the dry rubber content which is relevant and not the total weight of latex. The argument is that just as latex contains impurities and moisture, scrap rubber also contains impurities and moisture and in the case of scrap rubber also, h is only the dry rubber content which tons to be taken into consideration.

11. Neither the expression 'latex' nor the words 'dry rubber content' have been defined in the Act. As observed in Dunlop India Limited v. Union of India, (AIR 1977 SC 597) 'meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand them in usual course.' 'Indian Standard, -- Glossory of terras need in the Rubber Industry Part I' issued by the Indian Standards Institution refers to latex as 'colloidal acqueous dispersion of rubber'. At page 14 of Vanderbell Rubber Handbook it in stated that original rubber content of latex is 30 to 45 per cent. At page 39 of 1979 Rubber Growers Companion issued by the Rubber Board, it is staled that rubber content of latex is 30% to 40%, water content 55% to 60%. protein content 2% to 2 1/2% etc. Dictionary of Rubber by K. F. Heinisch at page 182 states that dry rubber content is determined by mixing coagulated latex with 1 % ferric acid at P. H. 4.8% to 5.0% sheet coagulum and drying it at 70%. The percentage 30 to 40% represents the rubber hydro-carbon content plus a small quantity of protein, resin ash minerals, and so forth. It is further, stated that in practice, the product percentage of solid rubber remaining after drying is accepted as the rubber content of the latex. So far as the moisture is concerned, there can be no doubt that scrap rubber may contain a small quantity of it. That is because latex has become scrap rubber by natural process of coagulation. So far as ash minerals, etc there can be no significant difference in content between latex and scrap rubber. Of course in certain types of scrap rubber like bark scrap, earth scrap, etc. there may be certain additional impurities such as particles of bark, or mud.

12. Thus, it may be seen that the expression 'dry rubber content' is an expression of technical import. It is the percentage at dry solid rubber content in latex arrived at alter subjecting the latex to particular processes. The available books on rubber describe the process by which the dry rubber content of latex can be ascertained. But, the petitioner has not been able to place any material before the Court suggesting that the concept of 'dry rubber content' could be used with reference to scrap rubber as well. It appears to me that this concept is inapplicable to scrap rubber mainly because scrap rubber is predominantly the dry form of latex though it may contain a small percentage of moisture. The petitioner has not been able to show to the Court any authorities stating that dry rubber content can he arrived at with reference to scrap rubber by subjecting it to any scientific process. Therefore, it is not possible to accept that scrap rubber as such is not 'rubber' and that only the 'dry rubber content' of scrap rubber is 'rubber' as defined in the Act. It is scrap rubber itself which is rubber as defined.

13. Section 12(1) of the Act speaks of levying as cess, a duty of excise on all rubber produced in India at such rate not exceeding 50 ps. per kilogram of rubber so produced, as the Central Government may fix. Clause (2) of Section 12 states that duty of excise so levied should be collected by the Board in accordance with the rules made in this behalf either from the owner of the estate or from the manufacturer. Clause (4) lays down the procedure to be followed by the Board in making the assessment. Rule 33 of the Rules confers on the Board power to call for information and documents from the concerned persons. Clause (e) of Rule 33 requires all manufacturers to submit half-yearly returns for the periods from 1st April to 30th September and 1st October to 31st March of each financial year showing the total quantity of rubber in kilogram purchased or otherwise acquired during such period and consumed or used in the process of manufacture during the said period. Clause (f) requires them to submit to the Board Auditor's report certifying the correctness of the return submitted earlier. The rules prescribe the forms of returns to be submitted as aforesaid. Form 'K.' is the prescribed halt yearly return to be submitted in accordance with Rule 33 (e) of the Rules. It refers to different grades of rubber. Flat bark (earth scrap crepe). Scraps and Sole crepe have been mentioned its Group No. 7 in the form. As against scraps, the words 'Dry Weight' occur in brackets. Form 'L' is the form of monthly return to be submitted to the Board indicating the details of the rubber acquired and disposed of in each month. We have already seen that in so far as latex is concerned the definition in Section 3(h) of the Act mentions dry rubber content.

14. It is contended by the learned counsel for the petitioner that the definition of 'rubber' in Section 3(h) of the Act is not applicable with reference to Section 12 as there is something repugnant in the subject or in the context and that the expression 'rubber' occurring in Section 12 must be so construed with reference to scrap rubber so as to lake into consideration only 'dry rubber content' thereof or so as to exclude the milling waste its otherwise the provisions in Section 12 of the Act and Ext. P-11 notification would offend Article 14 of the Constitution of India on account of hostile discrimination and hy treatment of unequals as equals. We have already seen that the expression 'dry rubber content' is one which could be applied only with reference to latex and not with reference to scrap rubber. It is true that definition of an expression given in a statute may not apply in the context of some sections of the Statute Of course, normally whenever a word is de-fined in the Statute and that word occurs in, the succeeding sections, the meaning given in the definition must be applied in construing the sections concerned. However, there is an exception to this normal rule: if in the subject or context of a particular section it appears that there is something repugnant so that the definition cannot be fitted in the Court is at liberty not to construe the word: occurring in that section in the manner in which it has been defined bill to give it either its ordinary meaning or some other meaning apposite to the context or subject. It is argued that the expression 'rubber' in Section 12(1) of the Act must be taken to mean only dry rubber content. That is so with reference to latex. But, since the expression 'dry rubber content' cannot be used with reference to scrap rubber, it cannot be said that the expression 'rubber' in Section 12(1) can be read as dry rubber content with reference to scrap rubber. It is also argued that the expression 'rubber' in Section 12(1) of the Act must be read as meaning the weight of dry and pure rubber in scrap rubber and other forms of rubber. There is nothing in the context of Section 12(1) of the Act which would support this contention. It is not as if dry rubber content of latex indicates only pure rubber content of latex. We have already seen that dry rubber content of latex also includes a small percentage of impurities. It cannot, therefore, be said that impurities in other forms of rubber should be excluded for the purpose of Section 12 of the Ad. Latex contains a very high percentage of water that is, 55 to 60%. The legislative intent is that with reference to latex this very high percentage of water must be ignored for the purpose of levying cess. Since the dry rubber content of latex also includes a small quantity of protien, resin, minerals, etc. it cannot be said that the legislative intent is to ignore these foreign materials also. It is not as if with reference to scrap rubber the entire weight is to be taken into consideration, Form 'K' requires the manufacturer to give the dry weight of scrap rubber. The intention is very clear, viz., that it is only on the dry weight of the scrap rubber that cess will be levied. It is true that scrap rubber will contain some impurities. But that is the case with dry rubber content of latex also. That also contains some impurities. It may be that scrap rubber contains more impurities than dry rubber content of latex. In either cast it will be difficult to arrive at a definite percentage of impurities. This is much more so in the case of scrap rubber. While latex is more or less homogeneous, scrap rubber is certainly not homogeneous. Therefore, in a mass of scrap rubber there may not be a representative sample available with reference to which percentage of impurities could be assessed. If, in these circumstances, the legislature has thought it not fit to provide for an estimation of the impurities for the purpose of arriving at the net assessable weight of latex or scrap rubber, that cannot be said to be arbitrary or unreasonable, nor can it be said to violate the equality clause in the Constitution.

15. In view of the fact that scrap rubber may contain a higher percentage of impurities than latex, it has been argued that there is discrimination involved. That is because in paying cess on latex, cess is calculated on a small quantity of impurities while paying cess on scrap rubber, cess is calculated on a higher percentage of impurities. It has to be borne in mind that we are dealing with excise duties which are levied either as specific duties or as ad valorem duties. In the case of specific duty, the duty is fixed on physical unit of the product without regard to the value of the unit, whereas in the case of ad valorem duty, duty is fixed on the selling price of the product. Specific duties fall more heavily on cheaper brand, while ad valorem duties are more productive. In other words, in imposing specific duty there may be an inlrinsic inequality involved depending on the quality of the product, since duty is levied on the physical unit irrespective of the quality or value of the unit. It has been observed by the Supreme Court in V. Venugopala Ravi Varma Rajah v. Union of India, (AIR 1969 SC 1094) thus (para 14):

'Equal protection clause of the Constitution does not enjoin equal protection of the laws as abstract propositions. Laws being the expression of legislative will be intended to solve specific problems or to achieve definite objectives by specific remedies, absolute equality or uniformity of treatment is impossible of achievement. Again, tax laws are aimed at dealing with complex problems of infinite variety necessitating adjustment of several disparate elements. The Courts accordingly admit, subject to adherence to the fundamental principles of the doctrine of equality, a larger play to legislative discretion in the matter of classification. ..... Protection of the equality clause does not predicate a mathematically precise or logically complete or symmetrical classification........'

16. It is true that combined operation of Section 3(h) and Section 12(1) of the Act is to give a different treatment to latex by taking only dry rubber content. This classification is certainly reasonable since latex contains' more than 50% water while in the very nature of things scrap rubber would contain only a very small quantity of moisture. The Statute has been enacted to provide for the development of the rubber industry under the control of the Union through the instrumentality of the Rubber Board. Rubber Board is to undertake research, train persons in important methods of planting and in cultivating rubber, supply technical advice to rubber growers, to improve marketing of rubber and discharge other functions: the Board should have funds which are provided for in Sections 9, 9(a) and 9(b). Section 12(7) of the Act provides for net proceeds of the excise duty to be paid to the Rubber Board for being utilised for the purposes of the Act. One of the objects of the Act is to levy excise duty on rubber. The classification made between latex and other forms of rubber is certainly a reasonable classification and has nexus with this object of the Act. The object is not to levy cess on produce which contains more than 50% water but only to levy cess on rubber as defined in the Act, i.e. a produce which is in the main rubber. It is also to be noticed that neces-isarily scrap rubber and other forms of rubber containing some impurities wilt be cheaper than the dry rubber content of latex. Under these circumstances, the argument that if milling waste is not to be deducted from the weight of scrap rubber, levy of cess on rubber under Section 12(1) of the Ac; read with Ext. P-11 notification would offend Article 14 of the Constitution has to fail. Section 12(1) of the Act if understood in the light of the construction put on Section 3(h) of the Act in this judgment, does not offend the equality clause. It is not possible to construe the expression 'rubber' occurring in Section 12(1) of the Act in its application to scrap rubber as excluding milling waste.

17. The last argument advanced by the learned counsel for the petitioner is that in the assessment made by the Rubber Board on Dunlop India Limited in regard to scrap rubber, deduction has been given for the weight of milling waste. A file relating to Dunlop India Limited has been caused to be produced. The file contains returns in Form 'K' with appendices submitted by Dunlop India Limited to the Rubber Board. In the appendices relating to a few months, such us August 1975, September. 1975. etc. Dunlop India Limited has mentioned the gross weight of scrap rubber, weight of milling waste and the net weight of crepe rubber. Petitioner on whom the burden of establishing discriminative treatment lies has not cared to explain the Form 'K' returns of Dunlop India Limited, nor has the petitioner taken the trouble of causing production before Court of the assessment orders and other relevant materials relating to Dunlop India Limited. As it is, there is no material before the Court to show that Form 'K' returns submitted by Dunlop India Limited take in only the net weight of scrap rubber after deducting milling waste or thatassessment has been made on that basis. The mention of milling waste separately in the appendices submitted by them by itself does not carry the petitioner any further. A case of discrimination supported by relevant materials has not been made out. However, I have to record the submission made by the learned counsel appearing for the Rubber Board to the effect that in regard to the assessments made for some periods on Dunlop India Limited, audit objections have been raised and that the entire matter is being looked into by the Rubber Board and further that if it is found that any deduction has been given for milling waste in the case of Dunlop India Limited, the Rubber Board will take steps to rectify the error. In this view, I am unable to agree that a case of discrimination has been made out.

In the result, the petitioner is not entitled to any reliefs in this original petition and the original petition is dismissed with costs.


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