M. Anantanarayanan, C.J.
1. Messrs. the Modern Theatres Limited, Salem, (Writ-appellant in W.A. No. 370 of 1964) produced a film entitled 'Sahasra Chircheda Approva Chintamani' in the Telugu language (Talkie), concerning which the relevant particulars are these. 42,053 metres of footage of this film had been exposed and completed before 1st March, 1960. 65,358 metres of this film were exposed and completed after 1st March, 1960. With regard to both these lengths of the film, the Producers paid tax at 50 naya paise per metre on 30th March, 1960, totalling Rs. 53,705-50.
2. This payment was made 'under protest' by the Modern Theatres Limited, for the simple reason that, according to them, the levy itself could only relate to the length of the film exposed and completed, subsequent to 1st March, 1960. According to the records of the Producers, the footage previously referred to by us, namely, 42,053 metres, had been exposed and completed on 29th February, 1960 itself. In the letter by the Producers dated 7th April, 1960, to the Collector of Central Excise, the matter is put in this form:
This length of exposed film is not liable for any levy. This sum, therefore, in question has to be refunded to us in full.
It is clear from the record that the Collector of Central Excise took the view that this length of the film, namely, 42,053 metres, cannot be eligible for exemption, or the claim that it is not liable to levy. The reason, in the language of the Departmental Authorities (O.C. No. 2900 of 1960, dated 16th June, 1960) is that 'the Censor Board has certified the film, for public exhibition, only after 1st March, 1960, and the prints were actually cleared for exhibition only on 30th March, 1960'.' Hence, this was a perfectly straightforward controversy between the producers on the one hand, and the Departmental Authorities on the other, whether the length of film exposed and completed prior to 1st March, 1960, could be liable for the levy at all. Before this matter could come up for adjudication to this Court in W.P. No. 1061 of 1960 which was dealt with by Srinivasan, J., certain complications had ensued. It is necessary to note those complications, not for the purpose of deciding the substantial ground involved before us in these Writ Appeals, which, again, is simple and straight forward, but in order to elucidate how the Writ Appeal eventuated.
3. The tax of 50 naye paise per metre, earlier referred to, was levied under old Entry 32 (new Entry 37) of the First Schedule to the Central Excise and Salt Act, 1944. But, in the meantime, there had been a notification No. 62 of 1960 dated 20th April, 1960, which, in substance, introduced what is called the 'slab system,' in respect of levies on 'Cinematograph Films, exposed', which is Entry 37. This 'slab system' is quite simple and explicable, and is indisputably, as Sri Govind Swaminathan for the Central Excise has argued a concession to the growing film industry and an attempt to make the taxation realistic, in order to prevent the stunting of its growth. Very briefly stated, the Table relevant to this Notification, which we shall set forth later, grants exemption at rates depending upon the first 5 prints of each picture, the next 5 prints, next 15 prints, next 25 prints, and so on. In other words, where the picture is not what is termed a 'box-office hit' and the producer dares not go beyond taking few copies of prints, the tax is at a low level; the 'slab system' increased sharply, in its incidence of the tax, as the number of prints is multiplied. Government of India (Ministry of Finance) F. No. B-10/60 dated 23rd February, 1960, makes clear the mode of assessment, and Government of India (Ministry of Finance) F. No. B.21/60 dated 19th April, 1960, explicitly declares that though Notification Nos. 62/60 and 64/60, introducing the 'slab system' take effect only from the date of issue, the policy had been decided upon, as a concession to the industry, to readjust the amount of duty on the revised basis and also to make refunds on that basis.
4. If we recollect that Modern Theatres Limited, Salem, paid duty at the standard 'ate of 50 naye paise per metre of the film, without being given the benefit of the slab system' under the Notifications, the subsequent events become clear. There is a letter from the producers dated 7th April, 1960, another letter dated 2nd May, 1960, and a third dated 6th May, 1960, claiming the refund of Rs. 26,251-05, because of the impact of the 'slab system' on the taxation of the film. The important fact to notice is that this refund was granted by the Department on 25th June, 1960. While matters stood thus, the producers filed W.P. No. 1061 of 1960 in this Court, which came up before Srinivasan, J., and was dealt with by the learned Judge. We must take it very clear that this writ proceeding had nothing to do with the 'slab system', its application to taxation of this film, or the grant of the refund by the Department. It related, purely and simply, to the claim of the producer, which the Department was not inclined to concede, that the length 42,053 metres exposed and completed before 1st March, 1960, was not liable to levy at all.
5. It is important to note the particular issue decided by Srinivasan, J., in W.P. No. 1061 of 1960, for the decision, since that Judgment has not been appealed against, has become final. The learned Judge first sets forth Item 32 (now Item 37), which is relevant for our purpose also, and we hence extract it here below:
6. At this stage, we may also conveniently set forth here the notification introducing the exemptions or concessions constituting the 'slab system', for that is highly relevant for the purpose of the present Writ Appeals, though it was not an issue in the Judgment in W.P. No. 1061 of 1960. The relevant portions of the Notification run as follows:
The Central Government exempts cinematograph films, exposed which conform to the description specified in column (1) of the Table hereto annexed, and are cleared by any manufacturer for home consumption within twelve months immediately following the month of certification by the Central Board of Film Censors, from so much of the duty of excise leviable thereon as is in excess of column (2) of the said Table:
Provided that, where cinematograph films, exposed are cleared from home consumption after twelve months immediately following the month of certification by the Central Board of Film Censors, such films, shall be exempted from so much of the duty of excise leviable thereon as is in excess of 15 naye paise per metre if they are of a width of 30 mm. or higher and of 10 naye paise per metre if they are below 30 mm. in width.
7. The effective part of the judgment of Srinivasan, J., which deals with the one and only issue which then came up to Court, namely, whether any length of film exposed and completed prior to 1st March, 1960, is liable to assessment at all, runs as follows:
What is the meaning to be ascribed to the expression 'cinematograph films-exposed'? The attempt of the respondent is to equate the expression 'exposed' to 'exhibited,' an interpretation which I am wholly unable to accept. The Legislature muse be presumed to have known what it intended to say when it made the entry 'cinematograph films-exposed.' When the duty is imposed in respect of what may be regarded as a technical process, the legislature must be intended to have attributed to the expression it used that meaning in Which that expression is understood in that business or industry. Everyone is aware that the exposure of a film indicates the use of the raw films for the purpose of taking a picture with the aid of suitable devices. An exposed film is one which has been submitted to the action of light through the instrumentality of a camera in order to obtain what is known as the negative of a picture. When once the film has been exposed it is rendered useless for any other purpose except that of making a positive print. Through chemical processes a negative of the picture is formed upon the film and thereafter that negative forms the basis for the preparation of positives. Even in the making of positives what happens is that the raw film is placed in contact with the negative and suitably exposed to light and that exposed raw film is chemically treated for fixing the picture. It is this positive that is useful for exhibition in theaters, but in either event the exposure in the sense in which it is used for the relevant entry, is not postponed to the point of time when the film is actually exhibited as a picture. Giving the matter my careful consideration, I am satisfied that the expression 'exposed' used in the relevant entry is used in the technical sense and not in the sense in which the department chooses to understand it.
Apparently some inference, that is the finally completed picture that is contemplated by this expression, is sought to be derived from the different rates of duty specified in respect of news-reels and shorts not exceeding 500 metres and other feature films, advertisement shorts and films not otherwise specified. How this can control the meaning of the expression 'exposed' I am unable to see. It is true that where the film is exposed for the purpose of news reels not exceeding 500 metres a different rate of duty is specified than other films of a greater length which are intended to be produced. This is only a matter of detail with regard to the nature of the film and cannot conceivably affect the content of the expression 'exposed' used by the statute.
The result is that in so far as any duty is leviable under the Act, such duty can be levied only in respect of the films exposed either for the purpose of a negative or a positive on and after 1st March, 1960, films that had been exposed prior to that date, whether those films had been completed or not in the sense that the film was ready as completed picture fit for exhibition, will not be liable to the duty.
8. We are extracting this portion of the judgment here, in order to make it clear that the judgment dealt only with this issue that we have already elucidated, and that it decided the issue in favour of Messrs. Modern Theatres Limited, Salem; further, the judgment was not appealed against, and it has become final. No argument is therefore, permissable to the Departmental Authorities, that this finding may require reconsideration, upon further scrutiny of the implications involved, and that the Departmental Authorities were not totally wide of the mark when they claimed that even the footage of the film, which had been exposed and completed prior to the crucial date, might be liable for duty. After allowing the Writ Petition, the learned Judge made this particular observation, which has also been the subject of some controversy:
It is obvious that the result is that it would be open to the Collector of Central Excise to amend the levy suitably to the observations contained in this judgment.
9. Indisputably, this direction means precisely what it says, and it is a direction accompanying the issue of the writ, and of the very nature of certiorari; it displaces the order of levy or assessment, and release the proceedings where they stood prior to the actual order of levy, so that the assessment of levy could again be made, conformable to the finding of law embodied in the judgment. Its terms do not authorise the Departmental Authorities to make a levy on some other basis altogether except to the extent that any such basis is in conformity with the legal principles of the taxation of films. What actually happened with regard to the fresh assessment made by the Department, is very clear from the record. Compelled to a acknowledge that the footage of film exposed and completed prior to 1st March, 1960, was not liable to levy at all, the Departmental Authorities then proceeded to take, quite a different stand namely, that the 'slab system' was not applicable to this film, in terms of the relevant Notifications, and that, therefore, the earlier refund granted by the Department had been erroneously made. The fresh levy, according to the Department, was made under Rule 10-A, of the Central Excise Rules, and the essential argument was that the Notification did not apply because the 'slab system' could only relate to completed pictures after the date relevant to the levy (1st March, 1960), and where the instance which arose for taxation was that of a picture, part of which had been taken and completed earlier than 1st March, 1960, the Notification did not at all apply; it was the standard rate which alone would be relevant.
10. Per contra, the producers contended that (1) the Notification clearly applied, and that they were entitled to the benefit of the 'slab system' that was the only system of levy for motion pictures or films after 1st March, 1960, certified for public exhibition. It was on this footage of film that the 'slab system' operated, depending on the number of prints taken, and the question whether there was some other length of film taken prior to 1st March, 1960, and not liable for duty at all, was irrelevant. (2) In any event, it was Rule 10 of the Central Excise Rules which operated since this was a case of short levy, according to the very version of the Department, and an attempt to recover, what the Department contended was money erroneously refunded. This was subject to the limitation prescribed in Rule 10 and hence the amended levy had to be set aside.
11. This was the crux of W.P. No. 118 of 1964 before Veeraswami, J., and the learned Judge allowed the writ petition, and quashed the revised demand, on one main consideration. After setting forth the prior facts the learned Judge extracts Rules 10 and 10-A of the Central Excise Rules, and points out that Rule 10-A was comprehensive and residuary in character, while Rule 10 was specific, and related to short-levies, and the power to rectify deficiencies in the collection of revenue, or in respect of erroneous refunds. The learned Judge then gives reasons why, in his view, Rule 10 alone applied. Admittedly, the revised demand was made after the period prescribed by that Rules, and was time-barred. The Petition was allowed on these grounds.
12. For a very important reason, we are not now proceeding into the question whether Rule 10 would apply to a situation of this character, or, as contended by the Department, Rule 10-A would be applicable, and there is really no bar of limitation. The important reason is that the Writ Appeals, which are respectively by the producers (Modern Theatres Limited Salem), and the Central Excise Authorities can be disposed of upon a far more substantial and clear ground, relating to the 'slab system' embodied in the Notification itself. With regard to the respective impacts of Rules 10 and 10-A on facts of the present character, learned Counsel for the producers (Sri Seshadri) has sought to rely on certain observations in the judgment of the Supreme Court, in Chhotabhai v. Union of India : AIR1962SC1006 . But as we stressed earlier, we are not deciding the Writ Appeals on this issue, and we therefore forbear from setting forth Rules 10 and 10-A here, or from further analysis of their provisions in regard to the present facts, and to the dicta of the Supreme Court. The issue is strictly left open, and we have not listened to the complete arguments of learned Counsel on the issue.
13. But we think that it can be shown, very clearly and simply, that the Notification introducing the 'slab system' certainly applies to the film in question, on the footage of the film that is at all liable to levy. Certain preliminary matters must first be clarified. Though the Notification and the other Explanatory Memos of the Central Government, earlier referred to by us, purport to be in the form of a concession ex gratia it is abundantly clear that the concession is a policy decision, and that it cannot be subject to individual exceptions or variations at the pleasure of the Department. Indeed, that was not the argument at all, and it could not be the argument, for the simple reason that any such purported discrimination, would be hit at by Article 14 of the Constitution. Further, learned Counsel appearing for the Central Excise (Sri Govind Swaminathan) admits, after obtaining instructions, that the 'slab system' concessions are being, and have been, uniformly extended to all films certified for exhibition, after the relevant date. The argument that this particular film could constitute an exception, because part of the footage of the completed film was exposed and made prior to 1st March, 1960, therefore not being liable to any levy whatever, conceals a fallacy, which can be patently shown to be such.
14. The argument is this. When we look at the Notification, the words used in the Table are: 'Of each picture.' As far as Entry 37 is concerned, the words are:
Feature films, advertisement shorts and films not otherwise specified.
Sri Govind Swaminathan argues that these words have to be taken in their juxtaposition. They can relate only to completed pictures, totally certified for public exhibition, and comprising artistic unities, in that sense. The 'slab system' Notification cannot apply to footage which is only part of picture, even though it might have been certified for public exhibition after the relevant date. But when, we proceed deeper into this question, it becomes at once obvious that this argument is not merely fallacious but that it is not in consonance with the realities of film production, and the practice of the industry. Let us take it that, in the present case, certain reels were exposed and completed prior to 1st March, 1960, and hence that, though they were also later certified for exhibition, they are not liable to any levy whatever, by virtue of the judgment of Srinivasan, J. But other reels were taken and completed subsequently, certified for public exhibition, and prints have been made, by the producer, of these reels. Even if the Censor Authorities certified both the reels taken before 1st March, 1960, and the rest of the picture, it would appear that there is no obligation on the producer to exhibit every thing certified by the Censor. We may not exhibit what has not been certified by the Censor Authorities, but he may very well curtail, or cut out, footage of film that has been actually certified by the Censor Board. Here, it is his judgment of what the public demands that matters, and the Censor Board or the Department has no right to insist that he cannot employ his judgment to curtail a film, it may be even to a drastic extent.
15. Thus, it will at once be evident that the Department is not at all concerned with the footage of film exposed and completed prior to 1st March, 1960, for the very good reason that this is not liable to any levy whatever. The rest of the film is liable to levy, and it is entitled to the concessions of the 'slab system' because, essentially, those concessions depend upon the number of prints made by the producer, at his discretion. We are unable to see how a category of inclusion or exclusion could be made dependent on what the producer later-does, in his judgment, or fails to do. Sri Swaminathan is compelled to concede, for instance, that, in the present case, it is perfectly open to the producer to exhibit only the film as made and completed after 1st March, 1960, which has been certified for public exhibition, as totality in itself. Suppose that he totally sacrificed the reels taken previously, which Authority can constrain him not to do so? Suppose, again, that of this footage of film which he actually exhibits as picture, he takes prints, he will clearly be liable to be assessed on the 'slab system,' depending on the number of copies he makes. Certain observations of Veeraswami, J., in his judgment in W.P. No. 112 of 1964, appear to indicate that the learned Judge thought that the 'slab system' may not apply to this film because of the footage made prior to 1st March, 1960, which is not liable to levy. It is for this reason that a separate writ appeal has been filed by the Producer. But, these observations must be taken as obiter, for the reason that the learned Judge was really allowing the writ petition on the other ground relating to short levy and limitation. In our considered view, and particularly bearing in mind the wide scope of the latter and residuary part of Clause (2) of Entry 37, 'films not otherwise specified,' the 'slab system' concessions necessarily apply to any footage of film, in the widest sense, made by the producer after the relevant date, and certified for public exhibition which he (producer) does actually release for such exhibition depending upon the number of prints taken. That is the only interpretation of the Notification, which is in consonance with the language of Entry 37, and the realities of film production and practice in the Industry.
16. Accordingly, on this substantial ground, we allow the appeal by the producer and dismiss the appeal by the Central Excise. In the result, the judgment of Veeraswami, J., quashing the levy, is sustained though upon different grounds. The parties will bear their own costs, except that the producers will have their costs in the Writ Appeal.