Debiprosad Pal, J.
1. The petitioner-company owns and runs three paper mills situated at the following places:
(1) No. 1 Mill at Titaghar, West Bengal.
(2) No. 2 Mill at Kankinara, West Bengal.
(3) No. 3 Mill at Choudwar, Cuttack, Orissa.
There are 32 varying qualities or types of paper alleged to have been manufactured at the said three paper mills. Some of these different varieties of paper are as follows :
(a) White printing and writing light and heavy.
(b) Coloured printing and writing heavy and light.
(c) Unbleached varieties.
(d) Embossed covers.
(f) Paste boards.
(g) Coated paper.
(h) Impression paper, etc.
The petitioner made an application dated 21st June, 1967, in the statutory form before the appropriate authority for the grant of a tax credit certificate under Section 280ZD of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), read with the Tax Credit Certificate (Excise Duty on Excess Clearance) Scheme, 1965 (hereinafter referred to as 'the scheme'), for the financial year 1966-67. The basis on which the petitioner claims the tax credit certificate has not been clearly stated in the petition. In the course of the hearing, learned counsel for the petitioner explained that this claim was made on the basis of the quantity of a particular quality of paper manufactured by the petitioner and cleared by it during the relevant financial year from a particular factory. On such basis the claim made by the petitioner amounted to Rs. 9,88,893.18, the break-up of which has been set out in annexure 'B' to the petition. The respondent No. 2 by an order dated 2nd February, 1968, restricted the claim of the petitioner to Rs. 4,19,375. In calculating the amount for which tax credit certificate was granted, the Central authority, the Deputy Director of Inspection, Customs and Central Excise, being respondent No. 2, proceeded on the basis that any individual manufacturing unit is not entitled to claim this benefit. According to him under Section 280ZD of the Act a 'person' as defined in Section 2 of the Act is entitled to a tax credit certificate. He was, therefore, of the view that tax credit will have to be determined on the overall net excess clearance after taking into account the shortfall in any unit in agroup owned by such individual, firm or corporate body. In other words, according to the respondent No. 2, the net excess clearance during the relevant financial year over the clearance during the base year would have to be calculated in respect of all the three units together and not individually.
2. Aggrieved by this order the petitioner came to this court and obtained a rule nisi. An affidavit of Sri A. N. Bhattacharya affirmed on 22nd April, 1970, has been filed on behalf of respondents Nos. 1 to 3.
3. The learned counsel for the petitioner has mainly contended that according to the object for which Section 280ZD was introduced, the benefit of the tax credit should be allowed in respect of each quality or variety of paper which itself constitutes the goods. His further submission is that the benefit of such credit is to be allowed factory-wise and not on the basis of overall clearance of such goods from all the factories. To appreciate the rival contentions of the parties it is necessary to examine the relevant Sections of the Act and the Scheme framed thereunder. The Finance Act, 1965, has introduced a new scheme of tax credit certificate and the provisions relating thereto are embodied in Chapter XXIIB of the Act. Section 280ZB provides for the grant of a tax credit certificate for increased production of goods. This certificate is granted to any person who manufactures or produces any goods for an amount calculated with reference to the excess amount of duty of Central excise payable by him on that quantum of goods cleared by him during the relevant financial year over the amount of such duty which he has paid on the quantum of the goods cleared by him during the base year. The rate at which the amount of the certificate is to be calculated is specified in the Scheme but it will not exceed 25% of the excess stated above. The 'base year' for the purpose of the said section means the financial year 1964-65, but in the case of an undertaking which was not in production during that year, it will be the subsequent financial year in which it began production. The benefit of this tax credit will be available in respect of the financial years 1965-66 to 1969-70. The amount shown on a tax credit certificate granted to any person can be adjusted against any existing liability of such person under the Indian Income-tax Act, 1922, or the Act or any such liability arising out of a period of 12 months from the date on which the certificate is produced before the Income-tax Officer, and the amount, if any, remaining after such adjustment will be refunded to the person on the expiry of the period. Under Section 280ZE the Central Government has been given the power to frame one or more scheme or schemes to be called Tax Credit Certificate Schemes in relation to tax credit certificates to be granted. A Scheme has been framed by the Central Government under notification dated 5th November, 1965, Under clause 5 of the Scheme a person eligible for thegrant of a tax credit certificate in respect of any class of goods has to make an application to the Central authority in Form 'A' in respect of each financial year for which he is so eligible and such application shall be accompanied by a declaration in Form 'B' of the goods cleared or deemed to have been cleared in the base year and the goods cleared in the relevant financial year. Such application is to be verified by the factory officer and countersigned by the circle officer. The proviso to Clause 5 of the Scheme requires a person who owns more than one factory manufacturing or producing the same class of goods to file a declaration in Form 'B' in respect of each such factory for the base year and the relevant financial year. The said declaration is to be sent along with the application in Form 'A'. On a close examination of Section 280ZD and the relevant Clauses of the Scheme I am of the view that the tax credit certificate under Section 280ZD should be granted not on the basis of the overall clearance of all varieties and qualities of paper manufactured or produced by the petitioner but on the basis of the clearance of each particular variety or quality of paper which constitutes a different class of goods manufactured by the petitioner. The expression 'goods' has not been defined in Chapter XXII-B of the Act but Clause 2(h) of the Scheme defines 'goods' to mean any excisable goods in respect of which a tax credit certificate can be granted under this Scheme. The Central Excises and Salt Act, 1944, charges excise duty on excisable goods other than salt which are produced or manufactured in India. The said Act, however, does not define 'goods' but defines 'excisable goods' to mean goods specified in the First Schedule to the said Act, as being subject to a duty of excise and includes salt [Section 2(d)]. The following interesting passage is quoted in the Words and Phrases, permanent edition, volume 18, from a judgment of a New York court: 'The first exposition I have found of the word 'goods' is in Bailey's Large Dictionary of 1732, which defines it simply ' merchandise'; and by Johnson, who followed as the next lexicographer, it is defined to be movables in a house ; personal or immovable estates; wares, freight; merchandise.' Webster defines the word 'goods' thus :
'Goods, noun, plural; (1) movables ; household furniture; (2) Personal or movable estate, as horses, cattle, utensils, etc.; (3) Wares; merchandise; commodities bought and sold by merchants and traders.'
In the case of Union of India v. Delhi Cloth and General Mills, A.I.R. 1963 S.C. 791 on a construction of the Central Excises and Salt Act, 1944, it has been held that to become 'goods', an Article must be something which can ordinarily come to the market to be bought and sold. It is also to be noticed that the First Schedule to the Central Excises and Salt Act, 1944, enumeratesdifferent items, which give the descriptions of the excisable goods of each item. Although the description of the goods is of a generic nature, there are various qualities, varieties of products each of which can be termed and classified as distinct and separate class of goods as the said goods constitute a different article which ordinarily come to the market in that variety to be bought and sold. To take an illustration, item 17 gives the description of the goods as papers (all sorts) in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power. Out of varieties and qualities of such papers some have been set out, viz., cigarette tissue, blottings, toilet, type-writing paper, bank paper, bond paper, art paper, stamp paper, parchment and coated boards, boards for plain cards and others. It can hardly be said that blottings and bond papers or cigarette tissue or type-writing papers constitute one class of goods. Each one constitutes an article of a distinct variety and quality and comes to the market to be bought and sold with their distinctive quality and character. Each one variety of paper constitute a class of goods and I see no reason why for the purpose of granting tax credit all varieties of papers with their separate and distinct qualities should be lumped together for the purpose of calculation of the amount of tax credit. Such an interpretation, in my view, runs counter to the object for which Section 280ZD and the Scheme was introduced. The object of the section was to encourage the manufacture or production of goods specified in Schedule 1 of the Scheme. Such an object cannot be carried into effect by the interpretation suggested by respondent No. 2.
The learned counsel for the petitioner next contended that the tax credit is to be calculated on the basis of the quantum of goods of a particular class or variety cleared from one factory and the production of all the factories should not be taken into account. In my view this argument does not stand closer scrutiny. If goods of the same quality and variety are manufactured in more than one factory, the overall production of such class of goods in the different factories is to be taken into account for the calculation of the amount to be granted by way of tax credit. An .examination of the relevant sections and the various Clauses under the Scheme lends support to the view I have taken. Under section 280ZD the amount of tax credit is to be calculated on the basis of the amount of the duty of excise payable by a person 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. The section does not restrict the clearance of the quantum of the goods in respect of one particular factory. It requires the appropriate authority to take into account the total quantum of the goods cleared by a person during the relevant financial year. The various Clauses under the Scheme bear outthe same interpretation. Under clause 5 of the Scheme if a person owns more than one factory manufacturing or producing the same class of goods he is to file a declaration in Form 'B' in respect of each such factory for the base year and the relevant financial year. Form 'A' which appears in Schedule II to the Scheme is the application form for claiming tax credit certificate on' excess clearance made during the financial year. Item No. 3 requires a person to give the description of the goods manufactured or produced. Item No, 4 requires the particulars of factories and clearances to be furnished and a declaration in Form 'B' should be attached in respect of each factory. In the various columns under Item No. 4 of Form 'A', column No. 2 specifically sets out the name and the location of the factory. Column No. 4 sets out the clearances during the base year. Column No. 5 refers to clearances during the financial year. Column No. 6 has to show the excess as plus or shortfall as minus. Item No. 6 of the same form requires the amount for which tax credit certificate is claimed to be specified. Under the said item a work-sheet showing detailed calculation in respect of each factory is to be attached. In the declaration which is to be signed by the appropriate person, it has to be set out that there has been no omission of the particulars of any factory manufacturing the class of goods given under Item No. 3 and no claim for tax. credit certificate in respect of such goods cleared by any of the factories shown in the application has been lodged during the financial year. The tax credit certificate is to be given in Form 'C' which appears in Schedule II to the Scheme. The form in which such certificate is to be given shows unmistakably that the certificate is to be given in respect of the total quantum of goods cleared during the financial year from all the factories of the claimant manufacturing the same quality or variety of goods. The certificate has to declare that the manufacturer has cleared during the financial year from his factories the quantities of goods in excess of the quantum of the said goods cleared from the said factories during the base year. On a closer analysis of the relevant Act and the Scheme, I am of the view that a tax credit cannot be granted on the basis of the quantity of goods manufactured by a person from one factory alone. If the same class of goods is manufactured or produced in more than one factory, the total quantity of goods manufactured or produced is to be taken into account for the purpose of the calculation of the tax credit.
4. To sum up, under Section 280ZD the tax credit is to be computed in respect of each variety or quality of paper which forms a distinct class of goods for the purpose of excise duty and also for the purpose of Section 280ZE of the Act. In calculating the rate at which the tax credit is to be computed the quantum of such goods is to be determined not with reference to one particular factory when such goods are manufactured orproduced in more than one factory. The total quantity of the same clase of goods manufactured or produced in all the factories owned by the person should be taken into account.
5. In the result this application succeeds. There will be a writ in the nature of certiorari quashing the order of respondent No. 2 dated 2nd February, 1968, being annexure 'C' to the petition. There will also be a writ in the nature of mandamus commanding the respondents to deal with and to decide according to law the application of the petitioner for grant of tax credit certificate. There will also be a writ in the nature of mandamus commanding the respondents to forbear from giving effect to the order dated 2nd February, 1968. The rule is made absolute to the extent indicated above. There will be no order as to costs.