J.K. Industries Ltd. And Anr. vs Union Of India (Uoi) And Ors.
2002 Latest Caselaw 933 Del

JUDGMENT

S.B. Sinha, C.J.

1. Interpretation of two Notifications bearing No. (s) 107 of 1981 and 88 of 1984 are for consideration in this writ petition.

2. The facts relating to the Notification No. 107/81 issued in terms of he provisions of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Excises Act') and the Rules framed there under are as follows:

3. The petitioner is a company engaged in the business of manufacturing and selling pneumatic tyres and tubes, tread rubber and other products sold under the trade mark of "J.J. Tyre". The products of he first petitioner fall sunder Tariff Item No. 16 of the 1st Schedule to the Excise Act. Excise duty @ 55% was leviable on tyres in terms of the Notification No. 27 of 1981.

4. Allegedly, the country felt shortage of tyres in the years 1974-76. As a result whereof, they were being sold at a premium. The production of tyres was confined to companies existed thence, which were seven in number. Purported to attract new investment for setting up new tyres industries as also to encourage investment in the existing tyre industries, the Government of India introduced an integrated excise relief Scheme. Pursuant to and in furtherance of the said Scheme a Notification bearing No. 198/76 was issued, in terms whereof, tyres were being exempted from payment of so much of excise duty leviable thereon as was in excess of 75% thereof. Relying on and on the basis of the said purported representation the petitioner established a factory. The Scheme was modified by another Notification No. 142/78, in terms whereof, the Central Government granted permission for payment of excise duty in respect of tyres to the extent mentioned therein and subject to the terms and conditions laid down therefore. By reason of the said Scheme, those who made substantial investment by way of setting up of a new plant and/or plant of additional capacity became entitled to the benefit thereof. Yet again by reason of the Notification No. 107/81-CE dated 24th April 1981, it was provided that the excise relief would be available not only to the new industries which were established under Section 11 of the Industries (Development and Regulation) Act, 1951 (hereinafter referred to as the IDR Act') but also to those industries which underwent substantial expansion as laid down under Section 13 thereof. The petitioner commenced production of tyres at its unit in Kankroli, Rajasthan commonly known as Factory-I. Total investment made on plant and machinery relating to the manufacture of tyres was to the tune of Rs. 2804.17 lacs. Further investment on the plant and machinery at the said factory was made by the petitioner, as a result whereof, its capital investment was to the tune of Rs. 3590.44 lacs. According to the petitioner, by reason of the said Notification No. 107/81, the exemption became available to the said factory.

5. The Central Government on 24th April 1981 issued and gazetted an Excise Notification No. 107/81-CE under the Central Excise Rules, 1944 (hereinafter referred to as Excise Rules'). By reason thereof, certain incentives were given to manufacturers of tyres falling under sub-items I and III of Item No. 16 of the First Schedule to the Excises Act. The exemption was available to factories from which clearances of tyres had been made for the first time during the period commencing on 1st April 1976 and ending with 31st March 1984. The exemption was available for a period of five years from the date of first clearance of tyres as contemplated in the said Notification. The Notification further provided that the exemption shall not apply to clearances of tyres as are in excess of 30% of the sum total of he value of capital investment made on plant and machinery for manufacture of tyres prior to the date of first clearance of tyres as certified by the Development Officer of the DGTD.

6. The Central Government on 24th April 1981 itself issued a purported explanatory memorandum to Notification No. 107/81 purporting to interpret the terms and conditions of the Notification and to define its scope for application and grant of relief there under.

7. An application was made by the petitioner to the DGTD, in accordance with the provisions of Notification No. 107/81, on 1st May 1981 for issuance of a certificate certifying the face value of the capital investment made on the plant and machinery for manufacture of tyres prior to the date of first clearance of the said tyres under the afore-mentioned Notification.

8. The petitioner wrote a letter on 5th May 1981 requesting the Assistant Collector of Central Excise/respondent No. 4 to permit it to avail of the relief under Notification No. 107/81. Permission was granted to the petitioner on 6th May 1981 by the Assistant Collector to clear tyres under Notification No. 107/81 on provisional basis. The DGTD issued a certificate to the petitioner on 13th May 1981 certifying that the petitioner had made a capital investment of the face value of Rs. 3590.44 lacs as on 31st March 1981 on the plant and machinery for manufacture of tyres. The Assistant Collector passed fresh order for provisional clearance under Rule 9B on 19th May 1981 and required the petitioner to submit DGTD certificate in original. The petitioner on 21st May 1981 submitted B-13 bond supported by bank guarantee, pursuant to an order of the Assistant Collector passed in this behalf on 19th May 1981. However, on 21st May 1981 the Assistant Collector sent a telegram to the petitioner directing the petitioner to stop clearances under notification No. 107/81. Assistant Collector on 22nd May 1981 issued a formal order revoking the provisional clearance granted to the petitioner and stopping clearance under Notification No. 107/81. The petitioner on the said date itself wrote a letter to Assistant Collector stating that it was aggrieved by the said order dated 22nd May 1981 as it would be stopping all clearances of tyres till full benefit under Notification No. 107/81 is restored. This letter was issued without prejudice to its legal rights and contentions.

9. The petitioner, thereafter, filed this writ petition.

10. On 29th May 1981 this Court issued Rule D.B. This Court on an application moved by the petitioner granted interim relief in terms of prayer (a) thereto, which reads as under:-

"(a) grant say of the operation of the order of the Assistant Collector/respondent No. 4 dated 22nd May 1981 (Annexure L to the writ petition) and the Memorandum of the Central Government (Annexure B to the writ petition) and to restrain the respondent from taking any action pursuant thereto and to permit the petitioners to clear the tyres manufactured in their factory upon payment of duty of excise at the reduced rate under Notification No. 107/81 (Annexure A to the writ petition) in accordance with the certificate of the DGTD dated 13.5.1981 (Annexure C to the writ petition) on provisional basis under Rule 9B upon the petitioner furnishing the requisite bond in Form B-13 for the differential duty supported by a bank guarantee for an amount of 25% thereof."

11. During pendency of the writ petitions several proceedings were initiated, which are not being taken note of, having regard to the scope and ambit of the present writ petitions. We may, however notice that after Notification No. 107/81, by reason of Notification No. (s). 268/82 and 88/84, the scope of exemption was liberalized and enlarged.

12. Facts relating to Notification No. 88/84 dated 6th April 1984 are as follows:

13. The petitioner filed an application under Section 13 of the IDR Act substantial expansion of Factory-I for increase in production capacity from four lacs tyres to 6.25 lacs tyres, wherefor it filed an application for grant of license also. Such a license was granted on 6th February 1982. Yet again on 19th May 1983 another license for substantial expansion was granted under Section 13 of the IDR Act in relation to a separate factory commonly know as Factory-III. The said factory-III was adjoining the factory-I, of the petitioner. According to the petitioner, they have no other factory, wherefor license had been granted under Section 13 of the IDR Act other than the said factory-III. Separate factory license had also been granted in respect of the said factory-III. The first classification as also clearances were made from the said factory-III on 29th March 1984.

14. A Notification No. 88/84 was issued on 6th April 1984. By reason of the said Notification, the earlier Notification No. 268/82 was substituted on 13th November 1982.

15. The petitioner claimed exemption in respect of factory-III in terms of the above said Notification Furthermore, the petitioner had categorically stated that by reason of the letter dated 27th August 1984 the Commissioner (TR), New Delhi addressed to Shri S.K. Malhi purported to have communicated the views of the Central Government that, as per Sub-clause 2 of the third proviso to the said Notification, the industrial undertaking referred to was the petitioner's industry and time limit fro computing the period of availability or the exemption would run from 20th December 1976. The Collector Central Excise, Jaipur was requested to issue suitable clarification to the concerned Assistant Collector to decide the issue without any further loss of time.

16. The petitioner in the writ petition has clearly averred that the action taken by the respondent No. 4 against the petitioner was pursuant to directions issued by the Central Board of Excise and Customs/respondent No. 2. Petitioner therefore filed an application for calling for the records and pursuant thereto such records were called for. In terms of an order dated 22nd January 1999 the counsel for the petitioner was permitted to inspect the records and according to the petitioner from the letter dated 27th August 1984, it would appear that various correspondences passed between the petitioner, Assistant Collector and the Superintendent of Central Excise as regards applicability of the said Notification. Various proceedings were also initiated. The letter dated 27th August 1984 was found to be the basis of passing the impugned order dated 9th January 1985. Thus, according to the petitioner, the concerned authorities are acting under the directions of the Ministry and thus no fruitful purpose would be served in filing a revision application. By an order dated 5th February 1985 Assistant Collector rejected the contention of the petitioner on the ground that the said Notification is applicable and on that stopped clearances of the manufactured products. Whereafter, the petitioner filed an application marked as CMP 567A of 1985 seeking permission to amend the writ petition by questioning the legality or validity of the said order dated 5th February 1985. The said application was allowed by an order dated 8th August 1985. It was further ordered that, int the meanwhile, clearance of the goods on provisional basis would not be denied to the petitioner.

Re: The maintainability of the writ petition vis-a-vis alternative remedy:

17. In the writ petition the petitioner has, inter alia, raised a contention as regards action on the part of the authorities of the excise department to refuse the grant to them the benefits of the afore-mentioned Notifications to which they are entitled to.

19. It is not in dispute that orders by the competent authority have already been passed.

20. It is also evident that the matter is pending before this Court since 1981. This Court not only issued Rule as far back as in the year 1981 but as noticed hereinbefore allowed the petitioner to amend the writ petition in the year 1985. In such a situation, in our opinion, it is not desirable to relegate the petitioners to alternative remedy at this stage.

20. The question, as to whether this Court in exercise of its discretionary jurisdiction under Article 226 of the Constitution of India would refuse to entertain a writ petition and relegate the parties to avail alternative remedy, would depend upon the facts and circumstances of each case. There is no proposition of law that in no case, despite existence of an alternative remedy, the writ petition cannot be entertained. such a course is not normally taken recourse to by the High Court as a matter of prudence and self-restraint. In the instant case, however, the petitioner, has question the jurisdiction of the authorities, is so far as, it refused to give benefit of the said Notifications to them. The jurisdiction of the appropriate authorities would be dependent on the interpretation of the Notifications, having regard to the admitted facts. It may be that there exists certain disputed arena as regards the actual amount of excise duty, which the petitioners are liable to pay even if the said Notifications are directed to be applied in case of the petitioner. Therefore there cannot be any doubt that in this case the jurisdictional facts are required to be determined which would depend upon the true and proper construction of the Notifications in question. It may be that in a given case the Court may ask the parties to get such questions determined by the statutory authorities itself by way of preliminary issue but in the facts and circumstances of this case recourse to such an action cannot be resorted, to, having regard to the fact that the statutory authorities have already determined the issue.

21. In Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and Ors. the Apex Court has laid down the law in the following terms:

"The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. The High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by the Supreme Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged.

Rashid Ahemd v. Municipal Board, Kairana, , considered.

Therefore, the jurisdiction of the High Court in entertaining a writ petition under Article 226 of the Constitution, in spite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation.

22. A question of jurisdiction not only arises when there exists inherent lacks of jurisdiction in the statutory authorities but would also arise when jurisdictional errors are committed by such authorities while exercising such jurisdiction.

23. It may be that upon determination of the question the cases are to be remitted back for calculation purpose but we do not see nay reason as to why the petitioner should be relegated to an alternative remedy, particularly, when this court has heard the matters on merits on several dates.

24. The first contention raised by Mr. Maninder Singh,. learned counsel appearing for the respondent/UOI, therefore, is rejected.

25. Re: Territorial Jurisdiction

It is not in dispute that the petitioner herein had earlier filed a writ petition before the Rajasthan High Court, which was marked as CWP 2012/85 since reported in 1986 Rajasthan L.R. 831 claiming exemption.

26. A learned Single Judge of the Rajasthan High Court held that the Government was bound by the principles of promissory estoppel, and on the basis of the said finding, Notification No. 159/85-CE dated 15th July 1986 was quashed. Union of India preferred an appeal thereagainst and the decision of the Division Bench of Union of India v. J.K. Industries Ltd. since reported in 1990 (49) ELT 511 (Raj.) . The Division Bench formulated two questions, which are:

(1) Whether the Central Government could not have issued Notification No. 159 of 1985 dated 16th July 1985 withdrawing the concession granted to the Company on account of promissory estoppel; and

(2) Whether the Notification No. 88/84-CE was at all applicable to the petitioner company since after 11-1-1985 because the period of seven years has expired by that date.

27. The division Bench noticed:

"However the parties did not take any steps on this aspect of the matter and when the appeal was argued before us, it was submitted that only the question of promissory estoppel may be decided and the other question may be left open to be decided by the Delhi High Court."

28. In view of the afore-mentioned representation made by the counsel for the parties the Division Bench confined itself only to the extent of promissory estoppel.

29. Thus, in our, opinion, it does not lie in the mouth of the respondent now to contend that this Court does not have any territorial jurisdiction. Furthermore, it is not in dispute that the impugned order, whether by way of a Notification or clarificatory order, was issued by the Ministry at Delhi within the jurisdiction of this Court.

30. The petitioner, inter alia has questioned the validity of the said purported order. Furthermore the letter of Shri V.K. Gupta had also been written from Delhi, pursuant to a decision taken in this behalf. Furthermore, we may notice that Section 37-B was not in existence at the relevant point of time as the same was inserted by amending Act by the year 1985, prior whereto such a provision was only contained in by way of subordinate legislation, viz., Rules 30-33, which was merely a supplemental provision. In any event, as a part of cause of action had arisen within the territorial jurisdiction of this Court, it cannot be said that having regard to the provision is contained in Clause 2 of Article 226 of the Constitution of India, this Court has no territorial jurisdiction.

31. In Appollo Tyres Limited and Ors. v. Union of India and Ors. reported in 1980 ELT 428 (Delhi) this Court observed:

"This Trade Notice had simply given effect to the Press Note issued by the Central Government. Since the latter had emanated from New Delhi, the jurisdiction of this Court ton entertain this writ clearly exists. Moreover, when the Cental Government had itself issued the impugned Press Note, it was futile to move any revision under Section 36 of the Act before it. The writ is, therefore, maintainable.

32. Yet again in Vareli Weaves Pvt. Ltd. v. Union of India . the Apex Court observed that the Circulars upon the basis of which the duty was levied, having been issued in Delhi the Delhi High Court had the jurisdiction to entertain the writ petition.

33. Re: Applicability of Notification No. 107/81 dated 24th April 1981

Notification No. 107/81-C.E. dated 24th April 1981 read thus:-

"In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts tyres (excluding tubes and flaps), falling

of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) (hereinafter referred to as the specified goods), from so much of the duty of excise leviable thereon as is in excess of the duty calculated at the rate of seventy-five per cent of he rate of duty leviable on the specified goods read with nay relevant notification issue under Sub-rule (1) of Rule 8 of the said Rules and in force for the time being:

Provided that the specified goods are manufactured in a factory from which the clearances of he specified goods are effected for the first time during the period commencing on the 1st day of April 1976 and ending with the 31st day of March 1984:

Provided further that the exemption contained in this notification shall not apply to clearances of the specified goods effected after the expiry of a period of five years from the date of the first clearance of the specified goods form such factory:

Provided also that the exemption contained in this notification shall apply only in relation to the first clearances of the specified goods for home consumption during any financial year up to a total quantity not exceeding seventy-five per cent of the initial annual licensed capacity of the specified goods as certified by the Development Officer of the Directorate-General of Technical Development:

Provided also that the exemption contained in this notification shall not apply to such of the clearances of the specified goods as are in excess of the clearances of the specific goods in respect of which the aggregate of the amount of exemption under this notification and the amount of exemption availed, if any in respect of clearances of he specified gods under the notification of the Government of India in the Department of Revenue and Banking No. 198/76-Central Excise, dated the 16th June, 1976 or in the Ministry of Finance Department of Revenue, No. 142/78-Central Excises, dated the 14th July, 1978 equals thirty per cent of he sum total of the value of the capital investment made on the plant and machinery for the manufacture of the specified goods prior to the date of first clearance of the specified gods as certified by the Development Officer of the Directorate General of Technical Development.

Explanation-I :- For the purposes of computing the "period of five years from the date of first clearance" the period commencing on the 1st day of April, 1980 and ending with the 23rd day of April, 1981, shall not be taken into account.

Explanation-II :- For the purposes of computing" the first clearances of the specified goods for home consumption during any financial year", the clearances of any specified goods, which are exempted from the whole of the duty of excise leviable thereon by any notification issued under Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 and for the time being in force, shall not be taken into account.

Explanation-III :- For the purpose of this notification, the "amount of exemption" shall be the difference between the amount of duty payable (including special duty of excise, if any, payable thereon) but for this notification or the aforesaid notification No. 198/76-Central Excises, or No. 142/78-Central Excises, as the case may be, and the amount of duty paid (including special duty prescribed under this notification or the aforesaid Notification No. 198/76-Central Excises, or No. 142/78-Central Excises, as the case may be, respectively.

Explanation-IV :- The "amount of duty payable" is Explanation III shall be the amount calculated by applying the rate of excise duty leviable eon the specified goods, but for this notification or the aforesaid notification No. 198/76-Central Excises or No. 142/78-Central Excises, as the case may be, to the assessable value of the specified goods as approved by the proper officer for the purposes of this notification or the aforesaid Notification No. 198/76-Central Excises or No. 142/78-Central Excise, as the case may be, respectively.

Explanation-V :- The expression "assessable value" in Explanation IV means the value as determined in accordance with the provisions of Section 4 of the Central Excises and Salt Act, 1944 (1 of 1944).

Explanation-VI :- For the purposes of computing the "sum-total of the value of the capital investment made on plant and machinery for the manufacture of the specified goods" the face value of the capital investment at the time when such investment was made only shall be taken into account but the value of the investment made on plant and machinery which have been removed permanently from the said factory or rendered unfit for use prior to the date of the first clearance of he specified goods, shall be excluded"

34. The said Notification contains several provisos and explanations.

35. The contention of Mr. Maninder Singh is that the said Notification refers only one i.e. to the first clearances, whereas according to Mr. Anil B. Dewan, learned Senior Counsel appearing on behalf of the petitioner, the said Notification refers to clearances of several nature, viz., clearances from factory, clearances in a financial year and thus unless all the provisions are given effect to by taking within its ambit the total investment made by the manufacture, no meaning can be attributed thereto. By way of an example, the learned counsel would contend that if a sum of Rs. 40 crores is invested in two phases and the manufacturer had already availed the benefits of two crores upon construction of the said Notification it must be held that the benefit there under should be computed as if the total investment is 38 crores. Provisos and explanations as is well known have several functions and role to play as has been observed by the Apex Court in S. Sundaram Pillai etc. v. V.R. Pattabiraman :

(1) Qualifying or excepting certain provisions form the main enactment:

(2) it may entirely change the very concept or the intendment of the enactment by insisting on certain mandatory conditions to be fulfilled in order to make the enactment workable;

(3) it may be so embedded in the Act itself as to become on integral part of the enactment and thus acquire the tenor and colour of the substantive enactment itself;

and

(4) it may be used merely to act as an optional addenda to the enactment with the sole object of explaining the real intendment of the statutory provision. (Case law discussed)

It is now well settled that an Explanation added to a statutory provision is not a substantive provision in any sense of the term but as the plain meaning of the word itself show it is merely meant to explain or clarify certain ambiguities which may have crept in the statutory provision.

The object of an Explanation to a statutory provision is-

a) to explain the meaning and intendment of the Act itself,

b) where there is any obscurity or vagueness in the main enactment to clarify the same so as to make it consistent with the dominant object which it seems to subserve,

c) to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful,

d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and

e) it cannot, however, take away a statutory right with which any person under a statute has ben clothed or set at naught the working of an Act by becoming an hindrance in he interpretation of the same."

36. In Mohan Kumar Singhania and Ors. v. Union of India and Ors. reported in 1992 (1) SCC 594 the law has been stated in the following terms:

"The submission made by Mrs. Chopra that the second proviso is an independent one does not merit consideration because the second proviso to Rule 4 begins with the words "provided further..." Which expression would mean that a strict compliance of the second proviso is an additional requirement to that of the substantive Rule 4 and the first proviso. The expression "provided further" spells out that the first proviso cannot be read in isolation or independent of the second proviso but it must be read in conjunction with the second proviso."

37. The proviso appended to the Notification, on a plain reading does not enlarge the scope of the machinery provisions. The total amount of duty for exemption granted is "so much of the duty of excise leviable thereon as is in excess of the duty calculate dat the rate of seventy-five per cent of the rate of duty leviable on the specified goods" . The first proviso append thereto regulates grant of such exemption, inasmuch as such goods must be manufactured in the factory wherefrom clearances of the specified goods are effected for he fist time between 1st April 1976 and ending with 31st March 1984. If it be held that by reason of subsequent provisos and explanations investments made subsequently, in relation whereof there would be several clearances, the expression "for the first time" looses all its sense. We may notice that the 2nd, 3rd and 4th provisos appended to the said Notification employs the expression "further" and "also" which clearly implies that apart from the restriction but under the first proviso other and further restrictions had also been put. It is, therefore, not possible for this Court to accept that there exists a distinction between clearances from a factory and clearances under a certain Notification. The Notification has to be understood in which context it has been issued, viz., the provision of he Central Excises and Salt Act, 1944 and the Rules framed there under. There cannot be any clearance under a Notification. Upon clearances of the goods the excise duty becomes payable. Only the quantum of the excise duty is leviable under certain Notification. Although the question, as to whether when a clearance has been made so as to apply a particular Notification laid down the quantum of excise duty may be relevant, in our opinion, the same takes a back seat when the Central Government intended to grant only one time benefit.

38. By using the expression "first clearance" in several provisos it is merely postulated that the application of the impugned Notification in relation to the condition is specified therein and the same by no stretch of imagination cannot said to have expanded the scope and purport of the Notification. By reason of the explanation VI, in terms whereof, sum-total of the value of the capital investment made on plant and machinery for the manufacture of the specified goods are to be computed on the face value of the capital investment at the time when such investment was made only are required to be taken into account but the value of the investment made on plant and machinery which have been removed permanently or rendered unfit for use prior to the date of the first clearance of the specified goods, shall be excluded. But what is therefore to be excluded, is the sum-total of the value of the capital investment mines the value of plant and machinery, which have ben removed permanently or rendered unfit.

39. In the fourth proviso appended to the said Notification the expression "first clearance" does not find place but thereby a different meaning cannot be attributed. Had the intention of the government of India was to grant the benefit of the subsequent investments made during the entire period for which the Notification was to remain in force, the same could have been stated expressly.

40. The contention of Mr. Dewan to the effect that, in the event, all investments made during the period of five years are not taken into consideration, Explanation VI would become otiose, cannot be accepted.

By reason of the said Explanation merely a benefit has been curtailed to the extent that plant and machinery which have been permanently taken away or are unfit should be excluded. By reason of he exemption only any duty over and above 75% is not to be charged. By reason of the Notification a period has been fixed. The first clearance may even be before the Notification.

41. In our opinion, for the purpose of giving effect to the said Notification it should be read in its entirety. Provisos, in the instant case, do not exist as mutually exclusive to each other. Duty limit of grant of exemption is 30% of the value of the machinery must be calculated having regard to the cut off date and cannot be held to be liable for computation at each stage. An exemption provision even otherwise should be construed strictly.

42. In Union of India and Ors. v. Modi Rubber Ltd. while construing the word "duty" the Apex Court had held that the same would be basis duty and not any special duty or additional duty. It was observed:

"It is, therefore, clear that where a notification, granting exemption is issued only under Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 without reference to any other statute making the provisions of the Central Excise and Salt Act, 1944 and the Rules made there under applicable to the levy and collection of special auxiliary or any other kind of excise duty levied under such statute, the exemption must be read as limited to the duty of excise payable under the Central Excise and Salt Act, 1944 and cannot cover such special auxiliary or other kind of duty of excise"

43. In Premier Tyres Ltd. v. Collector of Central Excise, Cochin the Apex Court observed:

"The notification dated July 14, 1978, it is to be noticed, has superadded the words "read with any relevant notification issued under the said Sub-rule (1) of Rule 8 and in force for the time being". These superadded words show conclusively that the notification dealing with exemption to the extent of the duty paid on the inputs, which was already in force, had to be given effect before giving effect to the notification dated July 14, 1978."

44.In Union of India v. Wood Papers Ltd. the law has been laid down in the following terms:

"Literally exemption is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially in a growing economy. For instance tax holiday to new units, concessional rate of tax to gods or persons for limited period or with the specific objective etc. That is why its construction, unlike charging provision, has to be tested on different touchstone. In fact an exemption provision is like an exception and on normal principle of interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden or progressive approach of fiscal provisions intended to augment state revenue. But one exception or exemption became applicable no rule of principle requires it to be construed strictly. Liberal and strict construction of an exemption provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play has to be given to it and it calls for a wider and liberal construction. A notification has to be read in its entirety and construed as a whole. But a construction which results in inequitable results and is incongruous is to be avoided."

45. Yet again in Grasim Industries Ltd. and Anr. v. State of Madhya Pradesh and Anr. , it has been held:

"It is settled position of law that exemption notification particularly in fiscal matters has to be strictly construed and the person claiming its benefit is oblige dot satisfy the court that this claim was covered by the exemption notification."

46. The Apex Court while deciding the aforesaid case relied upon its earlier decision in Union of India v. Wood Papers Ltd. , wherein it has been held:

"4. Entitlement of exemption depends on construction of the expression 'any factory commencing production' used in the Table extracted above. Literally exemption is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially, in a growing economy. For instance tax holiday to new units, concessional rate of tax to goods or persons for limited period or with the specific objective etc. That is why its construction, unlike charging provision, has to be tested on different touchstones. In fact an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden or progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly speaking liberal and strict construction of an exemption provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in the nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction. Therefore, the first exercise that has to be undertaken is if the production of packing and wrapping material in the factory as it existed prior to 1964 is covered in the notification."

47. Yet again in Collector of Customs v. Presto Industries reported in (2001) 3 SCC 6, it was held:

"The onus of proof of fulfilllment of condition subject to which an exemption may be admissible lies on the assessed or upon a party claiming benefit under the notification as also held in the case of Motiram Tolaram v. Union of India . So far as the question of construing an exemption notification is concerned, such notifications are to be strictly construed. Where a condition precedent is not fulfillled before claiming any exemption, such benefit would not be admissible."

48. The Apex Court, having regard to the fact that incentive was being given to the factory during the lean period was called upon to answer the question as to whether Notification in question could be made applicable from the date it came into force or for the entire period preceding thereto which was conferred under a separate Notification. Having regard to the fact that earlier Notification was referred to and in place of the relevant provisions, another provision was substituted, it was observed:

"Before we proceed to scrutinize the Notifications, the law to interpret is settled. Unless there is anything to the contrary in the Act, rules or Notification, if there be two possible interpretation, it is that interpretation which subserve the object and purpose should be accepted. The objective of this Notification is by conferring rebate in excise duty, an incentive is given to a factory for increasing the sugar production during the lean period. It is with this in mind now we proceed to scrutinize the two Notifications."

49. In The TATA Oil Mills Co. Ltd. v. Collector of C.Ex. , a Bench of two Judge was considering a case where the difficulties were faced in giving effect to the Notification. IN that situation, it was observed that although the assessed had the burden to prove, but having regard to the vagueness therein, it was observed that the same is required to be reasonable and also having regard to process of manufacture as explained by the Tribunal later on. The said decision, thus, in the instant fact situation is not applicable.

50. In Collector of Customs, Bombay v. United Electrical Industries Ltd. the question arose as to whether the word "machine" is to be read as "machines". Keeping in view the fact that, in the event, the word "machine" only is singular and not plural the Notification became unworkable. It was observed:

"The notification has to be interpreted to give true import and meaning, not to make it purposeless and nugatory. It is well settled which is also provided in Section 13 of the General Clauses Act, 1897 of the Central Acts that unless there is anything repugnant to the subject or context the word singular shall include plural and vice versa. The Tribunal interpreted the word 'machine' to be 'machines' and, in our opinion, rightly so. It seems by this restrictive interpretation the very purpose of this notification since completely diluted which led into clarification/modification by the Government through the aforesaid letter."

51. The said decision again cannot be said to have any application in the instant case. We, therefore, are of the opinion that the contention of the petitioner as regards the interpretation of the Notification 107/81 cannot be accepted.

52. Re: Notification No. 88 dated 6th April 1984

Notification No. 88/84-C.E. dated 6th 1984 reads as follows:

"In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts tyres (excluding tubes and flaps) falling under Item No. 76 of the First Schedule to the Central Excise and Salt Act, 1944 (1 of 1944), from so much of the duty of excise leviable thereon under Section 3 of the said Act as is in excess of the amount calculated at the rate of eighty per cent of the rate of duty leviable on such tyres under the said First Schedule, read with any notification issued under Sub-rule (1) of Rule 8 of the said rules and in force for the time being:

Provided that such tyres are manufactured in a factory which is an industrial undertaking licensed under Section 11 or Section 13 of the Industries (Development and Regulation) Act, 1951 (65 of 1951) and from which the clearance of tyres was effected for the first time during the period commencing on the 1st day of April, 1976 and ending with the 31st day of March, 1984 (hereinafter referred to as the said first clearance of tyres):

Provided further that where such tyres are manufactured in a factory which is an industrial undertaking licensed under Section 11 of the Industries (Development and Regulation) Act, 1951 (65 of 1951) (hereinafter referred to in this proviso as the said factory), the exemption contained in this notification shall not apply to such of the clearances of tyres-

(i) as are in excess of clearances of tyres in respect of which the aggregate of the amount of exemption under this notification and the amount of exemption, if any, availed in respect of clearances of tyres under all or any of the notifications of the Government of India in the Department of Revenue and Banking No. 198/76-

Central Excises, dated the 16th June, 1976, or in the Ministry of Finance (Department of Revenue) No. 142/78-Central Excises, dated the 14th July, 1978, or in the Ministry of Finance (Department of Revenue) No. 107/81-Central Excises, dated the 24th April, 1981, or in the Ministry of Finance (Department of Revenue) No. 268/82-Central Excises, dated the 13th November, 1982, equals an amount which is the aggregate of-

(a) fifty per cent of the sum-total of the value of capital investment made on plant and machinery in the said factory for the manufacture of tyres prior to the date of the said first clearance of tyres as certified by the Development Officer of the Directorate-General of Technical Development or the General Manager of the Industrial Development Bank of India, and

(b) thirty per cent of the sum-total of the value of capital investment made on plant and machinery in the said factory for the manufacture of tyres on or after the date of the said first clearance of tyres but up to the 31st March, 1984 as certified by the Development Officer of the Directorate-General of Technical Development or the General Manager of the Industrial Development Bank of India; or

(ii) as are effected after the expiry of a period of seven years from the date of the said first clearance of tyres from the said factory:

Provided also that where such tyres are manufactured in a factory which is an industrial undertaking licensed under Section 13 of the Industries (Development and Regulation) Act, 1951 (65 of 1951) (hereinafter referred to in this proviso as such factory), the exemption contained in this notification shall not apply to such of the clearances of tyres-

(i) as are in excess of the clearances of tyres in respect of which the aggregate of the amount of exemption under this notification and the amount of exemption, if any, availed in respect of clearances of tyres, under all or any of the notifications of the Government of India in the Department of Revenue and Banking No. 198/76-Central Excises, dated the 16th June, 1976, or in the Ministry of Finance (Department of Revenue) No. 142/78-Central Excises, dated the 14th July, 1978, or in the Ministry of Finance (Department of Revenue) No. 107/81-Central Excises, dated the 24th April, 1981, or in the Ministry of Finance (Department of Revenue) No. 268/82-Central Excises, dated the 13th November, 1982, equals thirty per cent of the sum-total of the value of capital investment made on plant and machinery in such factory for the manufacture of tyres prior to the date of the said first clearance of tyres as certified by the Development Officer of the Directorate-General of Technical Development or the General Manager of the Industrial Development Bank of India; or

(ii) as are effected after the expiry of a period of seven years-

(a) from the date of the said first clearance of tyres from such factory; or

(b) from the date of the first clearance of tyres at any point of time from any other factory in which the manufacture of tyres is being or has been carried on by the industrial undertaking referred to in this proviso;

Whichever is earlier.

Explanation I - For the purposes of this notification, in computing the said period of seven years, the period commencing on the 1st day of April, 1980, and ending with the 23rd day of April, 1981, shall not be taken into account.

Explanation II - For the purposes of this notification, the "amount of exemption" shall be the difference between the amount of duty payable (including special duty of excise, if any, payable thereon) but for this notification or the aforesaid notification No. 198/76-Central Excises, or No. 142/78-Central Excises, or No. 107/81-Central Excises, or 268/82-Central Excises, as the case may be, and the amount of duty paid on tyres (including special duty of excise, if any, paid thereon) at the concessional rate prescribed under this notification or the aforesaid notification No. 198/76 - Central Excises, or No. 142/78 - Central Excises, or No. 107/81-Central Excises, or No. 268/82-Central Excises, as the case may be, respectively.

Explanation III - The "amount of duty payable" in Explanation II, -

(i) in the case of tyres where duty of excise is chargeable under the Central Excises and Salt Act, 1944 (1 of 1944) with reference to value, shall be the amount calculated by applying the rate of excise duty leviable on tyres, but for this notification or the aforesaid notification No. 198/76-Central Excise, or No. 142/78-Central Excises, or No. 107/81-Central Excises, or No. 268/82-Central Excises, as the case may be, to the assessable value of the tyres as approved by the proper officer for the purposes of this notification or the aforesaid notification No. 198/76-Central Excises, or No. 142/78-Central Excises, or No. 107/81-Central Excises, or 268/82-Central Excises, as the case may be, respectively; and

(ii) in the case of tyres where the rate of excise duty is chargeable under the Central Excises and Salt Act, 1944 (1 of 1944) not with reference to value, shall be the amount calculated by applying such rate, but for this notification.

Explanation-IV - The expression "assessable value" in Explanation III means the value as determined in accordance with the provisions of Section 4 of the Central Excises and Salt Act, 1944 (1 of 1944).

Explanation-V - For the purposes of computing the sum-total of the value of the capital investment made on plant and machinery for the manufacture of tyres, the face value of the capital investment at the time when such investment was made only shall be taken into account, but the value of the investment made on plant and machinery which have been removed permanently or rendered unfit for use shall be excluded.

2. Nothing contained in this notification shall apply to tyres cleared by or on behalf of a manufacturer by whom or on whose behalf clearance of tyres from any one or more factories was effected for the first time before the 1st day of April 1976."

53. It is not in dispute that the petitioner had applied for grant of a separate license in terms of Section 13 of the IDR Act: It reads as under:

"13. Further provision for licensing of industrial undertakings in special cases-

(1) No owner of an industrial undertaking, other tan the Central Government shall-

(a) in the case of an industrial undertaking required to be registered under Section 10, but which has not been registered within the time fixed for the purpose under that section, carry on the business of that undertaking after the expiry of such period, or

(b) in the case of an industrial undertaking the registration in respect of which has been revoked under Section 10-A carry on the business of the undertaking after the revocation, or

(c) in the case of an industrial undertaking to which the provisions of this Act did not originally apply but became applicable after the commencement of this Act for any reason, carry on the business of the undertaking after the expiry of three months from the date on which the provisions of this Act became so applicable, or

(d) effect any substantial expansion of an industrial undertaking which has been registered or in respect of which a license or permission has been issued, or

(e) change the location of the whole or any part of an industrial undertaking which has been registered, except under, and in accordance with, a license issued in that behalf by the Central Government, and in the case of a State Government, except under and in accordance with the previous permission of the Central Government.

(2) The provisions of Sub-section (2) of Section 11 and of Section 12 shall apply, so far as may be, in relation to the issue of licenses or permissions to any industrial undertaking referred to in this section as they apply I relation to the issue of licenses or permissions to a new industrial undertaking.

Explanation- For the purposes of this section, "substantial expansion" means the expansion of an existing industrial undertaking which substantially increases the productive capacity of the undertaking, or which is of such a nature as to amount virtually to a new industrial undertaking, but does not include any such expansion as is normal to the undertaking having regard to its nature and the circumstances relating to such expansion."

54. "Factory" has been defined in Section 3(c) in the following terms:-

(SIC) "factory" means any premises, including the precincts thereof, in any part of which a manufacturing process is being carried on or is ordinarily so carried on-

(i) with the aid of power, provided that fifty or more workers are working or were working thereon on any day of the preceding twelve months; or

(ii) without the aid or power, provided that one hundred or more workers are working or were working thereon any day of the preceding twelve months and provided further that in no part of such premises any manufacturing process is being carried on with the aid of power;"

55. "Industrial undertaking" has been defined in Section 3(d) of the IDR Act, which reads as under:-

"3(d) "industrial undertaking" means any undertaking pertaining to a scheduled industry carried on in one or more factories by any person or authority including Government;

56. Sections 11 and 13 apply in different fields. If the matter relating to obtaining of the license is kept confined to Section 11 only the license granted under Section 13 would be of no purpose whatsoever. Section 11 speaks of licensing of new Industrial undertakings whereas Section 13 speaks for licensing of Industrial undertaking in special cases.

57. In the instant case basic issue which arises for consideration is interpretation of Clause (ii) of the third proviso to the Notification, i.e. whether Clause ii(a) or ii(b) would be applicable to the present case. They operate in different fields and the licenses granted there under must be considered for the purpose of construction of an exemption Notification.

58. The first proviso appended to the Notification refers to grant of benefit to an industrial undertaking licensed under Section 11 or Section 13 of the IDR Act. From both such factories clearances of tyres are effected. Such first clearance from the two factories would, thus, be different.

59. In the instant case it has not been in dispute that the clearance form factory II started form 29th March 1984. It is, thus, after 1st April 1976.

60. The 2nd proviso refers to a factory licensed under Seton 11 of the IDR Act. Whereas 3rd proviso refers to a factory licensed under Section 13 of the IDR Act. Had the intention of the Government of India been, as has been submitted by Mr. Maninder Singh, that the first proviso lays down the said condition and would cover both Sections 11 and 13 licenses, the 1st proviso would become meaningless. The third proviso, therefore, in the context of the second proviso, in the opinion of this Court, must be read as an independent proviso.

61. We may notice that the Government of India while issuing the said Notifications in no uncertain terms used the word "such factory" in Clause ii(a) of the third proviso which in the context of the case must be held to be referable to Section 13 factory and not Section 11 factory. A factory under Section 13 of the IDR Act has to be set up, the product is to be manufactured and the clearance would be from that factory an any investment will only be in relation to that factory. As indicated hereinbefore, even in the second proviso, it has clearly been stated, while referring to the earlier Notification NO. 107/81, that the amount of exemption would be 30% of the sum-total of the value of the capital investment made on plant and machinery in such factory under Clause (i) of the proviso. Clause

(ii) in the third proviso starts with the word "or", therefore, Clause (ii) must be read independently of Clause

(i). Yet again therein the seven years period is to be computed from the date of the said first clearance of tyres from such factory, whereas Clause ii(b) refers such first clearance from any point of time from any other factory. Explanation-I exclude the period commencing on 1st April 1980 and ending with 23rd April, 1981 for the purpose of computation of the period of seven years. There cannot be, therefore, in our opinion, any doubt that having regard to the plaint grammatical meaning of the expressions used therein and the background of the Notifications and particularly having regard to the fact that it fits in the object and purport of the Notification Sub-clause ii(b) of the third proviso of the said Notification is applicable in the instant case.

62. However, having regard to the fact that there exists certain disputes with regard to the benefits, which have been taken by the assessed, we are of the opinion that matter be remitted back to the Assistant Collector for computation of the amount of excise duty payable by the petitioners in terms of this judgment.

63. This petition is allowed to the afore-mentioned extent. No order as the costs.