Dukes Pharma vs Government of India

K.A. Swami, C.J.—These writ appeals are preferred against the common order dated 6-10-1993 passed by the learned single Judge in

W.P. Nos. 8885 of 1985, 5484 of 1988, 1539 of 1989 and 7333 of 1988 respectively. The question urged before the learned single Judge was

as to the construction to be placed on the provisions relating to exemptions contained in Notification Nos. 80/80 , dated 19-6-1980, as modified

by another Notification dated 25-3-1981, 85/83, 85/85 and 175/86, as amended by Notification No. 174/89. After considering the various

contentions, the learned single judge negatived the contention of the petitioners that the loan licensees should be treated as separate or in other

words, as independent. In coming to that conclusion the learned single Judge has followed the decision of another learned single Judge of the Court

in W.P. No. 1940 of 1981 etc., which has been approved by a Division Bench of this Court in W.A. Nos. 233 to 236 of 1991, dated 13-3-

1991. In these Writ appeals, the Division Bench of this Court, on considering the Notification No. 80/80, dated 19-6-1980, as modified by the

Notification No. 73/81, dated 25-3-1989, held as follows :

Notification No. 80/80 C.E., dated 19-6-1980 was modified by Notification No. 73/81 C.E., dated 25-3-1981 issued under sub-rule 1 of Rule

8 of the Central Excise Rules, 1944. The appellants were aggrieved by a portion of the Notification dated 25-3-1981 which fixed the limit to seek

exemption on the basis of the aggregate value of clearances of the specified goods from any factory by or on behalf of one or more manufacturers,

and filed writ petition Nos. 5011, 5010, 6315 and 1940 of 1981 respectively in this Court which came to be dismissed by the learned single Judge

by a common judgment dated 7-4-1990.

It is well settled that the determination of the criteria for applicability of any exemption, is the prerogative of the Legislature or its delegate the

executive as the case may be. The learned single judge took note of the settled law and found that since in the matter of granting concession or

granting exemption of tax, the Government has the wide latitude of discretionary power, Courts cannot interfere and command the Government to

grant exemption in a particular manner. It is not disputed that in so far as the impugned notification is concerned, it is applicable to all those who are

covered by the Notification. Courts cannot decide whether the policy of exempting certain articles followed by the Government is justified or not.

The learned single Judge, therefore, rightly dismissed the writ petitions. We see no reason to take a contrary view. The writ appeals fail and they

are dismissed.

Thus the view taken by the learned single Judge in W.P. Nos. 1940 of 1981 etc. was approved by the Division Bench of this Court. However,

it is contended by Shri Alagirisamy, learned senior counsel that the exemption Notification No. 175/86 relating to clubbing of clearances of various

firms to arrive at the aggregate value of clearances has not been correctly construed by the learned single Judge. In relation to the aforesaid

Notification the learned single Judge has stated thus :

In this connection, he invited my attention to W.M.P. Nos. 26177 and 26377 to 26330 of 1992. In all the W.M.Ps., the petitioners have prayed

for permission for raising additional grounds, based on circulars of the Board. The Circulars referred therein say that each loan licensee was an

independent manufacturer. There is no quarrel on that aspect. But while coming to the question of exemption, the decisions are to the effect that

must be considered subject to Clauses 2 and 3 in the Notifications, along with Clause 4. If so considered, notwithstanding the fact that each loan

licensee is an independent manufacturer, the clearances of such loan licensees will have to be clubbed along with the clearances of factory owners.

Therefore, the circulars of the Board will not help the petitioners. However, W.M.P. Nos. 26177, 26327, 26329 and 26330 of 1992 are ordered.

No costs. W.M.P. No. 26328 of 1992 in W.P. No. 8885 of 1985 is for amending the prayer in the writ petition. The petition is allowed. No

costs.

However, it is contended before us that the aforesaid Notification treats the different firms as different manufacturers for the purpose of

exemption limit, therefore, the loan licensees who manufacture within the premises of the petitioners/appellants'' factory being independent, they

should also to be treated as different manufacturers for the purpose of exemption limit. The circular of the Clarifications to Notification No.

175/86-C.E. reads thus :

S.S.I. EXEMPTION - NOTIFICATION NO. 175/86-C.E. CLUBBING OF CLEARANCES OF VARIOUS FIRMS TO ARRIVE AT THE

AGGREGATE VALUE OF CLEARANCES

Several representations and references have been made to the CBEC regarding the issue of clubbing of clearances of various firms to arrive at the

aggregate value of clearances for the purposes of Notification No. 175/86-C.E., dated 1-3-1986 as amended.

The matter has been examined by the Board. For the purpose of ensuring uniformity of levy of duties of excise, the Board, in exercise of the

powers conferred u/s 37B of CESA, 1944 hereby orders that the following general principles will be applicable to Notification No. 175/86 as

amended :

(i) Different firms will be treated as different manufacturers for the purpose of the exemption limit. But if a firm consisting of certain partners say, a,

b & c has got more than one factory, all these factories will of course be combined. Limited company, whether public or private, is a manufacturer

by itself and will be entitled to a separate exemption limit. .....

The question as to whether within the factory of a partnership firm there is another manufacturing unit independent of the petitioners'' firm, as

such it should be treated as a different manufacturer is a question of fact to be ascertained in each case, therefore, it does not have any bearing on

the interpretation of the Notification. Hence, if there is any independent unit working in the premises of the factory of the petitioners/appellants not

in any way connected with the partnership firm and the manufacturing unit in question, as the petitioner, it is open to the petitioners/appellants to

prove the same before the adjudicating authorities. We see no reason to differ from the view taken by the learned single Judge on the aforesaid

contention, which has to be proved in each case.

Lastly, it is urged that after the writ petitions in question were dismissed there was an order of adjudication made and that order was appealed

against and the order in that appeal also went against the petitioners, thereafter they have preferred an appeal before the CEGAT, as such the

contentions decided in the writ petitions by the learned single Judge should be kept open to be urged before the CEGAT. It is not possible to

accept this contention. These writ petitions do not relate to these adjudicatory proceedings, which have been taken up after the writ petitions were

dismissed. In these writ petitions, the show cause notices issued to the petitioners were challenged. While challenging the show cause notices, they

also challenged the velocity of the provisions relating to exemptions contained in the various Notifications referred to above. It is on the basis of the

findings recorded the adjudication has been made. As we do not find any ground to differ from the view taken by the learned single Judge, we see

no reason to allow the petitioners/appellants to urge the very same ground before the CEGAT.

For the reasons stated above, the writ appeals are dismissed. No costs. Connected C.M.P. Nos. 4650, 4651, 4652 and 4654 of 1996 are

also dismissed.