http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 10  

PETITIONER: JULLUNDUR RUBBER GOODS MANUFACTURERS’ASSOCIATION

       Vs.

RESPONDENT: UNION OF INDIA & ANR.

DATE OF JUDGMENT: 25/08/1969

BENCH: GROVER, A.N. BENCH: GROVER, A.N. SHAH, J.C. RAMASWAMI, V.

CITATION:  1970 AIR 1589            1970 SCR  (2)  68  1970 SCC  (2) 644  CITATOR INFO :  R          1984 SC 420  (47)  RF         1986 SC 649  (28)

ACT: Rubber  Act (24 of 1947), s. 12 and Rules 33, 33A  and  33D- Duty  leviable from users of rubber-If violative of Art.  14 and Entry 84 of List I of VII Schedule of the Constitution.

HEADNOTE: The   appellants,   an  ’association   of   rubber   chappal manufacturers  who were using rubber in their  manufacturing process, filed a petition in the High Court challenging  the levy and collection from the manufacturers of chappals, of a duty  under  s.  12 of the Rubber Act, 1947  aS  amended  by Rubber Amendment Act, 1960.  The grounds of challenge  were: (1)  that the imposition on the appellants was  outside  the ambit  of  Entry  84 of List     I of VII  Schedule  of  the Constitution,  which  deals  with the duties  which  can  be levied  on  goods  manufactured or produced  in  India;  (2) Section  12(2)  which provides the machinery  for  levy  and collection  has given uncontrolled and unbridled  discretion to  the Rubber Board and no guiding principle or policy  was laid  down in the Act to enable the Board to choose  between the owners of estates of rubber or the users of the  rubber; and  (3) the rules framed under the section do not  indicate with  sufficient clarity and precision on whom the levy  was to be made.  The High Court dismissed the petition. In appeal to this Court, HELD: (1) (a) The excise duty could be imposed at the  stage which was found to be most convenient and lucrative as  that is a matter relating to the machinery of collection and  did not  affect  the essential nature of  the  tax.   Therefore, merely because the incidence of tax is shifted to the  users of  rubber under s. 12(2) which provides for the  method  of collection, the tax would not cease to be one falling within Entry 84.[73 B--C;F  G] R.C.  fall  v. Union of India, [1962] Supp.  3  S.C.R.  436, followed.     Re:  the  Central Provinces and Berar Act, 14  of  1938, [1939] F.C.R. 18, applied.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 10  

   (b) If the duty is not excise duty because it is imposed on  the  user Parliament would even  then  have  legislative competence  to  provide  for  its  collection  from   users, whatever  be its nature, under Entry 97 of List I read  with Art. 248 of the Constitution. [73 H; 74 A  B]     (2)  The task of subordinate legislation  necessary  for implementing the purpose and objects of an enactment can  be delegated,  so  long as the law has provided the  method  by which  the. delegate can be controlled, there is a  guidance for fixing rates of tax and there is a provision to see that reasonable rates are fixed. [74 D--F]     Municipal Corporation of Delhi v. Birla Cotton, Spinning and Weaving  Mills, [1968] 3 S.C.R. 251, followed.     In the present case, the Act was enacted for the purpose of  development of rubber industry under the control of  the Union Parliament has 69 enacted that the Rubber Board can levy and collect the  duty either  from the owner of the rubber estate or the  user  of the  rubber.   But  the  Board  is  enjoined  to  do  so  in accordance  with the Rules made by Central Government  under s.  25(1)  (a) of the Act and which are placed  before  each House  of  Parliament for approval.  The Board itself  is  a high  powered body and all interests are  represented  among its members ’and all its acts are subject to the control  of the Central Government under s. 22. [74 H; 75 Ii; 78 C]     Further.   the  Board  is  vitally  interested  in   the collection  of the duty and it has to see that such duty  is collected  without undue delay and proper  expedition.   The objects and reasons of the Amending Act (which can be  taken into consideration for the purpose of seeing if there is any alleged  infringement  of Art. 14) show that the  Board  was finding  it difficult to levy and collect the duty from  the owners and it was considered that it would be much more easy to collect it from the users, in accordance with the  rules. Thus  it  is necessary that it should be left  to  the  rule making authority to indicate the cases and the circumstances in  which  the duty was to be collected from  the  owner  or user. [75 C; 77 H; 78 A  B]     Since  the  policy of the Act has been  enunciated  with sufficient  clarity, and guidance has been furnished  as  to how  the Board should exercise its powers in the  matter  of levy,  there  is  no  discrimination and  Art.   14  is  not violated.     Ipoh  v.C.I.T. Madras, [1968] 1 S.C.R. 65  and  Raghubar Dayal  Jai Prakash v. Union of India, [1962] 3  S.C.R.  547, referred to.     (3) A combined reading of rr. 33, 33A and 33D  indicates that  a  definite  provision  is made  with  regard  to  the category of persons on whom the collection of the duty is to be made, namely, the users of rubber.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1220 of 1966.     Appeal  by  special leave from the  judgment  and  order dated April 6, 1965 of the Punjab High Court, Circuit  Bench at Delhi in Letters Patent Appeal No.. 58-D of 1966.     M.C.  Chagla,  B.  Datta and J.B.  Dadachanji,  for  the appellant.     Niren  De, Attorney-General, V. A. Seyid Muhammad,  R.H. Dhebar and S.P. Nayar, for respondent No. 1.     Niren  De, Attorney-General, V.A. Seyid  Muhammad,  R.H. Dhebar, S.P. Nayar and Joy Joseph, for respondent No. 2.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 10  

   S.J.  Sorabji, A.J. Rana K.L. Hathi  and K.N. Bhat,  for the interveners. The Judgment of the Court was delivered by     Grover, J.  This  is an appeal  by special  leave   from a  judgment of the Punjab High Court (Circuit  Bench)  Delhi in  which the validity and legality of the levy of  cess  by way  of excise duty on the rubber used by  manufacturers  of chappals  under the provisions of the Rubber Act 1947,  (Act XXIV  of 1947) as amended, hereinafter called the Act,  have been assailed. 70     M/s.  Jullundur Rubber Goods Manufacturers’  Association is  an  association  of  rubber  chappal  manufacturers   at Jullundur  in  the  State  of  Punjab.   Its  members,   who manufacture  chappals, are stated to use. about 15 to 20% of rubber  in the process of their manufacture while  the  rest ’of  the material used  by  them consists of  various  other articles.   A petition was  filed  under Arts. 226 & 227  on behalf  of the aforesaid Association, the second  petitioner being  its  Secretary, challenging the levy  and  collection from  the manufacturers of chappals under the provisions  of the  Act,  the Rules framed and  the  relevant  notification issued  thereunder  of a duty as a result of  the  amendment made  in  s. 12 of the Act by the Rubber  Amendment  Act  of 1960.   A  learned Single Judge dismissed the writ  petition and  his  judgment was affirmed by a division bench  of  the High Court.     The  contentions  which have been raised are: (1  )  the duty  sought  to  be imposed under s. 12  as  amended  being outside  the  ambit of Entry 84 of List I in   the   Seventh Schedule   to   the Constitution is beyond  the  legislative competence of the Parliament; (2) Section 12(2) suffers from the  vice of excessive delegation.  It confers  uncontrolled and  unrestricted discretion upon the Rubber Board  to  levy upon  and collect duty of excise from either the  owners  of the  rubber  producing  estates  or  the  users  so   called manufacturers    (of   rubber)   without   specifying    the circumstances under which it should be imposed upon the  one or  the other nor has any guiding policy or  principle  been laid down in the Act for making a choice.  (3) In any  case, the  Rules  which  have  been  framed  do  not  satisfy  the provisions  of s. 12(2) of the Act and do not indicate  with sufficient  clarity and precision on whom the levy is to  be made  and from whom the duty is to be collected  as  between the owners of the estates and the manufacturers.     The relevant statutory provisions may first be  noticed. In   1947  the  Central  legislature  enacted   The   Rubber (Production  and Marketing) Act, 1947. Its name was  changed to Rubber Act 1947 by the Rubber (Production and  Marketing) Amendment Act, 1954. The Act was enacted to provide for  the development  under  the control of the Union of  the  rubber industry.    Under  s.  4  the  Rubber  Board  was   to   be constituted.  The functions of the Board were enumerated  in s.  8.  It was to be its duty to promote by such measure  as it thought fit development  of  the rubber industry.   Under s. 10 it was obligatory on every person owning land  planted with rubber plants to get himself registered as an owner  by applying  to  the  Board.   Section  12  provided  for   the imposition  of rubber cess. Under s. 14  no   person   could sell  or  otherwise dispose of or buy or  otherwise  acquire rubber     71 except  in accordance with the terms of general  or  special license  issued  by the Board.  The Central  Government  was given the over-all control over the acts of the Board by  s.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 10  

22.   Section  25 empowered the Central Government  to  make Rules.  Prior to the amendment made by the Rubber  Amendment Act of 1960 (Act XXI of 1960) the duty of excise was payable under  s.12(2) by the owners of the estates on which  rubber was  produced  and it was to be paid by’ them to  the  Board within  one  month from the date on which  they  received  a notice  of demand.  By Act XXI of 1960 an  important  change was made which affected the manufacturers and the duty could be  collected  by the Board either from the  owners  of  the estates  or  from the manufacturers by whom  the  rubber  is used. At this stage the relevant provisions of the Act with  which we are concerned may be reproduced :--                  S.  B(e)  "manufacturer" means  any  person               engaged     in the manufacture of any  article               in the making of    which rubber is used;"                   (h) "rubber"  means--                      (i)                      (ii)                      (iii)  latex, (dry rubber  content)  in               any state of concentration, and includes scrap               rubber,  sheet rubber, rubber in  powder   and               all  forms and varieties of crepe rubber,  but               does  not  include. rubber  contained  in  any               manufactured article;"               S. 4(3 ) "The Board shall consist of-                (a)  a  Chairman  to be  appointed   by   the               Central Government;                    (b) two members to represent the State of               Madras,  one  of  whom  shall  be  a    person               representing rubber producing interests;                    (c) eight members to represent the  State               of  Kerala, six of  whom  shall  be persons               representing  the rubber producing  interests,               three of  such  six being persons representing               the small growers;                    (d)  ten members to be nominated  by  the               Central   Government   of   whom  two.   shall               represent  the manufacturers and four  labour;               and                    (e)  three members of Parliament of  whom               two  shall  be  elected by the  House  of  the               People and one by the Council of States; and 72               (f)  the   Rubber   Production   Commissioner,               ex-Officio."                     S.  12(4)"For  the purpose  of  enabling               the   Board  to assess the amount of  duty  of               excise levied under the section--                  (a) the Board shall, by notification in the               Official  Gazette, fix a period in respect  of               which assessments shall be made; and                   (b) without prejudice to the provisions of               section 20, every manufacturer shall   furnish               to  the Board a return not later than  fifteen               days after the expiry of the period to.  which               the return relates, stating-               (i)  in  the  case  of  an  owner,  the  total               quantity  of rubber produced on the estate  in               each  such period; Provided that  in   respect               of  an  estate situated only partly in  India,               the   owner   shall in the said  return   show               separately          the  quantity  of   rubber               produced  within         and outside India;                     (ii) in the case of a manufacturer,  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 10  

             total quantity of rubber used by him  in  such               period  out  of  the   rubber   produced    in               India." The   contention  raised  on  behalf  of   the    appellant- association  is that under Entry 84 of List I in the Seventh Schedule  to  the Constitution the duties can be  levied  on goods manufactured or produced in India.  Excise duty, it is pointed out, can be levied only on the actual producers  and manufacturers of rubber but in the very nature of such  duty it  could  not  be imposed on users o.r  consumers  of  that commodity.  It is suggested that sub-s. (1 ) of s. 12 is the charging  section and sub-s. (2) provides for the  machinery for levy and collection of tax.  But sub-section (2)  cannot alter the substantive provision in the charging  sub-section (1)  and since the Parliament has employed the words  ’:duty of  excise"  which  have  a  well  understood  meaning   the incidence  of tax would fall only on the  actual  producers. Once  the incidence of tax was shifted to the users the  tax would cease to be one which would fall within Entry 84.   In re  the Central Provinces and Berar Act No.. XIV of  1938(1) Gwyer C.J. described "excise duty" thus:       "But  its  primary   and   fundamental   meaning    in English is still that of a tax on articles produced or (1) [1939] F.C.R. 18, 40-41. 73    manufactured  in  the  taxing country  and  intended  for home consumption". The  learned Chief Justice, however, proceeded to  add  that there could be no reason in theory why such duty should  not be  imposed  even on the retail sale of an  article  if  the taxing  .Act so provided. It could obviously be  imposed  at the  stage  which  was  found  to  be  most  convenient  and lucrative  as  that  was  a matter   of   the  machinery  of collection  and did not affect the essential nature  of  the tax.  Referring to this decision of the Federal  Court   and several  other cases it was observed in R.C. Jail v.   Union of India(1) at page 451:                     "Excise duty is primarily a duty on  the               production  or manufacture of  goods  produced               or  manufactured within the country.  It is an               indirect  duty   which  the  manufacturer   or               producer passes on to  the  ultimate consumer,               that is, its ultimate incidence will always be               on  the consumer.  Therefore,  subject  always               to  the legislative competence of  the  taxing               authority,  the  said tax can be levied  at  a               convenient  stage so long as the character  of               the  impost,  that  is, it is a  duty  on  the               manufacture  or production, is not lost.   The               method  of  collection  does  not  affect  the               essence  of the duty, but only relates  to-the               machinery  of  collection  for  administrative               convenience.   Whether in a  particular   case               the   tax  ceases to be in essence  an  excise               duty, and the rational connection between  the               duty  and  the person on whom  it  is  imposed               ceased  to exist, is to be decided on a   fair               construction of the provisions of a particular               Act".  The  above  statement  of  law  in  no  way   supports  the argument   that  the excise duty cannot  be  collected  from persons  who are  neither producers nor manufacturers.   Its incidence   certainly  falls directly on the  production  or manufacture  of goods but the method of collecting will  not affect the essence of the duty.  In  our opinion sub-s.  (2)

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 10  

of s. 12 provides for the method of collection as the excise duty can be  collected  either  from  the producers or  from the manufacturers as defined by the Act which  would include members of the appellant association who use  rubber in  the manufacture of chappals.    It seems to us that if the provisions of Entry 97 in List I in the Seventh Schedule as also the provisions of Art. 248 of  the Constitution are kept in view the  Parliament  would have   legislative  competence  even  with  regard  to   the imposition of a tax which  does not fall within Entry 84. It will be a kind of non-descripts tax which has been given the nomenclature of a duty of excise.  (1) [1962] Supp. 3 S.C.R. 436. Sup. CI/70--6 74 Counsel  for the appellant-association quite  properly   has not  challenged this position but has merely sought  to  lay emphasis  on  sub-s.-( 1 ) being the charging  section.   We find  it  difficult  to endorse the reading of sub-s.  (1  ) and sub-s. (2) of s. 12 in isolation.  Not only the  statute but  also,  the  section  have to be read  as  a  whole  and together,  and  in our judgment whatever be  the  nature  of duty,   Parliament  would  undoubtedly   have    legislative competence under Entry 97 of List I in the Seventh  Schedule read with Art. 248 of the Constitution.     We  may  next deal with the question  whether  s.  12(2) suffers  from the vice of excessive delegation  and  whether there  has  been violation of Art. 14  as  uncontrolled  and unbridled discretion has been conferred on the Board to levy and  collect  the  tax  from  either  the  producer  or  the manufacturer  (the user of rubber).  It is pointed out  that there is no guiding principle or policy laid down in the Act to  enable  the  Board  to make a  choice  between  the  two categories.   The principles governing such  questions  have been  laid down in several decisions of this Court.   It  is well   established  that  essential  legislative   functions consist  of the determination of the legislative policy  and its  formulation as a binding rule of conduct and cannot  be delegated by the legislature.  What can be delegated is  the task  of subordinate legislation necessary for  implementing the purpose and objects of an enactment.  Where  legislative policy  is  enunciated  with  sufficient  clearness   or   a standard  is laid down the ’courts will not  interfere.   It will  depend  on  consideration  of  the  provisions  of   a particular  Act  including its preamble as to  the  guidance which  has been given and the legislative policy  which  has been  laid  down  in the matter.  In a  taxing  statute  the guidance  may take the form subjecting the rate to be  fixed by  the local body to the approval of the  Government  which acts as a watch-dog on the actions of the local body in this matter on behalf of the legislature.  The reasonableness  of the rates may be ensured by providing Safeguards laying down the  procedure  for  consulting  the  wishes  of  the  local inhabitants.  So long as the law has provided the method  by which  the  local  body can be controlled  and  there  is  a provisions to see that reasonable rates are fixed it can  be said  that  there is guidance in the matter  of  fixing  the rates for local  taxation; vide  Wanchoo, C.J. in  Municipal Corporation  of Delhi v. Birla Cotton, Spinning and  Weaving Mills, Delhi & Anr.(1)     In s. 12(2) the Parliament has made it quite clear  that the  Board  can levy and collect the duty of  excise  either from   the owner of a rubber estate on which the  rubber  is produced  or  from the manufacturer by whom such  rubber  is used.  The Board has

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 10  

(1) [1968] 3 S.C.R. 251 at pp. 269-270. 75 further been enjoined to do so in accordance with Rules made in  this behalf.  The Board, as constituted under s. 4,  has to  be  a  high powered body and  among  its  members  those representing  the  rubber  producing  interests,  the  small growers, the manufacturers and the labour are included.   It can, therefore, keep in view the interests of all concerned. AccOrding  to the preamble of the Act it was meant  for  the development of the rubber industry under the control of  the Union.  That is the main purpose for which the Board has  to function.   All  amounts paid to the Board  by  the  Central Government  under  s.  12(7) of the Act have to  go  to  the general  fund  of the Board under  s.  9A.   Section   12(7) provides  that the proceeds of the duty of excise  collected has  first to be credited to the Consolidated Fund of  India reduced by the cost of collection and then it has to be paid over  by  the Central Government to the Board.  The Board is thus  vitally interested in the  collection of the duty  and it  has  to see that such duty is  collected  without  undue delay  and  proper  expedition. It has also to look  to  the best  possible method of realization.  In the light of  this scheme as embodied in the Act it is difficult to sustain the challenge on the ground of excessive delegation.  The policy of  the Act has been enunciated with sufficient clarity  and the  guidance has been furnished by the provisions to  which reference has been made as to how the Board should  exercise its  powers  in the matter of levy and  collection  of  tax. There is also another important safeguard which is contained in  s.  22 of the Act.  All acts of the Board by  virtue  of that section  shall be subject to the control of the Central Government  which  may cancel, suspend or modify any  action taken by the Board.     The provision in s. 12(2) that the Board shall levy  and collect  the duty, in accordance with the Rules  is  another important safeguard against the Board acting arbitrarily  in the  matter  of collection of duty from the  owners  of  the rubber estates or the manufacturers.  These Rules are to  be framed  by the Central Government under s. 25(1)(xxa)  which is to the following effect:       "the  cases  and circumstances in which  the  duty  of excise  under section 12 shall be payable by the  owner  and the manufacturers respectively, the manner in which the duty may  be assessed, paid or collected, the regulation  of  the production,  manufacture, transport or sale of rubber in  so far  as  such regulation is necessary for the  proper  levy, payment or collection of duty;" Section 25(3) makes it obligatory on the Central  Government to  place every rule before each House of Parliament  for  a specified  period of 30 days and those Rules can be  subject to criticism and can be modified or even be abrogated.  Thus it is not possible 76 to  hold that the Parliament has abdicated its functions  in enacting s. 12(2) of the Act.     Learned Attorney General has relied on certain decisions of  this  Court  according to which it can be  left  to  the authority  which has to levy and collect the tax  to  decide whether to collect from one category of persons or the other category  where persons in both categories can be  subjected to  tax.   In M.M. Ipoh & Ors.    Income-tax  Madras(1)  the validity of s. 3     the Income-tax Act, 1922 was challenged on  the  ground  that it was violative of  Art.  14  of  the Constitution.   That  section invested the taxing  authority with  an option to assess to tax the income collectively  of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 10  

the  association of persons.  The argument raised  was  that that Act set no  principles  and  disclosed  no guidance  to the Income-tax Officer in exercising the option.  The scheme of  the  Income-tax Act was considered and it  was  observed that  the duty of the Income-tax Officer was to   administer its.  provisions  in the interest of public revenue  and  to prevent  evasion of tax and his function was  mainly  quasi- judicial.  The decision of bringing to tax either the income of the association collectively or the shares of the members of the association separately was not final and was  subject to  appeal.   It was held that the very  nature      of  the authority  exercised by the Income-tax Officer and his  duty to  prevent evasion or escapement of  liability  constituted adequate  enunciation  of  principles  and  policy  for  his guidance.   In  Raghubar Dayal Jai Prakash v. The  Union  of India(2)  the validity of certain provisions of the  Forward Contracts (Regulation) Act, 1952 was assailed.  In regard to s.  15  of  that  Act the argument  was  that  it  conferred unguided  and arbitrary power  upon  the Central  Government to  choose  any commodity it liked and bring  the  Act  into operation in respect of the commodity  which  the Government chose  at any time it pleased.  In this manner the  interest of  the  traders  could be  vitally  affected  by  rendering illegal  a contract which was. perfectly legal when  it  was entered  into.  This  Court referred to the  Report  of  the Expert  Committee on the Bill which became an  Act,  dealing with  the economic implications of forward trading  and  for the  necessity of regulating such- contracts  in  particular goods.  It was observed that the suitability of a  commodity for forward trading depended on factors which were far  from static  and which were subject to variations over  a  period of,  time.   A  continuous assessment was  required  of  all elements which would necessitate regulation.  All this could not. be specified in a statute.  It was for that reason that a  Forward Markets Commission had been constituted  on  whom the  duty  had been cast of advising the Government  on  the situation  as it existed from time to time.   The  following observations are pertinent and may be reproduced: (1) [1968] 1 S.C.R. 65.                   (2) [1962] 3 S.CR. 547. 77               "In   our  opinion,  the  selection   of   the               commodity the regulation of forward trading in               it  or of prohibition       such  trading  can               only be left to the Government and the purpose               for  which  the power is to be  used  and  the               machinery   created  for   the   investigation               furnish sufficient guidance as to preclude any               challenge  on the ground a violation  of  Art.               14."     In the statement of objects and reasons appended to Bill No. 32 of 1960 when amendments were made in s. 12 of the Act by the Rubber Amendment Act, 1960, it was stated inter alia:                     "This method of collection of the   cess               provided under the Act has led to considerable               evasion of cess by the owners of the  estates,               either  by  evasion  of  registration  or   by               failure  to  submit correct returns   or   any               returns  at  all.   There  are  about   26,000               estates  under production in the  country  and               most of them are small holdings.  Many of them               do  not render  returns  of production to  the               Rubber  Board and thus evade payment of  duty.               From  October, 1947 to December 1954,  it  was               found  that  20,608  tons  of  rubber  escaped

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 10  

             assessment  and the Board suffered during  the               period a loss        Rs. 2,30,805.  The Rubber               Board   estimates   that  under  the   present               system there is no likelihood of more than  65               per  cent  of  the  potential  revenue   being               realised each year.                      With a view to improving the efficiency               of collection, it is proposed to amend section               12  of the Act so as to enable the cess to  be               collected  either  from   the  owners  or  the               manufacturer   who  ultimately  consumes   the               rubber produced in the estates.                      There  are  at present  347  registered               rubber  manufacturers  in the country.  It  is               felt that it would be far more easy to collect               the cess from a small number of  manufacturers               than  from  about   26,000   producers   whose               number  will  increase year   by   year.   The               proposed  amendment  of  section  12  in   the               amending Bill  is  an enabling measure for the               administrative   change  in  the   method   of               collection being contemplated." Although  it may not be permissible to  take the   statement of objects and reasons into consideration for construing the provisions  of  an  Act  the  facts  contained  in  such   a statement   can  certainly be looked at for the  purpose  of seeing   any  alleged infringement of Art. 14.  It is  quite clear  from  the   data  given that  the  Rubber  Board  was finding it difficult to levy and collect 78 the  duty  from  the owners of rubber  estates  and  it  was considered that it would be much easier to collect the  same from  the  manufacturers.   The  Board  was,  therefore,  to collect the  duty  in accordance with the rules made in this behalf by  the  Central Government.  Thus it was  necessary, in  view  of  the entire  facts  and   circumstances  stated before, that it  should be left to the rule-making authority to  indicate  the cases and the circumstances in  which  the duty  of  excise was to be collected from the owner  or  the manufacturer  respectively.  It was open to the rule  making authority  to  vary  the rules  according  to  the  changing circumstances  and conditions.  The Board which was  a  high powered  body was mainly responsible for collection  of  the duty  and the rules would naturally be made in  consultation with  it  from time to time.  We are unable to see  how  the challenge on the ground of discrimination under Art. 14  can be  sustained  in view of all these reasons.   It  does  not appear  that  the Board can ’discriminate  in  an  arbitrary manner   between   owners   of  rubber   estates   and   the manufacturers  or  between  persons inter  se  of  the  same category.     The Central Government has framed rules pursuant to  the power  conferred  by s. 25 of the Act.   Unfortunately   the rules  relating to furnishing of returns and  collection  of duties  are  not  properly worded and suffer  from  lack  of clarity.   Under Rule 33 the Board can call for  information and documents from owners of rubber estates or any  licensed dealer or manufacturer relating to the stock of rubber  held and  sale  of rubber etc.  Under el. (e)  all  manufacturers have  to  submit half yearly returns in form M  showing  the total quantity of all rubber purchased or otherwise acquired and consumed or used in the process of manufacture. Rule 33A provides for production of accounts by an owner if he  fails to  furnish in time the return referred to in sub-s. (4)  of s.  12 or if he furnishes a  defective return.   The   Board

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 10  

can,  after  checking  the amounts and  after,  making  such further enquiry as it may deem fit assess the amount payable under  sub-s.(2) of s. 12.  Similar provision is  made  with regard to manufacturers by Rule 33B.  Rule 33D, however,  is material  and  may  be reproduced:               (1  )  "Every manufacturer  shall  by   demand               notice  sent  through registered  post  or  in               such  other manner as the Board may direct  be               intimated  of  the  amount  assessed  on   the               quantity of rubber acquired during the periods               specified  in  rule 33(e).  On receipt of such               notice,  the   manufacturer shall pay  to  the               Board   the        amount            specified               therein   either  in  cash  at  the    Board’s               office  at Kottayam or by money  order      or               by 79               bank draft or .cheque duly crossed and payable               at  Kottayam  to the Secretary  of  the  Board               within  30  days of the receipt  of  the  said               notice.                   (2)  On  such  demand  being  made,  if  a               manufacturer  fails to pay the  amount  within               the  due  date, the Board may  take  steps  to               report  the fact to the Central Government  or               the State  Government concerned for   recovery               of   the   outstanding amount as an  after  of               land revenue."     Now  the above rule seems to contemplate the  filing  of return   both   by  the  owners  of  rubber   estates    and manufacturers.  But under Rule 33D the demand notice can  be sent only to a manufacturer on receipt of which he must make payment  to the Board of the amounts specified therein.   On his  failure to make such payment the Board can  take  steps for  recovery of the amounts due as arrears of land  revenue by  reporting  to  the  Central  Government  or  the   State Government  as the case may be  There is no  such  procedure prescribed with regard to owners of estates. It would follow that under the rules the demand notice is to be sent only to the manufacturers and the amounts of duty are to be realised from  them alone.  The  substantive  provisions  of  sub-ss. (4), (5) and (6) of s. 12 also contemplate assessment  being made  with regard to the returns to be furnished  by  owners and manufacturers.  Any person aggrieved by  an   assessment has   been   given  the  right  of  appeal to  the  District Judge.  But  as pointed out before, there  is  no  provision either  in  the statute or in the rules for a demand  to  be made  and a coercive process to be employed in the event  of failure to make the payment.  That is done by Rule 33D alone from which it would be reasonable to conclude that under the rules it is only the manufacturers who are liable to pay the amount of duty.  The rules can, therefore, be said to make a definite  provision  with regard to the category of  persons from whom the collection of the duty is to be made,  namely, the manufacturers.     For all the reasons given above the appeal fails and  it is dismissed with costs. Y.P.                                     Appeal dismissed. 80