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PETITIONER: B.K. INDUSTRIES AND ORS.  ETC.  ETC.

       Vs.

RESPONDENT: UNION OF INDIA AND OTHERS

DATE OF JUDGMENT13/04/1993

BENCH: JEEVAN REDDY, B.P. (J) BENCH: JEEVAN REDDY, B.P. (J) VENKATACHALA N. (J)

CITATION:  1993 AIR 2123            1993 SCR  (3)  51  1993 SCC  Supl.  (3) 621 JT 1993 (2)   709  1993 SCALE  (2)541

ACT: Vegetable   Oils  Cess  Act,  1983:  Section  3.  Levy   and collection of cess for period March. 1986 to March 31, 1987- Validity of. Statutory Interpretation: Power  of  exemption--Cannot  be utilised  nor  extended  to scrapping of the Act itself.

HEADNOTE: Parliament  enacted  In  1983  the  National  Oilseeds   and Vegetable  Oils Development Board Act, 1983 to  provide  for the  development,  under the control of the  Union,  of  the Oilseeds  Industry and the Vegetable Oils Industry  and  for matters  connected  therewith.   The  Act  contemplated  the establishment  of a board called the National  Oilseeds  and Vegetable  Oils Development Board, and the  Constitution  of Oilseeds  and Vegetable Oils Development Fund for  promoting the purposes of the Act.  The Vegetable Oils Cess Act, 1983, was,  simultaneously enacted to levy and collect by  way  of cess, for the purpose of the National Oilseeds and Vegetable Oils  Development  Board  Act,1983,  a  duty  of  excise  on vegetable  oils produced in any mill in India at  such  rate not exceeding Rs. 5 per quintal on vegetable oil.  This Cess Act  was,  however, repealed by Section 12 of  the  Cotton,’ Copra  and  Vegetable  Oils  Cess  (Abolition)  Act,   1987. Chapter  5 of the’ said Act carried the heading  ’Collection and Payment of Arrears of Duties and Excise’. The  petitioners  who were manufacturers of  vegetable  oil, which was subject to the cess/duty of excise under Section 3 of  the  Cess  Act, in their writ petitions  to  this  Court questioned  the validity of the levy and collection of  cess for  the  period commencing on, 1st March, 1986  and  ending with  31st  March. 1987.  It was contended that (1)  In  his Budget  Speech delivered on 28.2.1986 while  presenting  the Budget 52 1986-87,  the Union Finance Minister had stated that  as  an endeavour to reduce the number of cesses it had been decided to  dispense  with the cession cotton, copra  and  vegetable oils and that this statement was exemplified and implemented by way of a communication from the Directorate of Vanaspati.

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It  is not open to the Government to go back upon  the  said decision and demand cess for the period subsequent to  March 1,  1986, and (2) By virtue of Sub-section (4) of Section  3 of  the  Cess  Act, Rule 8 of the Central  Excise  Rules  is attracted  among other provisions of the Central Excise  Act and  Rules.   Reading the budget proposals  of  the  Finance Minister  and  the letter of the  Directorate  of  Vanaspati together  it  must  be held that vegetable  oils  have  been exempted from the levy under Section 3 (1). Dismissing the Writ Petitions, this Court, HELD:     1   (a)  The  cess  having  been  imposed   by   a Parliamentary enactment could he rendered inoperative  only, by a parliamentary enactment.  Such repealing enactment came only in the year 1987 with effect from April 1, 1987. (58-C) (b)  The repealing Act expressly provided in Section 13 that the  cess  due  before  the date of  said  repeal,  but  not collected,  shall be collected according to law", as if  the Cess  Act  is  not repealed.  This provision  amounts  to  a positive  affirmation of the intention of the parliament  to keep  the said imposition alive and effective till the  date of the repeal of the Cess Act. (58-1).) (c)  In  the face of the aforesaid statutory provisions,  no rights  can he founded-nor can the levy of the cess be  said to  have  been  dispensed  with by  virtue  of  the  alleged decision referred to in the Finance Minister’s speech or  on account of the letter dated August 11., 1986. (58-E) (d)  The   Finance  Minister’s  speech  is  not  law.    The Parliament  may or may not accept his proposal.  Indeed,  in this  case, it did not accept the said proposal  immediately but  only  a %ear later.  It is only from the  date  of  the repeal that the said levy becomes inoperative. (58 F) 53 2 (a) The cess imposed under section 3 (1) of the Cess  Act. is  a  duty  of  Excise  as  stated  in  Section  3  Itself. Therefore,  the  Central  Board of Excise  and  Customs  was perhaps  competent  to grant exemption even in the  case  of said  cess though no definite opinion on this question  need be  expressed since it was not debated.  Suffice It  to  say that the Central Government cannot again be brought in under sub-rule (2) of rule 8 in the place of the Central Board nor can  the  Directorate  of Vanaspati and  Vegetable  Oils  be equated  to the Central Board of excise and customs.  (58-H, 59-A) (b)  The  words "so far as may bell occurring In  section  3 (4) of the Cess Act cannot  be  stretched  to  that  extent. Above all It Is extremely doubtful whether   the  power   of exemption  conferred by rule 8 can be carried to the  extent of nullifying the very Act itself.  It would be difficult to Wee that by virtue of the power of exemption, the very  levy created  by Section 3 (1) can be dispensed with.   Doing  so would  amount  to nullifying the Cess Act  Itself.   Nothing remains thereafter to be done under the cess Act.  Even  the language  of Rule 8 does not warrant such  extensive  power; Rule  8 contemplates merely exempting of  certain  excisable goods  from  the whole or any part of the duty  leviable  on such goods. (59-B) 3.   The  power of exemption cannot be utilised to  dispense with  the very levy created under Section 3 of the Cess  Act or  for  that matter under Section 3 of the  Central  Excise Act. (59-E) Kesavananda  Bharti Sripadagalvaru and others v..  State  of kerala and another A.I.R. 1973 S.C. 1461, (62-G) relied on.

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JUDGMENT: ORIGINAL  JURISDICTION:  Writ Petition (c) No.  857/87  etc. etc. (Under Article 32 of the Constitution of India). Altaf  Ahmed,  Addl.   SolicitorGeneral,  M.L.  Verma,  G.L. Sanghi.   K. Labiri, Sarva Miner, Narain,  S.  Bhattacharya, Vivek Gambhir, S.K. Gambhir, Vijay-Hansaria, P.  Pameswaran, P.K.Jain,  Rajiv Dutta, M.N. Shroff, Ms.  A.Subhashini,  Ms. PratibhaJain, L.K. Gupta, M.A. Firoz, Naresh K. Sharma, A.K. Goel, Ashok K. Mahajan, Ms. 54 Sushma Suri and Kailash Vasdev for the appearing parties. The judgment of the Court was delivered by B.P. JEEVAN REDDY, J. The petitioners in this batch of  writ petitions   question  in  the  validity  of  the  levy   and collection  of  cess under section 3 of the  Vegetable  Oils Cess Act, 1983 for the period commencing 1st March, 1986 and ending with 31st March, 1987. Parliament  enacted in the year 1983 the  National  Oilseeds and Vegetable Oils Development Board Act, 1983 (being Act 29 of 1983) hereinafter referred to as the Board Act.  The  Act was  intended  to  provide for the  development,  under  the control  of  the  Union, of the oilseeds  Industry  and  the Vegetable Oils Industry and for matters connected therewith. The  Act  contemplated establishment and constitution  of  a board  called  the  National  Oilseeds  and  Vegetable  Oils Development   Board.   The  functions  of  the  Board   were specified  in section 9. In short the duty of the Board  was to  promote the development, by such measures as it  thought fit,  subject to the control of the Central Government,  the Oilseeds Industry and the Vegetable Oils Industry.   Section 12 provided for constitution of Oilseeds and Vegetable  Oils Development Fund.  The fund was to be applied for  promoting the purposes of the Act. Simultaneously with the Board Act was enacted the  Vegetable Oils  Cess  Act, 1983 (being Act 30  of  1983),  hereinafter referred  to  as the Cess Act.  The purpose of this  Act  is stated  in sub-section (1) of section 3. It is to  levy  and collect  "by way of cess, for the purposes of  the  National Oilseeds  and Vegetable Oils Development Board Act, 1983,  a duty  of excise on vegetable Oils produced in any m- ill  in India  at  such  rate  not exceeding  Rs.5  per  quintal  on vegetable  oil, as the Central Government may, from time  to time,  specify  by notification in  the  Official  Gazette". Sub-section  (2)  of Section 3 clarified that  the  duty  of excise  levied under sub-section (1) section 3 shall  be  in addition  to the duty of excise leviable on  vegetable  oils under  the Central Excises and Salt Act, 1944 or  any  other law  for  the time being in force.  Sub-section  (3)  stated that  the  duty of excise levied on section 3 (1)  shall  be payable  by the occupier of the mill in which the  vegetable oil  is  produced.   Sub-section  (.4)  provided  that   the provisions of the 55 Central  Excise Act and the Rules made thereunder  including those  relating to refunds and exemptions from duty,  "shall so  far  as  may  be, apply in  relation  to  the  levy  and collection  of  the  said duty of excise as  they  apply  in relation to the levy and collection of the duty of excise on vegetable oils under that Act".  Section 4 provided that the proceeds  ,of the duty of excise levied under section 3  (1) shall  first be credited to the Consolidated Fund of  India. Subject to appropriation made by law by the Parliament,  the Central Government could pay to the Board from time to  time such amounts from out of the said collections as it  thought

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fit  for  being  utilised for the  purposes  of  the  Board. Section  7  amended certain provisions of the  Produce  Cess Act, 1966. It  is thus clear that the cess, which is called a  duty  of excise, levied under section 3 of the cess Act was  intended to  serve the purposes of the Board Act.  The said cess  was accordingly levied and collected on and from 1983.  The Cess Act  was,  however, repealed by section 12  of  the  Cotton, Copra  and Vegetable Oils Cess (Abolition) Act, 1987  (being Act  4 of 1987), hereinafter referred to as the Repeal  Act. Chapter  IV of the Repeal Act provides for the repeal  inter alia of the Vegetable Oil Cess Act, 1983.  Section 12 is the repealing  section.  Chapter V, containing only one  section namely  section  13, is relevant for  purposes.   Chapter  V carries  the  heading "COLLECTION OF ARREARS  OF  DUTIES  OF EXCISE",.  Section 13 reads as follows:               "13.   Collection  and payment of  arrears  of               duties   of  excise-Notwithstanding   anything               contained  in  the  amendments  made  to   the               Produce  Cess  Act, 1966 (15 of 1966)  or  the               repeal of the Copra Cess Act, 1979 (4 of 1979)               or  the Vegetable Oils Cess Act, 1983  (30  of               1983)  ,  by  this Act, any  duty  of  excise,               levied under any of the said Acts  immediately               before  the commencement of this Act, but  has               not  been collected before such  commencement,               shall  be  liable to be collected  after  such               commencement in accordance with the provisions               of  the  said  Acts for being  paid  into  the               Consolidated Fund of India as if this Act  had               not been enacted," The Statement of Objects and Reasons appended to the Bill,. 56 (which  became  the Repeal Act) stated inter alia  that  the abolition  of  the said cess was with a view to  reduce  the number of cesses and multiplicity of taxes. The  petitioners do not dispute the validity of the levy  of the  said cess/duty of excise till the 28th February,  1986. Their submission is confined, as stated hereinbefore, to the period  commencing on.  March 1, 1986 and ending with  March 31,  1987.   As  noticed here in before, the  Cess  Act  was repealed  on and with effect from March 31, 1987 by  section 12  of  the  Repeal  Act.  Section  13  of  the  Repeal  Act expressly provides  notwithstanding  the  said  repeal,  the duty of excise levied under the    said   Act    immediately before the commencement of the Repeal Act,   but  which  has not been collected before such commencement, shall be liable to  be collected even after the repeal, in  accordance  with the Cess Act, as if the said Cess Act has not been repealed. In  the  face of this provision, it would  appear  that  the petitioners’  dispute as to their liability to pay the  said cess  for the period March 1, 1986 to March 31, 1987  is  of little  avail.  The petitioners, however, rely upon  certain circumstances/grounds  in support of their contention  which we may now deal with. The  petitioners are manufacturers of vegetable  oil,  which was  subject to the cess/duty of excise under section  3  of the  Cess Act.  They rely upon the  following  circumstances and ground in supports of their plea: (1)  In his Budget Speech delivered on 28.2.1986, presenting the  Budget 1986-87, the Union Minister of  Finance  stated: "the  long term Fiscal Policy recognises that cesses  levied as  excise duties contribute to the multiplicity  of  taxes. As  an endeavour to reduce the number of the cesses  it  has been decided to dispense with the cess on cotton, copra  and

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vegetable  oils.   The  Ministry of  Agriculture  will  take appropriate action in the matter.  The loss to the exchequer on  this  account  will  be  Rs.5.90  crores."  The   Budget proposals also specify the loss of revenue on account of the decision  to dispense with the cess on vegetable oils  among others.   This,  Speech made on the floor of the  Lok  Sabha speaks of a decision already taken by the Government and  is enforceable and effective from the said date. 57 (2)  In pursuance of the said decision of the Government  of India, the Directorate of Vanaspati, Vegetable Oils and Fats addressed   the  letter  dated  August  11,  1986   to   the Commissioner  (Tax  Research) Department of  Revenue,.   New Delhi  asking  him to issue instructions  to  all  concerned indicating  that  the  cess  on  vegetable  oils  has   been dispensed with and as such the cess shall not be  collected. It  was  further directed that the cess collected,  if  any, since  April  1,  1986 shall be refunded.  A  copy  of  this letter  was sent to the President, Central Organisation  for Oil Industries and Trade, Bombay. Counsel for the petitioners Shri M.L. Verma and G.L.  Sanghi urged the following contentions: (a)  The Budget Speech of the Finance Minister delivered  on the  floor  of the Lok Sabha constitutes a  enforceable  and effective decision upon which the petitioners were  entitled to  act.  The said decision was exemplified and  implemented by way of a communication from the Directorate of Vanaspati, Vegetable  Oils and Fats referred to above.  In view of  the said  communication,  the petitioners did not  pass  on  the burden  of  the said cess to their purchasers  on  and  from March 1, 1986.  It is not open to the Government to go  back upon  the  said  decision and demand  cess  for  the  period subsequent to March 1, 1986. (b)  By  virtue of sub-section (4) of section 3 of the  Cess Act, Rule 8 of the  Central Excise Rules is attracted  among other provisions of the Central    Excise  Act  and   Rules. Rule 8 empowers the Central Government to grant exemption on any  excisable  goods  from the whole or any  part  of  duty leviable on such goods.  Sub rule (1) of Rule 8 empowers the Central Government to grant exemption while Sub-rule (2) em- powers  the  Central Board of Excise and  Customs  to  grant exemption.   Inasmuch  as  section 3 (4)  of  the  Cess  Act applies  the  provisions of the Central Excise Act  and  the Rules  subject  to  the  rider  "so  far  as  may  be",  the provisions  in  Rule  8 should be read  with  the  necessary modification.  In other words, while sub-rule (1) of rule  8 must  be read as empowering the Central Government to  grant exemption, sub-rule (2) must be read as conferring a similar power upon the Central Government and/or the Directorate  of Vanaspati,  Vegetable Oils and Fats.  Unlike  sub-rule  (1), sub-rule  (2) does not require the order of exemption to  be published  in the Official Gazette nor does it require  that such 58 exemption  should  be through a  notification.   The  budget proposals  of  the Finance Minister and the  letter  of  the Directorate  of the Vanaspati and Vegetable  Oils  aforesaid are  relatable to sub-rule (2) or Rule 8 of  Central  Excise Rule read with sub-section (4) of section 3 of the Cess Act. Reading  them together it must be held that  the  Government and  the Directorate have exempted the vegetable  oils  from the levy under section (1) of section 3. We  find  it difficult to agree.  It is not brought  to  our notice  that the budget proposals contained in  the  Finance Minister’s speech were accepted by the Parliament.  The cess

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having  been imposed by a Parliamentary enactment  could  be rendered  inoperative  only by  a  Parliamentary  enactment. Such  repealing  enactment came only in the year  1987  with effect  from April 1, 1987.  Not only that.   The  repealing Act  expressly  provided  in section 13 that  the  cess  due before the date of said repeal. but not collected, shall  be collected  according  to  law  as if the  Cess  Act  is  not repealed.  This provision amounts to a positive  affirmation of the intention of the Parliament to keep the said  imposi- tion alive and effective till the date of the repeal of  the Cess Act.  In the face of the said statutory provisions,  no rights  can be founded-nor can the levy of the cess be  said to  have  been  dispensed  with by  virtue  of  the  alleged decision referred to in the Finance Minister’s speech or  on account  of the letter dated August 11, 1986.   The  Finance Minister’s speech is not law.  The Parliament may or may not accept  his  proposal.   Indeed, in this case,  it  did  not accept the said proposal immediately but only a year  later. It  is only from the date of the repeal that the  said  levy becomes inoperative. Now coming to the argument based upon Rule 8 of the  Central Excise Rules read with section 3(4) of the Cess Act, we find it  totally unacceptable.  No notification has  been  issued under rule 8 (1) by the Central Government-much less was any such  notification  published in the  Gazette.   No  special order has also been made by the Central Board of Excise  and Customs  in this behalf under rule 8 (2).  The cess  imposed under  section 3 (1) of the Cess Act, it may be  remembered, is  a  duty  or  Excise  as  stated  in  section  3  itself. Therefore,  the  Central  Board of Excise  and  Customs  was perhaps  competent  to grant exemption even in the  case  of said  cess-though  we do not wish to  express  any  definite opinion  on  this question since it was not debated  at  the Bar.   Suffice it to say that the Central Government  cannot again be brought 59 in  under  sub-rule (2) of rule 8 in the  place  of  Central Board  nor  can the Directorate of Vanaspati  and  Vegetable Oils be equated to Central Board of Excise and Customs.  The words  "so far as may be" occurring in section 3 (4) of  the Cess Act can not be stretched to that extent.  Above all  it is  extremely  doubtful  whether  the  power  of   exemption conferred  by  rule  8  can be  carried  to  the  extent  of nullifying  the very Act itself.  It would be  difficult  to agree  that  by virtue of the power of exemption,  the  very levy  created by section 3(1) can be dispensed with.   Doing so would amount to nullifying the Cess Act itself.   Nothing remains thereafter to be done under the Cess Act.  Even  the language  of rule 8 does not warrant such  extensive  power. Rule  8 contemplates merely exempting of  certain  excisable goods  from  the whole or any part of the duty  leviable  on such goods.  The principle of the decision of this Court  in Kesavananda  Bharti  Sripadagalvaru and others v.  State  of Kerala  and  another  A.I.R. 1973  S.C.  1461  applies  here perfectly.  It was held therein that the power of  amendment conferred  by Article 368 cannot extend to scrapping of  the Constitution  or  to  altering the basic  structure  of  the constitution.   Applying the principle of the  decision,  it must he held that the power of exemption cannot be  utilised for,  nor  can it extend to, the scrapping of the  very  Act itself.   To  repeat,  the  power  of  exemption  cannot  be utilised  to  dispense  with the  very  levy  created  under section 3 of the Cess Act or for that matter under section 3 of the Central Excise Act. Mr.  Sanghi submitted that the Board contemplated under  the

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Board   Act  never  did  actually  start  functioning   and, therefore,  the  levy  of  cess  is  impermissible.   It  is difficult  to  agree with this contention  either.   As  the Preamble  to  the Cess Act indicates, the levy of  the  said cess  was  not  for the purpose of the  Board  but  for  the purpose  of  the development of the  Oilseeds  Industry  and Vegetable  Oils Industry.  The Board was merely a medium  in that  effort.   It must be noticed that the cess was  to  be credited  to  the Consolidated Fund of India, out  of  which requisite  sums of money to be utilised for the  purpose  of the  Board Act.  In any event there is nothing to show  that the  Board  did  not  become  operational  except  the  bare assertion  to that effect.  A vague allegation cannot  merit any credence. In Writ Petition 963 of 1987 Mr. Sanghi raised an additional contention that the goods concerned therein cannot be called "Veg- 60 eatable Oil" within the meaning of section 3 (1) of the Cess Act  and,  therefore,  the  levy  of  the  cess  thereon  is incompetent.   We cannot, however, allow this contention  to be   raised   in  a  petition  under  Article  32   of   the Constitution.   It  is open to the petitioner to  raise  the said  contention  before the appropriate  authority  at  the appropriate stage. For  the  above  reasons the writ  petitions  fail  and  are dismissed but in the circumstances without costs. N. V. K.                          Petitons dismissed. 61