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PETITIONER: PREMIER  TYRES LTD.

       Vs.

RESPONDENT: COLLECTOR OF CENTRAL EXCISE, COCHIN

DATE OF JUDGMENT09/02/1987

BENCH: REDDY, O. CHINNAPPA (J) BENCH: REDDY, O. CHINNAPPA (J) KHALID, V. (J)

CITATION:  1987 AIR  729            1987 SCR  (2) 198  1987 SCC  (1) 697        1987 SCALE  (1)273

ACT:     Central  excise Rules, 1944: Rule  8(1)--Exemption  from excise  duty--Notification dated June 16, 1977 and July  14, 1978’Applicability of. Excise duty-- Double taxation-- Whether permissible.

HEADNOTE:     By  a  notification  dated August 1,  1974  the  Central Government  in exercise of its powers under  sub-rule(1)  of Rule  8  of the Central Excise  Rules,  exempted  automobile tyres from excise duty leviable thereon as was in excess  of fifty-five per cent ad valorem. Another notification  issued on  June 16, 1977 exempted all excisable goods from duty  to the extent of the duty already paid on the inputs. A further notification  dated July 14, 1978 exempted tyres  and  tubes from  so  much of the duty leviable thereon (read  with  any relevant  notification issued under the said  subrule(1)  of Rule  8  in force for the time being) as was  in  excess  of eightyseven and a half per cent of such duty if produced  in any  factory which commenced production for the  first  time earlier than the 1st day of April 1976, and seventy five per cent of such duty if produced in any factory which commenced production  for  the first time on or after the 1st  day  of April, 1976.     A dispute arosse in respect of the latter two  notifica- tion  as to which of them was first to be given  effect  to. The  Tribunal  accepted  the  Department’s  contention  that effect had to be given in the first instance to the  notifi- cation  dated  June 16, 1977, and then to  the  notification dated July 14, 1978.     In this appeal, it was contended for the appellant  that to give effect to the second notification and thereafter  to the  third notification would mean that the  assessee  would not  be getting full credit for the entire duty paid on  the inputs  but  only a percentage of it and that  there  would, therefore, be double taxation at least to that extent. Dismissing the appeal, the Court, 199     HELD: 1. The Tribunal was right in taking the view  that effect had to be given first to the notification dated  June 16,  1977 and then to the notification dated July 14,  1978. The words "read with any relevant notification issued  under

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the said sub-rule (1) of Rule 8 in force for the time being" super-added  by  the latter notification  show  conclusively that the earlier notification dealing with exemption to  the extent  of the duty paid on the inputs which was already  in force had first to be given effect to. [201E-G]     Assistant  Collector of Central Excise v. Madras  Rubber Factory  Limited,  Civil Appeal No. 3195  of  1979,  distin- guished.     2.  There is no general principle that there can  be  no ’double taxation’ in the levy of excise duty. The Court  may lean  in  favour of a construction which will  avoid  double taxation,  but in the instant case there does not appear  to be any lean question of construction at all. [202B-C]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No.  943  Of 1986.     From the Judgment and Order dated 4th July, 1985 of  the Appellate Tribunal in Appeal no. 244 of 1985-D. L.M. Singhvi and K.K. Bhaduri for the appellant. A Subba Rao and Ms. S. Relan for the Respondent. The Judgment of the Court was delivered by     CHINNAPPA  REDDY, J. This appeal is directed  against  a judgment  of the Customs, Excise and Gold Control  Appellate Tribunal  in  regard  to the manner and  sequence  in  which certain  notifications  under  Rule 8 Sub-rule  (1)  of  the Central  Excise Rules granting exemptions from duty have  to be  worked  out.  By a notification dated  August  1974  the Central   Government,  in  exercise  of  its  powers   under subrule(1) of Rule 8 of the Central Excise Rules exempted.               "Tyres  for motor vehicles failing under  sub-               item(1)  of Item No. 16 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 as is in excess of fifty-five               per cent Ad valorem". 200 Thereafter on June 16, 1977 another notification was  issued in the following terms:               "In  exercise of the powers conferred by  sub-               rule  (1)  of  Rule 8 of  the  Central  Excise               Rules,  1944  the  Central  Government  hereby               exempts   all  excisable  goods   (hereinafter               referred to as the "said goods") on which  the               duty of excise is leviable and in the manufac-               ture of which any goods falling under Item No.               68 of the First Schedule to the Central Excise               and  Salt Act, 1944 (1 of  1944)  (hereinafter               referred  to  as the inputs) have  been  used,               from  so much of the duty of  excise  leviable               thereon as is equivalent to the duty of excise               already  paid on the inputs. Notification  No.               205/77  dated 28.9.77, subject to  the  condi-               tions  that the manufacturer furnishes to  the               proper Officer a statement showing the quanti-               ty  of the inputs used in the  manufacture  of               every unit of the said goods.               Provided  that where the duty of excise  levi-               able on the said goods is less than the amount               of  duty  of  excise paid on  the  inputs  the               extent of exemption shall be restricted to the               duty of excise on the said goods." A Further notification was issued on July 14, 1978 and  this

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was in the following terms:               "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 and tubes excluding flaps failing  under               Item No. 16(1) and 18(3) 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 (read with any  rele-               vant  notification issued under the said  sub-               rule(1)  of rule 8 and in force for  the  time               being) as is in excess of               (a) eighty-seven and a half per cent, of  such               duty,  if produced in any factory  which  com-               menced  production of the specified goods  for               the  first  time earlier than the 1st  day  of               April 1976: and               (b)  Seventy-five  per cent of such  duty,  if               produced  in any factory which commenced  pro-               duction of the specified               201               goods  for the first time on or after the  1st               day of April, 1976,               subject to the conditions that:-     There  is no controversy regarding evaluation  According to  the assessee as well as the department effect has  first to be given to the notification dated August 1, 1974 and the duty calculated in terms of that notification. There is also no  controversy  at  this stage.  The  controversy  begining thereafter. According to the dapartment, thereafter,  effect has  to  be given first to the notification dated  June  16, 1977 and then to the notification dated July 14, 1978 where- as according to the assessee effect has to be given, in  the first instance, to the notification dated July 14, 1978  and then  to the notification dated 16, 1977.  The  Department’s contention was accepted by the Tribunal. In this appeal, Dr. L.M. Singhvi, learned counsel for the appellant argued  that on  principle the effective duty has to be first  determina- tion by applying the notification dated July 14, 1978  first and the duty paid on the inputs should be set off under  the notification dated June 16, 1977 against the duty determined as  payable after applying the notification dated  July  14, 1978. In support of his argument, the learned counsel relied upon a recent judgment of this court in Assistant  Collector of  Central Excise v, Madras Rubber Factory  limited,  Civil Appeal No. 3195 of 1979 etc. We are afraid that in the  face of the language of the notifications, it is not possible  to agree  with the submission of Dr. Singhvi. We  have  already extracted the notification dated June 16, 1977 and July  14, 1978.  The  notification dated July 14, 1978, it  is  to  be noticed,  has super-added 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 super-added 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. This was the submission of Shri A. Subba Rao, learned counsel for the department and it is difficult to see any escape from it. The case upon  which reliance  was placed by Dr. Singhvi does not appear to  have any relevance to the question at issue. There, the court was concerned with the determination of the assessable value and not  with  the  present question relating to  the  order  of priority in which the notifications granting

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202 exemption from duty had to be applied. There, what the court decided  was  that Excise Duty cannot  be  computed  without proper determination of the assessable value namely assessa- ble value exclusive of permissible deductions. That  princi- ple  cannot  come in aid of the question  involved  in  this appeal. The learned counsel also argued that to give  effect first  to  the notification dealing with  exemption  to  the extent  of  the duty paid on inputs and  thereafter  to  the notification dated July 14, 1978 would mean that the  asses- see  would  not be getting full credit for the  entire  duty paid  on the inputs but only to a percentage of it and  that there  would, therefore, be double taxation atleast to  that extent.  There is no general principle that there can be  no ’double taxation’ in the levy of Excise Duty. The court  may lean  in  favour of a construction which will  avoid  double taxation but in the present case there does not appear to be any lean question of construction at all. On the language of the  notification  dated July 14, 1978 only one  result  can follow. That is the view taken by the Tribunal in the  order under  appeal.  We agree with that view of the  matter.  The appeal is dismissed with costs. P.S.S.                                                Appeal dismissed. ?203