http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4  

PETITIONER: ASSOCIATED CEMENT CO. LTD.

       Vs.

RESPONDENT: DIRECTOR OF INSPECTION, CUSTOMS  CENTRAL, EXCISE, NEW DELHI.

DATE OF JUDGMENT29/03/1985

BENCH: TULZAPURKAR, V.D. BENCH: TULZAPURKAR, V.D. ERADI, V. BALAKRISHNA (J) MISRA, R.B. (J)

CITATION:  1985 AIR  867            1985 SCR  (3) 575  1985 SCC  (2) 719        1985 SCALE  (1)672  CITATOR INFO :  D          1989 SC 516  (45,46)

ACT:      Income  Tax   Act  1961   Section  280ZD   Tax   Credit Certificate (Excise  Duty on Excess Clearance) Scheme 1985 & Finance Act 1965, Section 80      Manufacturer of  cement-Whether entitled  to Tax Credit Certificate in  respect of  special Excise duty levied under Finance Act 1965,      Words & Phrases:      Duty of  excise-Meaning of-Section 280ZD (6) (b) Income Tax Act 1961. .

HEADNOTE:      The Tax  Credit  Certificate  (Excise  Duty  on  Excess Clearance) Scheme  1965 was framed by the Central Government under s.  280ZD of  the Income  Tax Act  1961. It  was  made applicable to  the Cement  Industry in  1985. For  the  year 1965-66, the excise duty for Cement levied under the Central Excise and Salt Act 1944 was Rs. 23.60 per ton, but under s. 80 of the Finance Act 1965 a special duty of excise equal to 25% of  the total  amount of  excise  chargeable  under  the Excise Act on various articles including cement was levied.      The appellant company on the excess Clearance of cement made during  the concerned  year 1965-66  over and above the quantity cleared  in the  base year (financial year 1964-65) applied for  the grant  of tax  credit  certificate  to  the concerned authority. The authority however, granted tho, Tax Credit Certificate  only in  respect of  the Central  Excise Duty levied  under the  Excise Act, taking the view that the appellant was not entitled to have any tax credit in respect of any other excise duty levied under a different enactment, namely, s. 80 of the Finance Act. 576      The appellant  company challenged  in the  High  Court. .Theafore said  view, but it was rejected on the ground that tax credit  would not  be available to The appellant-company in respect  of the, special excise duty levied under s.80 of the   linance Act, 1965 having regard to the special meaning assigned to the expression ’duty of excise’ by clause (b) of sub-section (6) of section 280ZD

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4  

    Dismissing the  appeals and  Special leave Petitions to this Court. ^      HELD: 1.  Under s.  280ZD (I)  a  manufacturer  of  the concerned goods  is entitled  to be  granted  a  tax  credit certificate  for  an  amount  calculated  at  the  rate  not exceeding 25%  of "the  amount of  duty of excise payable by him" on  that quantum of the goods cleared by him during the relevant financial  year which  exceeds the quantum of goods cleared by  him during  the base year and clause (b) of sub- sect on (6) of section 280ZD defines the expression ’duty of excise’ for the purpose in a special manner, as "the duty of excise leviable under the Central Excise and Salt Act ]944". [578C-E]      2. Sub  clause (3)  & (4)  of s. 80 of the Finance Act, 1965  refer   to  the   procedural  aspect   such   as   the quantification and  collection of  duty. Simply  because the quantification and  collection of  special  duty  under  the Finance Act  is to be done in the manner indicatcd under the Excise Act,  such duty  does not  become  leviable  that  is chargeable under the Excise Act. [578G-H]      Seshasayee Paper  & Boards  Ltd. v.  Deputy Director of Inspection, Customs  and Central Excise New Delhi. and Anr,. 114 ITR 616, over-ruled.

JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1201-03 Of 1972      From the  Judgment and  Order dt. 30.4.1971 of the High Court of Delhi in Civil Writ No. 12)7/67, 455/68 & 16/70.                             WITH      Special Leave  Petitions (Civil)  NOS. 2820-23 of 1977. From the  Judgment and order dt. 18.1.1977 of the High Court of Delhi in Letters Patent Appeals Nos. 3 to 6 of 1977.      Anil  Devan,   A.N.  Haksar  and  D.N.  Misra  for  the Appellant in C.A. Nos. 1201-03172.      B.P. Maheshwari  for the Petitioners in SLPs Nos. 2820- 23 of 1977.          Abdul Khader, T.V.N. Chari and  R.N. Poddar for tbe Respondents in C.A. Nos. 1201-03/72.      The Order of the Court was delivered by        TULZAPURKAR, J. Two contentions under a Scheme called "Tax Credit  Certificate (Excise  Duty on  Excess Clearance) Scheme, 577 1965" framed  by the  Central Government  under s. 280 ZD of the Income  Tax Act,  1961, which were negatived by the High Court, have  again been  pressed by  the  appellant  company before us in these appeals but after hearing counsel for the appellant company at some length and after going through the relevant provision  of the  said Scheme, relevant section of the Income  Tax Act,  1961 and s. 80 of the Finance Act 1965 we are  satisfied that  the High Court was right in the view which it  took on  both  the  contentions  and  the  appeals deserve to be dismissed.      With a  view to  encourage  investment  in  new  equity shares and  to stimulate industrial output the Government of India introduced certain special provisions in Chapter XXII- B of  the Income  Tax Act,  1961 for the grant of tax credit certificate and  s. 230ZD  is one  of such  Provisions which provides for  the grant  of tax credit certificate by way of incentive for  increased production  of goods  and the  "Tax Credit Certificate  (Excise Duty on Excess Clearance) Scheme

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4  

1965" was  framed  by  the  Central  Government  under  this section and it was made applicable to the cement industry in 1965. Under  the Scheme  the amount of tax credit to which a manufacturer of  cement is  entitled is calculated at a rate not exceeding  25% of  the amount  of  the  duty  of  excise payable by  him on  the quantity of excess production during the financial year as compared to the production in the base year and  the financial  year 1964-65 is defined as the base year in  relation to an existing undertaking. For the year 1 965-66 being  the concerned  year in  the instant  case  the excise duty  for cement levied under the Central Excises and Salt Act,  1944 (for short the Excise Act) was Rs. 23.60 per ton but  under s.  80 of the Finance Act 1965 a special duty of excise  equal to  25%  of  the  total  amount  of  excise chargeable  under   the  Excise   Act  on  various  articles including cement  was levied.  On the  excess  clearance  of cement made  during the  concerned year  over and  above the quantity cleared  in the  base year  the  appellant  Company applied for  the grant  of tax  credit  certificate  to  the concerned  authority   under  the   Scheme  for   an  amount calculated at  the rate of 25,’ of the entire amount of duty of excise  paid by  it, that  is to  say, 25%  of the  basic excise duty levied under the Excise Act at Rs. 23.60 per ton plus the  amount of  special excise duty paid by it under s. 80 of  the Finance  Act. The concerned authority granted tax credit certificate  only in  respect of  the Central  Excise Duty levied  under the  Excise Act, taking the view that the appellant was not entitled to have any tax credit in respect of any other excise duty levied under a different enactment, namely, s. 80 of the 578 Finance Act.  The appellant challenged before the High Court the aforesaid  view of  the authorities  but the  High Court negatived the  challenge principally  on the ground that tax credit would  not be  available to  the appellant company in respect of the special excise duty levied under s. 80 of the Finance Act having regard to the special meaning assigned to the expression ’duty of  excise’ by clause (b) of sub-s(6) of s. 280ZD.      It is  clear that  under s. 280ZD (1) a manufacturer of the concerned  goods is  entitled to be granted a tax credit certificate  for  an  amount  calculated  at  the  rate  not exceeding 25%  of "the  amount of  duty of excise payable by him" on  that quantum of the goods cleared by him during the relevant financial  year which  exceeds the quantum of goods cleared by him during the base year and clause (b) of sub-s. (6) of  s. 280ZD defines the expression ’duty of excise’ for the purpose  of the  aforesaid provision in a special manner and clause  (b) says  ’duty of  excise’ means  the  duty  of excise leviable  under the  Central excises  and  Salt  Act, 1944". Obviously  the special  excise duty  which was levied under s.  80 of  the Finance Act 1965 can not be regarded as having been  levied under  the Excise  Act. Counsel  for the appellant company,  however, urged  before  us  that  having regard to  the provisions of sub-clause (3) and (4) of s. 80 of  the   Finance  Act  the  special  excise  duty  leviable thereunder should  be regarded  as duty  of excise  leviable under the  Excise Act.  lt is  not possible  to accept  this contention. It  is true that the expression ’leviable’ is an expression  of   wide  import   and   includes   stages   of qualification and recovery of the duty but in the context in which that  expression has been used in clause (b) of sub-s. (6) of  s. 280  ZD it  is clear that it has been used in the sense of  chargeability of the duty. In other words the duty of excise  in respect  whereof tax credit is available would

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

be in respect of such duty of excise as chargeable under the Excise Act  and clearly  the special  excise duty in respect whereof additional  tax credit  is sought  by the  appellant company  is   not  chargeable   under  the  Excise  Act  but chargeable under  the Finance Act. Sub- clauses (3) & (4) of s. 80  of the  Finance Act on which reliance has been placed by counsel  for the  appellant company in terms refer to the procedural aspect  such as  the qualification and collection of duty  and simply because the qualification and collection of the  special duty  under the Finance Act is to be done in accordance with  the provisions  of the Excise Act such duty does not  become leviable,  that is to say, chargeable under the Excise Act. It is, 579 therefore, not  possible to  accept the  contention  of  the counsel  that such special duty of excise leviable under the Finance Act  should also  be included  or taken into account for the propose of granting tax credit certificate under the Scheme read  with S.  280ZD of  the  Income  Tax  Act  1961. Reference was  made  by  counsel  for  the  appellant  to  a decision of  the Madras  High Court  in Seshasayee  Paper  & Boards Ltd.  v. Deputy  Director of  Inspection Customs  and Central Excise,  New Delhi  and Anr.(l) where the view taken by that  Court seems  to support  his contention  but having regard to  the special definition of the expression ’duty of excise’ given in s. 280ZD (6) (b) and the construction which we have  put on  the word  ’leviable, we  do not approve the decision of the Madras High Court.      The other contention urged by counsel for the appellant relates to the question of limitation but on this aspect the admitted facts are that the first application for tax credit certificate was  made by  the appellant on June 24, 1966 and the same had been disposed of in December 1966. Thereafter a supplementary application  was made on August 26, 1967 which was obviously  barred by  limitation as  per para 5.2 of the Scheme. Further,  even the  power to condone delay conferred on the  Central Authority under para 5.3 would not cover the appellant’s case  for under  that provision  a delay  for  a period not  exceeding  60  days  could  alone  be  condoned. Counsel,  however,  urged  that  the  delay  in  filing  the supplementary application ought to have been condoned having regard to  the trade notice that had been issued on June 29, 1967 inasmuch as the supplementary application could be said to have  been made because of the clarification issued under that trade  notice. It  is, however, clear that by the trade notice no  amendment was effected but merely a clarification of the  existing position  in law  was given and, therefore, the  trade  notice  could  not  furnish  starting  point  of limitation for the supplementary application.      In our  view both the contentions were rightly rejected by the  High Court and the appeals are dismissed but without cost.      In view  of what  is stated  above  the  special  leave petitions are also dismissed. N.V.K.                        Appeals & Petitions dismissed. (1) 114 ITR 636 580