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PETITIONER: SUPERINTENDENT, CENTRAL EXCISE & ANR.

       Vs.

RESPONDENT: AYYANGAR MATCH WORKS ETC.

DATE OF JUDGMENT04/12/1975

BENCH: RAY, A.N. (CJ) BENCH: RAY, A.N. (CJ) BEG, M. HAMEEDULLAH SARKARIA, RANJIT SINGH BHAGWATI, P.N.

CITATION:  1976 AIR 1003            1976 SCR  (2) 888  1976 SCC  (1) 716

ACT:      Central Excise Salt Act, 1944-S. 3-Notification dated 4 September 1967  giving concessional  rate of  duty to  small manufacturers  of   matches-Khadi  and   Village  Industries Commission-If  competent  to  grant  certificate  under  the notification.

HEADNOTE:      For the purpose of protecting the smaller manufacturers from the  cometition of larger manufacturers, the Government of India,  by a  notification dated 21 July 1967, amended by notification   dated   4   September,   1967,   declared   a concessional rate  of duty  to those  manufacturers who  had filed a  declaration before  4  September  1967  that  their estimated annual  clearance would  be less  than 75  million match sticks.  This Court  in Union of India v. Parameswaran Match Works  etc. [1975]  2 S.C.R.  573  setting  aside  the judgment of  the High  Court holding that classification was invalid, held  the classification  founded on  a  particular date to  be reasonable;  and the  concessional rate would be availed of even by those manufacturers who came to the field after 4  September, 1967  if they satisfied the condition in clause (d) of the notification regarding quantity of matches and are  recommended by  the Khadi  and  Village  Industries Commission for exemption.      The respondent  filed declarations on 22 December, 1967 that they  would not  produce more  than  75  million  match sticks during the year 1969-70 and claimed to be entitled to the concessional rate of excise duty.      In appeal  to this  Court  the  respondents  sought  to support the  judgment of  the High  Court on the grounds (i) that they  were entitled  to the  exemption on  the basis of clause (d)  of the notification; and (ii) that the Khadi and Village Industries  Commission was not competent to make any recommendation.      Allowing the appeal, ^      HELD: (1)  The appeals  are covered  by the decision of this Court  in Parameswaran  Match Works case and no case is made out  by the respondents on the basis of exemption under

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cl. (d)  of the  notification. There is no allegation in the petition that  the respondents  came into  the field after 4 September  1967  or  that  they  started  manufacturing  the matches  after   4  September,   1967  or   that  they  were recommended by  the Khadi and Villages Industries Commission mission. [871 D & B]      (2) Under  s. 15(h) of the Khadi and Village Industries Commission  Act  1956  the  Commission  may  take  steps  in ensuring the  genuineness of,  and for granting certificates to producers of, or dealers in, Khadi or the products of any village industry.  Therefore, the Commission is competent to recommend for  exemptions under cl. (d) of the Notification. [871. F-G]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeals Nos. 133- 188 of 1975.      [Appeals by Special Leave from the Judgments and Orders dated the  (1) 29-4-1970,  (2) 28-7-1970, (3) 12-3-1970, (4) 28-7-1970, (5) 7-9-1970, (6) 7-4-1970 & (7) 12-3-1970 of the Madras High  Court at Madras in (1) W.P. Nos. 2929, 3253 and 68, 123 and 260 of 1970, (2) W.P. Nos. 1606 and 1607/70, (3) W.P. Nos. 1998, 2484, 2567, 2568, 2569, 2663-65, 3046, 3125, 3126, 3182,  3363 65, 3410, 3508, 3555-60, 3630, 3631, 3667- 3668, 3810-3812 and 869 3650 of  1969, (4)  W.P. Nos.  2647, 2648/69 and 1121, 1451, 1452 and  1495 and  1496 of  1970, (5) W.P. Nos. 1912, 1913, 1919, 2123, 2318, 2516 and 2610 of 1970, (6) W.P. Nos. 2088, 2317 and 2515/70 and (7) W.P. No. 3666 of 1969 respectively.      Niren De, Attorney General of India and R. N. Sachthey, for the Appellants.      M. R.  M. Abdul  Karim  and  Shaukat  Hussain  for  the Respondents (In  Cas. Nos. 137, 140, 149, 152-155, 164, 169, 178, 179, 181, 182, 183 and 187/75.)      Mrs. S.  Gopalakrishnan for  the Respondents (In CA No. 177 of 1975).      The Judgment of the Court was delivered by      RAY, C.J. These appeals arise out of the judgment dated 11th December, 1968 in writ petition No. 3838 of 1968 in the High Court at Madras.      In the  present appeals  the writ petitions in the High Court were  allowed following the judgment of the High Court in the aforesaid writ petition No. 3838 of 1968.      In Civil Appeals No. 262-273 of 1971 arising out of the common judgment dated 11 December, 1968 of the High Court at Madras in  writ petition  No. 3838 of 1968 this Court in the decision in  Union of India & Anr. v. M/s Parameswaran Match Works etc.  set aside  the orders  of  the  High  Court  and dismissed the writ petitions.      The present appeals were not heard at that time because service was not complete.      This Court  by order  dated 14 July, 1975 directed that these appeals  be listed  for hearing  on 21 November, 1975. The Union  made an application for consolidation of appeals, reduction of  security and early hearing of the appeals. The respondents were  served in  that application.  Pursuant  to that application  this Court  ordered on  14 July,  1975 the hearing of the appeals on 21 November, 1975. The respondents have entered appearance in all these appeals.      In these  appeals the  respondents who were petitioners in  the   High  Court   asked  for  a  writ  of  prohibition restraining the  appellants  from  collecting  any  duty  in

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excess of  Rs.  3.75  per  gross  from  the  petitioners  in pursuance of  notification dated 21 July, 1967 as amended by notification dated 4 September, 1967.      The case  of the respondents in the High Court was that they filed declaration on 22 December, 1969 for 1969-70 that they would  not produce  more than  75 million  match sticks during the  financial year.  The respondents  claimed to  be entitled to the concessional 870 rate of  excise duty  at Rs.  3.75 per gross pursuant to the notification dated  21 July,  1967. The  further case of the respondents in  the High  Court was  that  the  notification dated  4   September,  1967  was  issued  stating  that  the concession of  Rs. 3.75 per gross would be available to such "D" Class manufacturers who had filed the declaration before 4 September,  1967. The respondents challenged the fixing of the date 4 September, 1967 as an arbitrary time limit making unreasonable discrimination  between the  same  category  of manufacture simply  on the  basis of  the application  being before or  after 4  September, 1967.  The respondents craved reference to the judgment of the High Court in writ petition No. 3838  of 1968  dated 11  December, 1968  and prayed  for orders in terms of that judgment.      The High Court accepted the petition of the respondents following the  judgment in  writ petition  No. 3838  of 1968 dated 11 December, 1968.      The appellants  challenged the  decision  of  the  High Court and  relied on  the decision  of  this  Court  in  M/s Parameswaran Match  Works case  (supra). This  Court in  M/s Parameswaran Match  Works case (supra) held that the purpose of the  notification dated  4 September,  1967 was to enable bonafide  small   manufacturers  of   matches  to   earn   a concessional rate  of duty  by filing  the declaration.  The small manufacturers  whose estimated clearance in a year was less than  75 million  matches would have availed themselves of the  opportunity by  making the  declaration as  early as possible  because   they  would   become  entitled   to  the concessional rate  of duty  on their  clearance from time to time. The  purpose of the notification was to prevent larger units who  were producing  or clearing more than 100 million matches in  a year and who could not have made a declaration from splitting  up into  smaller units  in order to avail of the concessional  rate of  duty by  making  the  declaration subsequently. The  classification founded  on  a  particular date was  held to be reasonable because the choice of a date was to  protect the  smaller  units  in  the  industry  from competition by  the larger  ones and  that object would have been frustrated  if by adopting the device of fragmentation, the larger  units could become the ultimate beneficiaries of the bounty.      Counsel for the respondents relied on an observation of this Court  in M/s  Parameswaran Match Works case (supra) at page 576  of the Report to the effect that the manufacturers who came  to the field after 4 September, 1967 were entitled to concessional rate of duty if they satisfied the condition prescribed  in  clause  (d)  of  the  notification  dated  4 September,  1967.  In  M/s  Parameswaran  Match  Works  case (supra) the  match works asked for a licence on 5 September, 1967 for  manufacturing matches  stating that  it began  the industry from  5 March,  1967 and  also filed  a declaration that the  estimated manufacture for the financial year 1967- 68 would  not exceed  75 million matches. Parameswaran Match Works contended  there that it was denied the benefit of the concessional rate  of duty on the ground that it applied for a licence  and filed  the declaration  on 5  September, 1967

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after the expiry of the fixed date. This Court held that the 871 concessional rate would be availed by them who satisfied the condition laid down in the notification.      The case  of the  respondents as  laid in  the petition before the  High Court  was that they were claiming an order in terms  of the judgment in writ petition No. 3838 of 1968. There is  no allegation in the petition that the respondents came to  the field  after 4  September, 1967  or  that  they started manufacturing  matches after  4 September, 1967. The notification dated  4 September,  1967  gave  relief,  inter alia, to  factories  mentioned  in  sub-clause  (d)  of  the notification. The  factories mentioned in sub-clause (d) are those "whose  production during  any financial year does not exceed or is not estimated to exceed 100 million matches and are  recommended   by  the   Khadi  and  Village  Industries Commission  for  exemption  under  this  notification  as  a bonafide cottage  unit or  which is  set up by a cooperative society registered  under any  law relating  to  cooperative societies for  the  time  being  in  force".  There  are  no allegations in  the petitions  in the  High Court  that  the respondents  were  recommended  by  the  Khadi  and  Village Industries Commission  for  exemption  as  bonafide  cottage units or were set up by cooperative society registered under any law  relating to cooperative societies. No case was made by  the  respondents  in  the  petitions  on  the  basis  of exemption under sub-clause (d).      A contention  was advanced  by the respondents that the Khadi and Village Industries Commission was not competent to make any  recommendation as contemplated in sub-clause (d) . Section 15  of the  Khadi and  Village Industries Commission Act, 1956  which speaks  of the  functions of the Commission states in  clauses (c),  (d), (f),  (g)  and  (h)  that  the Commission may  take steps  to  provide  for  the  sale  and marketing of  khadi or of products of village industries, to encourage and promote research in the development of village industries.  to   undertake,   assist   or   encourage   the development of  village industries, to promote and encourage cooperative efforts among manufacturers of khadi and persons engaged in  village industries.  Section 15(h)  specifically states that  the Commission  may take steps for ensuring the genuineness of,  and for  granting certificates to producers of, or  dealers in,  khadi or  the products  of any  village industry. These  provisions  indicate  that  the  Khadi  and Village  Industries   Commission  is   competent  to   grant certificates recommending  village industries  for exemption under clause  (d) of  the notification  dated  4  September, 1967.      The appeals  are all  covered by  the decision  in  M/s Parameswaran Match  Works  case  (supra).  The  appeals  are accepted. The orders of the High Court are set aside and the petitions are  dismissed. There  will be one set of costs to the appellants. P.B.R.                                      Appeals allowed. 872