ALUMINIUM CORPORATION OF INDIA LTD. versus UNION OF INDIA & ORS.

Citation: [1976] 1 S.C.R. 400 · Decided: 22-08-1975 · Supreme Court of India · Bench: HANS RAJ KHANNA · Disposal: Appeal(s) allowed

Judgment (excerpt)

400 
ALUMINIUM CORPORATION OF INDIA LTD. 
v. 
UNION OF INDIA & ORS. 
August 22, 1975 
[H. R. KHANNA, V. R. KRISHNA IYER, A. C. GUPTA AND 
S. MURTAZA FAZAL ALI, JJ.] 
Central Excise Rules, 1944-R11Ie 8 ( J )-Finance Act, 1960..-Excise duty 
on Ahuniniurn-lten1 27-Notification of Go\'f, of India dated lst March, 1960-
Exeniption for use of exciS,e paid aftuniniun1. 
The appellant manufactures aluminium plates, sheets, circles, strips 
and 
foils which are the end products of its compos'.,te factory, but, as intermediate 
products, it also turns out ingots, bars, slabs, biKets, pellets and the like which 
;get consumed tnostly in the process of manufacture of plates, sheets, and other 
.end P.TOducts. 
Aluminium is first converted into items like ingots. bars, slabs, 
etc., but when they are used up for finished products like plates and sheets, nearly 
lhalf of the stuff is thrown back into scrap in which state it is remelted and 
starts its manufacturing journey over again. 
Under the Finance Act for the 
year 1960, Excise Duty was imposed on the aluminium. On the manufacturin).': 
<0f the alum!nium, plates, sheets, circles, strips and foils in any form or size, 
:the duty leviable ·was rupees five hundred per metric tonne. 
A note appended 
to Item 27 reads as under : 
"Under the Government of India, Ministry 
of Finance, (Department 
of 
Revenue) Notification No. 29/60 Central Excises, dated the 1st March 1960, 
the following aluminium manufactures, namely plates, sheets, circles, strips and 
foils in any form is used, are exempt from so much of the duty leviable thereon 
:as is in excess of Rs. 200.00 per metric tonne." 
The appellant manufactured certain plates, sheets etc. by using partly duty 
A 
B 
c 
D 
paid aluminium and partly aluminiu.m on which no duty was paid. The autho-
E 
rities under the Act disallowed exempt'.on under note to Item 27 on the ground 
-that the plates, sheets, etc., \Vere not manufactured exclusively out of the duty 
paid aluminium. 
Allowing the appeal, 
HELD : ( 1) The whole scheme of the exemption is that where ingots, bars, 
blocks, slabs, billets, pellets etc. ma<le out of aluminium scrap or scrap obtained 
from the virgin metal on v.·h~ch excise duty v.1as already paid, are used fur n1ak-
F 
ing finished items like sheets, reduction pro tanto in the rate of duty Jeviable 
·on the final prcduct is to be given. 
[403BC] 
(2) The marginal mystique in :nterpretation has arisen from misunderstand-
ing the spirit letters of the notification. 
[405-D] 
(3) We feel confident that the State will seriously consider: (a) that good 
;government involves not only diligent collection of taxes, but· also ready refunds 
of exc~ss levies; (b) that simol:city or easy comprehensibility in drafting legisla-
tion, including rules and notifications affecting the laity, is an art found absent, 
although not difficult to accom'.llish, given a fresh approach to use of statutory 
"language; and (c) that a fair construct.ion-no.t always one. adverse 
to 
the 
assessee-is permissible and proper on the part of government and the taxing 
·officers when enforcing fiscal legislation. 
{401DE] 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 677 of 1968 
G 
Appeal by special leave from the judgment and order dated the 21st 
H 
Angust, 1967 of the Govt. 
of India, Central Excise in No. 1036 of 
1967. 
... 
• 
A 
• 
B 
c 
0 
E 
F 
• 
G 
H 
ALUMINIUM CORP, v. UNION (Krishna Iyer, J.) 
40 I 
A•. K. Sen, Anjana Sen and Rameshwar N_ath, for th·~ appellant. 
G. L. Sanghi and S. P. Nayar, for the respondents. 
The Judgment of the Court was delivered by 
KRISHNA !YER, J.-The fate of this appeal, by special leave, turns 
on the construction of a notification issued by the Government of India 
dated April 20, 1960 under r. 8 ( 1) of the Central Excise Rules, 1944 
whereby a qualifie(f exemption was accorded to certain types of alu-
minium manufactures in the matter of excise duty. The ultimate statue 
tory revision to the Central Government having been decided against the 
appellant company, it has challenged the correctness of the ¥iew based 
on which the revision petition was dismissed. 
The facts, fortunately, are few and beyond controversy although 
the length of the litigation has been considerable and beyond necessity, 
this being the second time the appellant has had to come to this Court 
aggrieved by the revisory authority's refusal to grant refund of over-
Ievied excise duty, as claimed by it. 
Had there been dispu

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