LexUNION OF INDIA AND ORS. versus M/S WOOD PAPERS LTD. AND ANR
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UNION OF INDIA AND ORS. v. A ) MIS. WOOD PAPERS LTD. AND ANR ~- APRIL 24, 1990 [K. JAGANNATHA SHETIY AND R.M. SAHA!, JJ.] Central Excise and Salt Act, 1944/Central Excise Rules: Section 4, B Schedule I item 17/Rule 8 and Notification No. 163 of 1965-Exemptjon to all sorts of paper by 'any factory commencing production'-Claim for exemption on capacity as it existed in 1967-Whether permissible? ~/ The Respondent Company which was established in 1942 went into production in 1944 manufacturing Straw Boards and Mill boards only uptil c -r the year 1964. In 1965 it expanded its activities by manufacturing duplex - board. In the following year it started manufacturing packing and wrapping paper on experimental basis and on commercial basis after 1967. Sometime in 1971 the Company wrote to the Assistant Collector of Central Excise ~..._,,_ .. enquiring as to whether it would be entitled to exemption from duty under Notification No. 163/1965 both in respect of production attributable to its D installed capacity as in 1%7 as well as in respect of production attributable to its expanded capacity. The Assistant Collector passed an Order holding the company was entitled to concession under column 5 of the Table of the Notification No. 163 of 1965 in respect of production attributable to its enlarged capacity namely, the third machine and rejected its claim for ex- emption on production attributable to its capacity as it existed in 1967. Dis- E , /( satisfied the company preferred appeal to the Appellate Collector who maintained the order of the Assistant Collector. The Respondent-Company thereupon moved the High Court by a writ petition under Article 226 of the Constitution of India. In allowing the Writ Petition the High Court held that on a plain literal construction it is obvious that the commencement of production must refer not to the production of F )-.. excisable goods-paper in general falling under item 17, but to production of those specified exempted categories of paper in column 2 of the aforesaid ->- notification. Hence this appeal by the Union of India. Allowing the appeal and dismissing the Writ Petition of the Company. this Court, HELD: When the question is whether a subject falls in the Noli- G fication or in the exemption clause then it being in nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is removed and the subject falls in the notification then ~ full play should be given to it and it calls for a wider and liberal cons- !ruction. [ 663D-E] H A close reading of both parts of the Notification together leaves no 659 660 SUPREME COURT REPORTS [1990] 2 S.C.R. room for doubt that it was intended to be exhaustive granting exemption to A all factories producing packing and wrapping paper whether existing or commencing production from Isl March. 1964 to the former to the extent of enlarged capacity and to latter to the full extent. [663G-H] As the Respondent Company did not fall in the first clause of the notification there was no question of giving the clause a liberal construction B and hold that production of goods by the Respondent mentioned in the Notification were entitled to the benefit. Production of packing and wrapping paper by Respondent was entitled to exemption only to the extent it was attributable to enlarged capacity and not to the existing capacity. [665F; 664F] C Hansraj Goverdhan v. H.H. Dave, Asst/. Collector, Central Excise& Customs, Surat and Others, [1969] 2 S.C.R. 252; Commissioner of /name-tax v. Madho Prasad, [1989] 4S.C.C. 541; Tata Oil Mills Co. Ltd. v. Collector of Central Excise, A.I.R. 1989 SC 644 referred to. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 539 D of 1'!76. E From the Judgment and Order dated 26.8.1975 of the Gujarat High Court in Spl. Civil Application No. 1627 of 1972. Soli J. Sorabjee, Attorney General, A. Subba Rao, C.V.S. Rao, P. Parmeswaran and Ms. Nisha Bache for the Appellants. S.K. Dhingra for the Respondents. The Judgment of the Court was delivered by R.M. SAHA!. J. By this appeal Union Government has chal- lenged correctness of construction by High Court of Gujarat of notifi- cation No. 163 of 1965 issued under Rule 8 framed under Central F Excise and Salt Act allowing exemption to all sorts of papers by "any factory commencing production" to refer "not to the production of excisable goods-paper in general fal
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