UNION OF INDIA & ANR. versus M/S. PARAMESWARAN MATCH WORKS ETC.

Citation: [1975] 2 S.C.R. 573 · Decided: 04-11-1974 · Supreme Court of India · Bench: A.N. RAY · Disposal: Disposed off

Cited by 11 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

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573 
UNION OF INDIA & ANR. 
v. 
MIS. PARAMESWARAN MATCH WORKS ETC. 
November 4, 1974 
[A. N. RAY, C.J., K. K. MATHEW, N. L, UN'rWALIA JJ.] 
Central Excise and Salt Act 1944-.S'. 3-Concessional rate of duty on 
matches !(ranted to smaller Units-Whether discriminatory. 
For the purpose of levy of excise duty match faetories were classified 
by th,e Governme!lt on the basis of their production i!uring a financial rear, 
the higher rate be1.ng levied on ml!tches produced in factories having a higher 
output. In 1967, ID place of classification on the basis of prod uctioo, a higher 
rate for matches produced on mechanised units and a lower rate on matches 
produce.d on non-mech~nised 11nits was ad.opted. In the case of cottage units 
and umts on co-operaUve basis a concess1onal rate of duty was levied. The 
notification of July 21, 1967 contained a proviso to the effect that if a manu· 
facturer was to give a declaration that the total clearance of matches from 
a factory would not exceed 75 million during a financial year he would~be 
entitled to a concessional rate of dutr.. This notification enabled the manu· 
facturers with higher capacity to avail of the concessional rate of duty 
by 
filing 
a declaration as vtsualilied 
in the 
proviso to 
the notification 
by restrictin~ their 
clearance · to 
75 
million 
matches. To 
avoid 
such a cont1Dgency the notification dated 21st 
July, 
1967 
was amended 
on September 4, 1967 with a' view to give bona fide small manufacturers, whose 
total cl ea ran~ was not estimated to be in excess of 7 5 million matches, the 
·concessional. rate of duty prescribed under the notification dated July 21, 1967. 
The respondent aPPlied for a Jicence for manufacturing matches on September 
5, 1967 and filed a declaration that the estimated manufacture for the finan· 
cial year would not exceed 7 5 million matches, but this was rejected. In 
1lts Writ Petition before the High COurt it was contended that it had been 
denied the benefit of the concessional rate of duty on the ground that it ap· 
plied for a licence and filed the declaration only a day after the dare mentioned 
ID clause (b} of the notification and that that was discrimoatory. 
The High 
Court held that the classiffcalioo was unreasonable inasmuch as the fixation 
of the date for making a declaration had no nexus with the object of the Act. 
Allowing the appeals. 
HELD : (1) The reasonin11 of the High Court is not correct. The purpose 
behind the proviso is to enable only bona fide small manufacturers of matches 
to earn a concession~l rate of <'11ty by filing the declaration. The small manu· 
facturers whose estimated clearnn,:c in a year was less than 75 million matches, 
would have availed themselves of the. opportl!nitv by making th~ declaration 
as early as possible as they would becon:ie entitled to the concessional . rate. of 
duty on their clearance from time to ttme. The purpose of tl1e notification 
was to p~vent larger units who were producing and 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 the concessional rate of duty 
by making the declaration subsequently. [577FG; 578BC] 
(2) In the matter of granting concession or exemption {~om tax the Gov-
ernment has a wide latitude of discretion, It need not give exemption or conces~ 
sion to everyone In order that It may grant the same to some. That a class!· 
fication can be founded on a porUcular date and yet be reasonable, has been 
held In several decisions. [578G·H) 
· 
M/1 Hatlilsln11h Mfg. Co. Ltd •. v •. Union of lndla [1960] 3 SCR. 528, at 
543: Dr. Mohammad Saheli Mahboon Medico v. The Deputy Custodian General 
[1962) 2 SCR 371, at 379: Ml1. Bhlku.re Yamasa Ksl1atrlya (P) Ltd. v. Union 
of India [1964) 1 SCR 860, at 880; Daruka d Co. v. Union of lnd/a AIR 
1973 SC. 2711 referred to. 
574 
SUPREME COURT REPORTS 
[1975] 2 s.c.R. 
(3) The choice of a date as a basis for classification cannot always be 
A 
dubbed as arbitrary even if no particular reason is forthcoming for the choice 
unless it is shown to be capricicius or whimsical in the circumstances, [579B] 
Louis1•iUe Gas Co. v. Alabama Power Co. 240 U.S. 30 at 32 ( 1927) 
per 
Justke Holmes, referred to. 
Ar)luments for 
~he Appelkmts : 
The impugned notification dated 4th September, 1967 does not violate arti, 
B 
cle 14 of the Constitution. All applications for licences and declaratio

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