UNION OF INDIA & ORS. versus M/S MODI RUBBER LIMITED

Citation: [1986] 3 S.C.R. 587 · Decided: 18-08-1986 · Supreme Court of India · Bench: P.N. BHAGWATI · Disposal: Disposed off

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

UNION OF INDIA & ORS. 
v. 
MIS MODI RUBBER LIMITED 
AUGUST 18, 1986 
[P.N. BHAGWATI C.J., V. KHALID AND G.L. OZA, JJ.] 
Exemption from duty in special cases-Government issuing two 
Notifications on 1.8.74 and J.3.1981 using the expression "duty of 
excise"-Whether the said expression is limited to basic "duty of excise" 
r· 
levied under the Central Excise and Salt Act, 1944 or it covers also 
"special duty of excise" levied under various Finance Acts, additional 
duty levied under the Additional Duty of Efccise (goods of special im, 
.portancej Act, 1957 or any other kind of auxiliary duty of excise levied 
under a Central enactment. 
The manufacture of tyres is subject .to duty of excise under tbe 
Central Excise and Salt Tax Act, 1944. Section 3(1) of this Act provides 
that there shall be levied and collected in such manner as may be pre-
scribed by Rules made under tbe Act duties of excise on all excisable 
A 
B 
c 
D 
goods other than salt which are produced and manufactured in India. 
E 
The word duty for the purposes of these Rules is defined in clause (v) of 
Rule 2 to mean "the duty payable under section 3 of the Act." Section 
8(1) authorises the C~htral Government to exempt from duty in special 
cases by Notfficatlotis made thereunder. As such the exemption which 
the Central Government can grant by issuing Notification under sub-
rule (1) of Rule 8 of the Act can only be from the whole or any part of 
F 
~ the duty of excise payable under section 3 of the Act. 
Since 1963 special duty of excise was levied inter a/ia on manu-
facture of tyres from year to year up to 1971 by various Finance Acts 
passed from time to time. The levy of special duty of excise was discon-
_tinued from 1972 until 1978 when it was again revised by the Finance 
G 
Act, 1978. Thereafter, it continued to be levied from year to year. 
By virtue of the powers vested in it, the Central Government 
issued the Notification No. 123/74/C-E dated August 1, 1974. The asses-
see which manufactured "tyres" and who is_ eligible to exemption under 
the said Notification, submitted, prior to 9.1t.1979, classification list in 
H 
587 
A 
B 
c 
D 
E 
r 
H 
588 
SUPREME COURT REPORTS 
[ 19861 3 S.C. R. 
terms of Rule 1738 of the Central Excise Rules, 1944 and paid excise 
duty ou the basis .that the Notification dated August 1, 1974 granted 
partial exemption only in respect of basic excise duty levied under the 
Act and did not claim any such exemption in respect of special duty of 
excise. However, on 9.11.1979 the assessee, while submitting its classifi-
cation list contended that by reason of the Notification dated 1.8.74 the 
assessee was exempted from payment not only in respect of basic excise 
duty levied under the Act but also in respect of special duty of excise 
levied under the rele.vant Finance Acts because the language used in the 
Notification was not restrictive and it referred generally "to duty of 
excise" without any qualification and 'it, therefore, coVered all duties of 
excise whether levied under the Central Excise and Salt Act, 1944 or 
under any other Central enactment. The Assistant Collector of Central 
Excise rejected the claim and the assessee being aggrieved filed a writ 
petition before the Delhi High Court. The Central Government issued 
under Notification No. 27/81/C-E dated 1.3.81, during the pendency of 
the writ petition, resulting in the amendment of the writ petition so as to 
bring the question of interpretation of the second Notification as well. 
The Delhi High Court upheld the contention of the assessee. 
Meanwhile Parliament also enacted the Central Excise Laws (Amend-
ment and Validation) Act 1982 laying down statutory rules which 
should guide the court in interpreting Notifications granting exemption 
from payment of duty of excise etc. Hence the writ petition by the 
assessee challenging the constitutional validity of the 1982 Amendment 
and Validation Act and the appeal by Revenue after obtaining special 
leave. 
Allowing the appeal and dismissing the writ petitions, the Court, 
HELD: 1. The Central Excise Laws (Amendment and Valida-
tion) Act, 1982 is merely declaratory of the existing law and hence its 
constitutional validity cannot be assailed. [6iJIB-CI 
2. Under the Notifications dated 8th November, 1967, Isl August, 
· 1974 and 1st March, 1981 the assessee is entitled to exemption only in 
· respect of the basic duty of excise leviable under the Central Excise and 
Salt Act, 1944 and are not en

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