LexUNION OF INDIA & ORS. versus MIS. N.S. RATHNAM & SONS
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(2015] 8 S.C.R. 751 UNION OF INDIA & ORS. v. MIS. N.S. RATHNAM & SONS (Civil Appeal No.1795 of 2005) JULY29, 2015 [A.K. ~IKRI AND N.V. RAMANA, JJ.] A B · Central Excise rules, 1944 - Exemption Notification under~ Validity of - Notifications Nos. 102187-CE and 1031 87-CEdated 27.03. 1987 ~Exemption from excise duty under C - In respect of iron and steel scrap obtained by breaking the ship subject to certain condition - Vide Notification Nos. 1021 87-CE customs duty levied at the rate of Rs.1,0351-perLDT along with additional duty leviable thereon, the excise duty 0 payable at the rate of Rs.3651- per tonne, exempting' the remainder as specified in the Schedule - Vide Notification No.103/87cCE, customs duty paid at the rate of Rs.14001- per LDT, scrap obtained exempted from the entire excise duty - Whether the two categories are identical or there is a E reasonable classification based on intelligible differentia - Held: When the goods are same, they fall under the same Heading and the custom duty is leviable as per the Act which has been paid - Notification giving exemption only to those persons who paid a particular amount of duty-Rs. 1, 4001- per F LDT, would not mean that such persons belong to a different category and would be entitled to exemption and not other persons like the assessee who paid the duty on the same goods but on the formula whereby rate of duty comes to Rs.1,0351- per LDT - Order by the High Court quashing the G Notification to be violative of Art. 14 modified to the extent that assessee would also be entitled to the benefit of exemption Notification subject to the condition that duty 751 H 752 SUPREME COURT REPORTS [2015] 8 S.C.R. A already paid by it on LDT, would be taken into account and only the balance out of it would be subject to excise duty - Constitution of/ndia, 1950-Art. 14 - Customs Tariff Act- s. 3. B Disposi.ng of the appeal, the Court HELD: 1.1 When the exemption is granted to a particular class of persons, then the benefit thereof is to be extended to all similarly situated person. The Notification has to apply to the entire class and the C Government cannot create sub-classification thereby excluding one sub-category, even when both the sub- categories are of same genus. If that is done, it would be considered as violating the equality clause enshrined in Article 14 of the Constitution. Therefore, judicial review D ofs1,1ch Notifications is permissible.in order to undertake the scrutiny as to whether the Notification results in invidious discrimination between two persons though they belong to the same class. The justiciability of particular Notification can be tested on the touchstone E of Article 14 of the Constitution. The person challenging the act of the State as violative of Article 14 has to show that there is no reasonable basis for the differentiation between the two classes created by the State. Article 14 F prohibits class legislation and not reasonable classification. If the government fails to support its action of classification on the touchstone of the principle whether the classification is reasonable having an intelligible differentia and a rational basis germane to the G purpose, the classification has to be held as arbitrary and discriminatory. [Para 15, 16] [766-D-F; 767-H; 768-A, E, G-H] 1.2 ·The two Notifications both dated 27 .03.1987 H pertain to same goods namely those falling under Heading 72'.15 and 73.09 of the second Schedule to the UNION OF INDIA& ORS. v. N.S. RATHNAM & SONS 753 Act. Customs duty is leviable ori these goods u.nder A Section 3 of the Customs Tariff Act. The said duty can be paid under any of the two methods. When two methods are permissible under the statutory scheme itself, obviously option is that of the assessee to choose in all those methods to pay the custom duty. Duty, thus, B ·paid is to be naturally treated as validly paid. Merely because with the adoption of one particular method the duty that becomes payable is lesser would not mean that two such persons belong to different categories. When the goods are same; they fall under the same Heading C and the custom duty is leviable as per the Act which has been paid. Therefore, the impugned Notification giving exemption only to those persons who paid a particular amount of duty, namely Rs.1,400/- per LDT, would not 0 mean that such persons belong to a different category and would be entitled
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