Union of India and ors. Vs. M/S. Nandi Printers Pvt. Ltd. - Court Judgment

Excerpt:
excise - levy of duty - tariff act, 1985 - whether for purpose of levy of excise duty on manufacture of playing cards plus printed cartons respondent can be regarded as small scale industry or not - playing cards which fall under tariff item 56 of act and printed cartons which come under tariff item 68 are excisable goods even though rate of duty on each of them may be different - mere fact that rate of duty on printed cartons was nil by reason of exemption notification would not make printed cartons non-excisable goods - taking into consideration aggregate value of goods cleared respondent could not be regarded as small scale industry. - [] the government of mysore by an order defined backward classes and directed that 30 per cent of the seats in professional and technical colleges and institutions shall be reserved for them and 18 per cent to the schedule castes and scheduled tribes. it was laid down that classification of socially and educationally backward classes should be made on the basis of economic condition and occupation. by a letter the government informed the director of technical education that it had been decided that 25% of the maximum marks for the examination in optional subjects shall be fixed as interview marks. the selection will be conducted by a committee composed of heads of technical institutions aid in allotting marks for interview factors like general knowledge, personality and extracurricular activities of the candidates should be' taken into consideration. on the basis of the above criteria selections were made for admission to engineering and medical colleges. thereupon some of the candidates whose applications for admission were rejected filed writ petitions before the high court of mysore for quashing the orders issued by the government and for directing that they shall be admitted in the colleges strictly in the order of merit. the high court rejected the contentions raised on points of law but found that the selection committee has abused its power and directed that the petitioners be interviewed afresh and admissions be made in accordance with the government order and letter which were declared valid. before this court it was contended that the government letter was invalid inasmuch as it did not comply with the provisions of art. 166 of the constitution. the next contention was that the government had no power to appoint a selection committee for admitting students to colleges on the basis of higher or different qualifications than those prescribed by the university. another contention was that selection by viva voce examination was illegal by reason of the fact that it enables the interviewers to act arbitrarily and therefore it contravenes art. 44 of the constitution. lastly it was contended that unless the observation of the high court that the classification was not perfect since the government has not applied the caste test as well as the economic test is corrected it will mislead the government. held: (per b. p. sinha, c.j., subba rao, raghubar dayal and rajagopala ayyangar jj.) (i) the provisions of art. 166 of the constitution are only directory and not mandatory and, if they are not complied with, it can be established as a question of fact that the impugned order was issued in fact by the state government or the governor. in the present case the impugned order though it does not conform to the provisions of art. 166 ex facie says that an order to the effect mentioned therein was issued by the government and it is not denied by the appellants that the order was made by the government and neither it is denied that it was communicated to the selection committee. therefore it is valid. 134-159 s.c.-24 dattatraya moreshwar pangarkar v. state of bombay [1952] s.c.r. 612, state of bombay v. purushottam log naik, [1952] s.c.r. 74, ghaio mall & sons v. state of delhi, [1959] s.c.a. 1424 and bachittar singh v. state of punjab, [1962] supp. 3 s.c.r. 713, referred to. (ii) if the impact of the state law providing for standards of education on entry 66 of list i is so heavy and devastating as to wipe out or appreciably abridge the central field it may be struck down. but that is a question of fact to be ascertained in each case. if a state law prescribes higher percentage of marks for extra-curricular activities in the matter of admission to colleges it cannot be said that it would be directly encroaching on the field covered by entry 66 of list i. the government orders do not contravene the minimum qualification prescribed by the mysore university; what the government did was to appoint a selection committee and prescribe for selection of students who have the minimum qualifications prescribed by the university. since they cannot admit all the students who have secured the minimum marks prescribed by the university they had necessarily to select the applicants on some reasonable basis. the state government is therefore entitled to prescribe a machinery and also the criteria for admission of qualified students to medical and engineering colleges run by the government and with the consent of the management of the government aided colleges, to the said colleges also. gujarat university v. shri krishna, [1963] supp. 1 s.c.r. 112, distinguished. (iii) the selection by viva voce is one of the methods suggested by modern authorities on education in preference to written tests. it is no', for the court to say which method should be adopted, it should be left to the authorities concerned. the fact that one particular method is capable of abuse is not sufficient ground for quashing it as being violative of art. 14. if in a given case the selection committee abuses its powers in violation of art. 14 the selection will be held invalid and will be set aside as the high court has done in the present case. (iv) a classification of backward classes based on economic conditions and occupation is not bad and does not offend art. 15(4). the caste of a group of citizens may be a relevant circumstance in ascertaining their social backwardness and though it is a relevant factor to determine social backwardness of a class, it cannot be the sole or dominent test in that behalf. if in a given selection caste is excluded in ascertaining a class within the meaning of art. 15(4) it does not vitiate the classification if it satisfied other tests. the inference to the contrary which may be drawn from the observation of the high court in the impugned judgment will not be correct in law or a correct reading of the observations of this court in m. r. balaji v. state of mysore, [1963] supp. 1 s.c.r. 439. (v) various provisions of the constitution like arts. 15, 29, 46, 341 and 342 which recognise the factual existence of backward classes in our country and which make a sincere attempt to promote the welfare of the weaker sections thereof should be construed to effectuate that policy and not to give weightage to progressive sections of the society under the false colour of caste to which they happen to belong. under no circumstances a "class" can be equated to a "caste" though the caste of an individual or group of individuals may be a relevant factor in putting him in a particular class. if in a given situation caste is excluded in ascertaining a class within the meaning of art. 15(4) it would not violate the classification if it satisfied other tests. if an entire sub-caste by and large, is backward, it may be included in the scheduled castes by following the appropriate procedure laid down by the constitution. per mudholkar, j. (dissenting): (i) the decisions of this court dealing with art. 166 of the constitution have definitely held that where the' existence of a government order itself is challenged by a person who is affected by it the burden is upon the government to establish that an order was in fact made by the governor in the manner provided for in the rules of business framed by the governor under cl. (3) of art. 166. (ii) it is not correct to say, in this case, that the appellants have not denied the existence of the order. right from the beginning they have been saying that there was no "government order" in so far as admission to the medical college was concerned. since both the appellants were concerned only with the admission to a medical college they had no necessity to deny the existence of the government order regarding admission to an engineering college. the document which is relied on the state to establish that there was a government order is nothing but a communication from the secretary to government of mysore addressed to the selection committee and deans medical college mysore. it is thus not an order of the kind contemplated by art. 166. except a statement in that communication that the under secretary is "directed to state" that the government has taken a decision there is no evidence or averment that the governor has made an order providing for interview. in no case has this court held that such a document. can be treated as the governor's order or even evidence of the existence of the governor's order. (iii) the decision of this court in gujarat university v. shri krishna, [1963] supp. 1 s.c.r. 112, establishes that the power to provide for coordination and determination of standards in certain institutions like the medical colleges is vested in the parliament and even though parliament may not have exercised that power the state legislature cannot step in and provide for the determination and coordination of standards by requiring that marks on the basis of interviews be awarded to the applicants for admission of candidates to,-such institutions as is done in the present case. it constitutes an interference with the standards of admission laid down by the university. (iv) the executive power of the state which is co-extensive with legislative power under art. 162 of the constitution cannot be exercised where such exercise is contrary to law or where it has been assigned to other authorities or bodies. section 23 of the mysore university act, provides that the acadamic council shall have power to prescribe the conditions of admission to the university and therefore the executive cannot encroach on this power. rai sahib ram jawaya kapur v. state of punjab, [1955] 2 s.c.r. 225 and motilal v. government of state of uttar pradesh, a.i.r. 1951 all 259 (f.13.). (v) it would not be in accordance with cl. (1) of art. 15 or cl. (2) of art. 29 to require the consideration of the caste of persons to be borne in mind for determining what are socially and educationally backward classes.   - 1. the respondent herein at his printing press manufactures playing cards as well as printed cartons. this was so stated even in the show cause notice which was issued to the respondent and it was clearly mentioned therein that in the preceding financial year, that is to say, 1979-80, the turnover of the respondent had exceeded rs. the single judge as well as the division bench were of the opinion that the respondent was entitled to the benefit of notification no. 8. for the aforesaid reasons, this appeal is allowed and the judgment of the single judge as well as that of the division bench are set aside.orderkirpal, j.1. the respondent herein at his printing press manufactures playing cards as well as printed cartons. playing cards fall under tariff item 56 of the tariff act, while printed cartons fall under tarriff item 68. the question for consideration in this appeal is whether for the purpose of levy of excise duty on the manufacture of printed cards the respondent can be regarded as a small scale industry or not. the answer to that question depends on whether the value of the printed cartons can be taken into consideration even though by notification no. 89/79 levy of excise duty on manufacture of printed cartons was exempted.2. the excise authorities came to the conclusion that taking into consideration the aggregate value of the goods cleared, i.e., playing cards plus printed cartons the respondent could not be regarded as a small scale industry. this was so stated even in the show cause notice which was issued to the respondent and it was clearly mentioned therein that in the preceding financial year, that is to say, 1979-80, the turnover of the respondent had exceeded rs. 20 lakhs.3. the decision of the excise authorities was challenged by way of a writ petition filed by the respondent. the single judge as well as the division bench were of the opinion that the respondent was entitled to the benefit of notification no. 80/80 dated 19.6.1980 and in respect of the playing cards no excise duty would be payable because the aggregate value of the clearances of the playing cards was less than rs. 20 lakhs as, in the opinion of the high court, the clearances in respect of printed cartons could not be taken into consideration. hence, this appeal.4. the aforesaid notification dated 19.6.1980 mentions that excisable goods of the description specified in column (3) of the table annexed thereto, which excisable goods are referred to as 'specified goods', are exempted from levy of excise duty when cleared for home consumption subject to the conditions mentioned in the said notification. this notification will not apply in the cases falling under clause (2) thereof which reads as follows:'2. nothing contained in this notification shall apply to a manufacturer -(i) if the aggregate value of clearances of the specified goods, if any, by him or on his behalf, for home consumption, from one or more factories, during the preceding financial year, had exceeded rupees fifteen lakhs;(ii) who manufacturers excisable goods falling under more than one item number of the said first schedule and the aggregate value of clearances of all excisable goods by him or on his behalf for home consumption, from one or more factories, during the preceding financial year, had exceeded rupees twenty lakhs.'5. on facts, there is no dispute that in the previous year 1979-80 the clearance in respect of playing cards was rs.14,11,467.35 while in respect of printed cartons the figure came to rs.10,93,846.04. as has already been noticed, no excise duty was payable on this value of rs.10,93,846.04 in view of the exemption notification no. 89/79.6. the high court appears to have overlooked the fact the clause (2) of the notification dated 19.6.1980 denies the benefit of the said notification to a manufacturer whose excisable goods falling under more than one item exceed rs. 20 lakhs. this court in collector of central excise, hyderabad vs . vazir sultan tobacco co. ltd. : 1996(83)elt3(sc) , while referring to an earlier decision in the case of wallace flour mills company vs . collector of central excise, : [1990]186itr440(sc) , observed that if by virtue of an exemption notification the rate of duty was reduced to nil the goods specified in the tariff act would still be regarded as excisable goods on which nil rate of duty was payable. to the same effect is the decision of this court in vee kayan industries vs . collector of central excise, chandigarh, : 1996(83)elt262(sc) .7. it is true that printed cartons are not specified goods as contemplated by the said notification dated 19.6.1980 but clause (2) of the said notification refers to excisable goods falling under more than one item of the first schedule. both, playing cards which fall under tariff item 56 and printed cartons which come under tariff item 68, are excisable goods even though the rate of duty on each of them may be different. the mere fact that the rate of duty on printed cartons was nil by reason of an exemption notification would not make printed cartons non-excisable goods. the excise authorities were, therefore right in aggregating the value of the turnover of the two items and coming to the conclusion that the respondent was not a small scale industry which was entitled to the benefit of notification dated 19.6.1980 in respect of clearances of playing cards.8. for the aforesaid reasons, this appeal is allowed and the judgment of the single judge as well as that of the division bench are set aside.9. there will be no order as to costs.

Judgment:
ORDER

Kirpal, J.

1. The respondent herein at his printing press manufactures playing cards as well as printed cartons. Playing cards fall under Tariff Item 56 of the Tariff Act, while printed cartons fall under Tarriff Item 68. The question for consideration in this appeal is whether for the purpose of levy of excise duty on the manufacture of printed cards the respondent can be regarded as a small scale industry or not. The answer to that question depends on whether the value of the printed cartons can be taken into consideration even though by Notification No. 89/79 levy of excise duty on manufacture of printed cartons was exempted.

2. The excise authorities came to the conclusion that taking into consideration the aggregate value of the goods cleared, i.e., playing cards plus printed cartons the respondent could not be regarded as a small scale industry. This was so stated even in the show cause notice which was issued to the respondent and it was clearly mentioned therein that in the preceding financial year, that is to say, 1979-80, the turnover of the respondent had exceeded Rs. 20 lakhs.

3. The decision of the excise authorities was challenged by way of a writ petition filed by the respondent. The Single Judge as well as the Division Bench were of the opinion that the respondent was entitled to the benefit of Notification No. 80/80 dated 19.6.1980 and in respect of the playing cards no excise duty would be payable because the aggregate value of the clearances of the playing cards was less than Rs. 20 lakhs as, in the opinion of the High Court, the clearances in respect of printed cartons could not be taken into consideration. Hence, this appeal.

4. The aforesaid Notification dated 19.6.1980 mentions that excisable goods of the description specified in column (3) of the Table annexed thereto, which excisable goods are referred to as 'specified goods', are exempted from levy of excise duty when cleared for home consumption subject to the conditions mentioned in the said Notification. This Notification will not apply in the cases falling under clause (2) thereof which reads as follows:

'2. Nothing contained in this notification shall apply to a manufacturer -

(i) if the aggregate value of clearances of the specified goods, if any, by him or on his behalf, for home consumption, from one or more factories, during the preceding financial year, had exceeded rupees fifteen lakhs;

(ii) who manufacturers excisable goods falling under more than one Item Number of the said First Schedule and the aggregate value of clearances of all excisable goods by him or on his behalf for home consumption, from one or more factories, during the preceding financial year, had exceeded rupees twenty lakhs.'

5. On facts, there is no dispute that in the previous year 1979-80 the clearance in respect of playing cards was Rs.14,11,467.35 while in respect of printed cartons the figure came to Rs.10,93,846.04. As has already been noticed, no excise duty was payable on this value of Rs.10,93,846.04 in view of the Exemption Notification No. 89/79.

6. The High Court appears to have overlooked the fact the clause (2) of the Notification dated 19.6.1980 denies the benefit of the said Notification to a manufacturer whose excisable goods falling under more than one item exceed Rs. 20 lakhs. This Court in Collector of Central Excise, Hyderabad vs . Vazir Sultan Tobacco Co. Ltd. : 1996(83)ELT3(SC) , while referring to an earlier decision in the case of Wallace Flour Mills Company vs . Collector of Central Excise, : [1990]186ITR440(SC) , observed that if by virtue of an exemption notification the rate of duty was reduced to NIL the goods specified in the Tariff Act would still be regarded as excisable goods on which NIL rate of duty was payable. To the same effect is the decision of this Court in Vee Kayan Industries vs . Collector of Central Excise, Chandigarh, : 1996(83)ELT262(SC) .

7. It is true that printed cartons are not specified goods as contemplated by the said notification dated 19.6.1980 but clause (2) of the said notification refers to excisable goods falling under more than one item of the First Schedule. Both, playing cards which fall under Tariff Item 56 and printed cartons which come under Tariff Item 68, are excisable goods even though the rate of duty on each of them may be different. The mere fact that the rate of duty on printed cartons was NIL by reason of an exemption notification would not make printed cartons non-excisable goods. The excise authorities were, therefore right in aggregating the value of the turnover of the two items and coming to the conclusion that the respondent was not a small scale industry which was entitled to the benefit of Notification dated 19.6.1980 in respect of clearances of playing cards.

8. For the aforesaid reasons, this appeal is allowed and the judgment of the Single Judge as well as that of the Division Bench are set aside.

9. There will be no order as to costs.