Vopak Pharmaceuticals Vs. Union of India - Court Judgment

1. The petitioner is a manufacturer of Patent and Proprietary Medicines and Drugs licence obtained in Drugs Act. The petitioner claims to be a small manufacturer and had been claiming exemption from payment of excise duty or concessional payment of excise duty under various notifications issued by the respondents. The grievance of the petitioner is that the second respondent is refusing to release the goods manufactured from a factory wherein a number of loan licensees manufactured goods by stating that the value of the clearances will be clubbed together for the purpose of the Notification No. 175/86. The petitioner submits that the direction to club all the clearances from a factory for the purpose of applying the exemption is contrary to Article 19(1)(g) of the Constitution of India. The petitioner has, therefore, come forward with this writ petition for the issue of a writ of mandamus to forbear the second respondent from clubbing the value of clearances of the petitioner with that of other manufacturers invoking clause 3-B of the Notification No. 175/86 as amended by Notification No. 216/86 dated 2-4-1986. Clause 3 of the notification is as follows :

'3. Nothing contained in this notification shall apply if the aggregate value of clearances of all excisable goods for home consumption,

(a) by a manufacturer, from one or more factories or

(b) from any factory, by one or more manufacturers, had exceeded rupees two hundred lakhs in the preceding financial year.

Provided that for the purposes of computing the aggregate value of clearances under this paragraph, the clearances of any excisable goods where a manufacturer affixes the specified goods with a brand name or trade name (registered or not) of another person who is not eligible for the grant of exemption under this notification, shall not be taken into account.'

2. I had occasion to consider the very same question in a batch of writ petitions, W.P. Nos. 1940 of 1981 and other cases and by Order dated 6-4-1990, I have rejected the contention that such clubbing of all the clearances from a factory is not unconstitutional and perfectly valid. In that batch of writ petitions, the notification was attacked on several grounds including violation of Articles 14 and 19(1)(g) of the Constitution of India. However, the learned counsel for the petitioner sought to reply on a Division Bench judgment in W.P. Nos. 1425 of 1987 etc. cases dated 8-2-1989. I find from the said Division Bench judgment that there is no discussion on the question of the validity of the notification on the basis of the argument now advanced by the learned counsel for the petitioner. In fact, in those cases, only show cause notices were challenged and the Division Bench directed the parties to file their objections. Therefore, the judgment in the writ appeals certainly does not help the petitioner. Learned counsel then relies on the decision in Shree Packaging Corporation, Hyderabad v. Collector of Central Excise, Hyderabad which is a decision of the Special Bench of the Customs Excise and Gold Control Appellate Tribunal (CEGAT) at Delhi. The facts of the said case have no relevance to the facts of the present case, because the Tribunal was dealing with different kinds of notification. The decision in R. Suresh Jayaseelan v. Collector of Central Excise only says that in a case where the clearances of one unit are sought to be clubbed with that of another unit, it is essential that evidence should be brought on record to show that all the manufacturing operations and other business transactions in regard to the product were being managed in fact by persons belonging to one particular unit while showing the owners of the other units as merely name lenders. This decision is no doubt on a similar notification as we are concerned with, but does not deal with the point but decides the case on actual evidence that was adduced. As I have already pointed out in the case before us we are concerned with the validity of the notification which provides for clubbing of the clearances from more than one factory. If on facts the petitioner is aggrieved in a particular case, it is always open to him to file appeals and canvass the factual findings. In this case, there is no such relief asked for but the prayer is only to restrain the respondents from applying clause 3 of the notification. I have already held the method adopted under clause 3 of the notification is valid in my order dated 6-4-1990. Accordingly, the writ petition fails and it is dismissed.