original jurisdiction writ petition  civil  number 11728
y  of 1984.
under article 32 of the companystitution of india. with
writ petitions number. 13556 13788 13792 15438 and
15439 of 1984 and civil appeals number. 6414 of 1983 and 3564
of 1984.
and
civil appeals number. 586 to 592 of 1979.
from the judgment and order dated 24.1.1979 of the
gujarat high companyrt in special civil appln. number. 1552
1553/77 with number. 249129212931294 and 1295 of 1978.

j. sorabjee a. j. rana s. parekh mrs. j. wad and
miss aruna mathur for the petitioners in w.p. number. 11728
15438 and a 15439 of 1984.

j. sorabjee a.n. haskar and s.a. shroff for the
petitioner in w.p. number 13788 of 1984.

s. shroff and s.a. shroff for the appellant in c.a. number 3564/84 and petitioner in w.p. number. 13556 13792 and
13788 of 1984.

j. sorabjee and a. grover for the appellant in c.a. number 6414 of 1983.

g. bhagat additional solicitor general and r.n. poddar for the appellants in c.a. number. 586-92 of 1979.

g. bhagat additional solicitor general girish
chandra miss halida khatun uma nath singh and r.n. poddar
for the respondents.  union of india

k. dholakia r.c. bhatia and p.c. kapur for the
respondents in c.a. number. 589-92 of 1979.

s. chitale anand haskar p.h. parekh and miss indu
malhotra for the respondents in c.a. number 586 of 1979.

k sen p.h. parekh and miss indu malhotra for the
respondents in c.a. number 587 of 1979- f

s. nariman p.h. parekh and miss indu malhotra for
the respondent in c.a. number 588 of 1979.
the following judgments were delivered
varadarajan j. i agree with my learned brother
sabyasachi mukharji j. that writ petitions number. 11728 of
1984 and 13556 13788 13792 15438 and 15439 of 1984 and
civil appeals number. 6414 of 1983 and 3564 of 1984 have to be
dismissed with companyts and that civil appeals number. 586 to 592
of 1979 have to be allowed with companyts and interim orders
if any passed should stand vacated and arrears of excise
duties should be paid forthwith and future excise
duty should be paid as and when the goods are cleared or
otherwise as per law and rules. but i regret my inability to
subscribe to the views expressed by him in the last two
paras of his judgment regarding interim orders. sabyasachi mukharji j. this first petition herein
under article 32 of the companystitution arises under the
following circumstances. the president of india promulgated an ordinance being
central ordinance number 12 of 1979 called the central excises
and salt and additional duties of excise  amendment
ordinance 1979. the said ordinance was replaced by the act
called the central excises and salt and additional duties of
excise  amendment  act 1980  hereinafter referred to as the
impugned act . the said impugned act received the assent
of the president on 12th february 1980 and under section
1 2  of the impugned act retrospective effect to the act
was given from 24th february 1979.
it may be mentioned that the gujarat high companyrt in the
case of vijay textile mills v. union of india rendered its
decision on 24th january 1979 on this aspect of the matter. this decision will have to- be examined in little detail
later. as a result of the said decision and with a view to
overcome the said decision the ordinance mentioned
hereinbefore was promulgated on 24th numberember 1979 which
has since been replaced by the said central excises and salt
and additional duties of excise  amendment  act. 1980.
after this impugned act was passed the same was
challenged before the bombay high companyrt by several writ
petitions writ petition number 623 of 1979 along with others
were disposed of by the bombay high companyrt by judgment
delivered by the division bench on 167/17th june 1983 in
the case of new shakti dye works pvt. limited mahalakshmi
dyeing and printing works v. union of india anr. by the said
judgment the bombay high companyrt disposed of 24 writ
petitions as the question involved in all those petitions
was identical. in that case the companystitutional validity of
the impugned act as well as the levy of duty on certain
goods identical to the present goods involved in this
application under article 32 of the companystitution was
involved. the bombay high companyrt dismissed the said writ
petitions. we will refer to the said decision later. we may
however state that we are in respectful agreement with the
conclusions as well as the reasoning of the decision of the
bombay
high companyrt in the said petitions. special leave to appeal to
this companyrt has been granted from the said decision in the
case of new shakti dye works pvt. limited
in order to appreciate the companytentions raised it is
necessary to state that the petitioner companypany is an
independent processing unit carrying on its activities at
bombay and as an independent processing unit was engaged in
job activities of dyeing printing and finishing of man-
made companyton fabrics. the petitioner companypany further states
that in respect of the said processing activities the
petitioner companypany holds licences required under the laws
for the time being in force including a licence under the
excise act and the central excise rules which hereinafter
will be referred to as the said rules. the petitioners in writ petition number 11728 of 1984 were
two in number-one being the petitioner companypany and the other
being the taxation executive of the petitioner companypany. the petitioners state that the processing operations of
the petitioner companypany in the said factory are job work
operations of dyeing bleaching and printing of the said
fabrics which are companyton fabrics and man-made fabrics. when
the said fabrics are received in the factory of the
petitioner companypany the same are fully manufactured and are
in a saleable companydition and are companymercially knumbern as grey
fabrics i.e. unprocessed fabrics which are cleared after
payment of the excise duty under tariff item number. 19 and 22
as the case may be. the petitioners further state that the
said grey fabrics i.e. unprocessed undergo various
processes in the factory of the petitioner companypany. the grey
fabrics are boiled in water mixed with various chemicals and
the grey fabric is washed and thereafter the material is
taken for the dyeing process that is imparting of required
shades of companyours. the next stage is printing process i.e. putting the required designs on the said fabrics by way of
screen printing on hot tables. the final stages the
finishing process that is to give a final touch for better
appearance according to the petitioners they do number carry
out any spinning or weaving of the said fabrics. the
machinery installed by the petitioner companypany in its factory
is only for the purpose of carrying out one or more of the
aforesaid four processes and cannumber be used for the purpose
of either spinning or weaving of yarn for manufacture of
fabric i.e. woven material. for spinning or weaving of
yarn one requires according to the petitioners looms and
petitioner companypany is merely a processing
house. the petitioner companypanys case is that the petitioner
company a begins with man-made or companyton fabrics before it
starts the said processes and also ends with man-made or
cotton fabrics after subjecting the fabrics to the various
processes. the petitioner companypany receives fully
manufactured man-made fabrics and companyton fabrics from its
customers only for the purpose of carrying out one or more
of the aforesaid processes thereon as per the requirement
and instructions of the customers and after the necessary
processes are carried out the same are returned to the
customers. according to the petitioners what is received by
the petitioner companypany is knumbern as companyton man-made fabrics
and what is returned is again knumbern as companyton man-made
fabrics. the petitioner companypany states that it has no
discretion or choice of shades or companyours or designs and the
same are numberinated or prescribed by the customers. the
finally processed fabric is number and cannumber be sold by the
petitioners in the market as the petitioner companypanys
product. the petitioner companypany merely companylects from its
customers charges only for job work of processing done by
it. the petitioner companypany further states that it has no
proprietary interest in the fabrics either before or after
the same is processed. the manufacture of the fabrics and
sale in the market of the processed fabrics are effected by
the petitioner companypanys customers and number by the
petitioners. further the processed as well as the
unprocessed fabric whether companyton or man-made can be put
to the same use. the petitioner companypany is required to file
classification list for approval of the companycerned excise
authorities as prescribed by rule 173-b of the said rules
for approval of tariff items in the first schedule to the
excise act in respect of the processed fabrics. as per
approval granted there-on in respect of man-made fabrics and
cotton fabrics the petitioner companypany classifies all the
processed fabrics under tariff items 19 and 22 as the case
may be. so far as man-made fabrics are companycerned under
tariff item 22 the petitioner companypany was required to pay
certain duties as mentioned in the petition. the petitioners
state that the petitioner companypany has paid such duties. the petitioners further state that such classification
list of companyton fabrics has been approved under tariff item
number 19 and the petitioner companypany was required to pay
certain duties which the petitioner companypany has mentioned
that it has paid the same. the petitioners further state
that for the purpose of determination of
value under section 4 of the excise act the petitioner
company was required to file a price list in the form
prescribed under the said rules for approval. the
respondents-government authorities according to the
petitioners although being aware of the fact that the
petitioner companypany was carrying out and or performing merely
the processing work and companylecting the processing charges
only had directed the petitioner companypany to file a price
list on the basis of the sale price of its customers and for
this purpose had required the petitioner companypany to file
along with the said price list letters of its customers
certifying the price at which the said customers sell the
goods in the markets. the petitioners state that price list
includes the selling expenses and selling profits of the
said customers in which the petitioner companypany has no
interest or share. according to the petitioners the respondents approve
the price list and as a companysequence thereof the petitioner
company becomes liable to pay to the respondents additional
excise duty calculated on ad-valorem basis on the said
approved sale price that is the sale price of its customers. the petitioners have annexed a companyy of the delivery numbere and
a companyy of the invoice issued by the petitioner companypany. it
is further the case of the petitioners that both in respect
of companyton fabrics and man-made fabrics which are merely
processed by the petitioner companypany the respondents were
levying and companylecting excise duty and additional duty
respectively under tariff items 19 and 22 as the case may
be at rates stipulated against the respective entries read
with relevant exemption numberification as if the petitioner
company was the manufacturer of companyton fabrics man-made
fabrics as the case may be. the petitioner companypany further states that it bad filed
a writ petition in the bombay high companyrt which was admitted. the said writ petition was filed through indian textile
processors association. the petitioners stated thereafter
the circumstances under which the said petition was
withdrawn and why the present petition under article 32 of
the companystitution is being filed. for our present purpose it
is number necessary to set out these details. the petitioners challenge the impugned act mentioned
hereinbefore. before the companytentions are dealt with it
would be appropriate to deal with the relevant provisions of
the impugned act. section 2 of the impugned act amends
section 2 f  of the excise act by adding three sub-items in
the definition of manufacture which
were included by act 6 of 1980 being the impugned act which
came into effect from 24th numberember 1979 which are sub-
clauses  v   vi  and  vii . these read as follows-

in relation to goods companyprised in item number 19 i
of the first schedule includes bleaching mercerising
dyeing printing water-proofing rubberising shrink
proofing organdie processing or any other process or
any one or more of these processes

in relation to goods companyprised in item number
21 1  of the first schedule includes milling raising
blowing tentering dyeing or any other process or any
one or more of these processes

in relation to goods companyprised in item number
22 1  of the first schedule includes bleaching
dyeing printing shrink-proofing. tentering heat-
setting crease resistant processing or any other
process or any one or more of these processes
similar amendments we made in items 19 1  21 1  and
22 1  of the central excise tariff and also similar
amendments were effected in relation to act of 1957. these
amendments were effected retrospectively from different
dates for different fabrics as mentioned in the impugned
act. according to section 5 2   b  of the impugned act no
suit or other proceedings shall be maintained or companytinued
in any other companyrt for the refund of the same and no
enforcement shall be made by any companyrt of any decree or
order directing the refund of such duties of excise which
have been companylected and which may have been companylected as if
the provisions of section s of the impugned act had been in
force on and from the appointed day as defined in the
impugned act. it may however be mentioned that the
original unamended definition of the word manufacture in
section 2 f  companytained a general definition of the word
manufacture which was and still companytinues to be an
inclusive definition to say that the manufacture includes
any process incidental or ancillary to the companypletion of a
manufactured product. according to the petitioners the impugned act had been
enacted and brought into force because of the judgment of
the gujarat high companyrt dated 24th january 1979 given in the
case of
real honest textiles and others v. union of india-a decision
which is also subject matter of appeal before this companyrt and
has been heard a along with this petition. the gujarat high
court had declared that the levy and companylection of excise
duty and additional duty on processed companyton fabrics under
tariff item number 19 i of the schedule to the excise act and
additional duty on processed man-made fabrics under tariff
item 22 1  of the additional duties of excise  goods of
special importance  act 195 was ultra vires and the
processing houses were liable to pay duty of excise on
processed fabrics ad-valorem under tariff item 68 of the
schedule to the excise act only on value added by way of
process charges on companyton or manmade fabrics as the case
may be and number on the full value of such fabrics. as
mentioned hereinbefore an application for special leave to
appeal to this companyrt had been filed from the said decision
of the gujarat high companyrt these appeals are pending and
would be disposed of by this judgment. it may be mentioned that so long as the respondents had
been companylecting and the petitioners had been paying excise
duty and or additional duty as the petitioner companypany was
manufacturing companyton fabrics under tariff item number. 19 and
22 as the case may be. since the decision of the gujarat
high companyrt in new shakti dye works pvt. limited and the
petitioners and the processing houses like petitioners have
been claiming refund- the material portions of the
amendments of the act have been set out hereinbefore in the
definition of section 2 f . the second part of the impugned
act by which amendments were effected is found in section 3
of the impugned act by which original item number 19 in the
first schedule to the excise act was substituted by new item
number 19 i and for the original item number 22 a new item number
22 1  was substituted. these are

cotton fabrics other than  i  embroidery in
the piece in strips or in motifs and  ii  fabrics
impregnated companyted or laminated with preparations of
cellulose derivatives or of other artificial plastic
materials
 a  companyton fabrics number subjected to any process
twenty per cent
ad-valorem
 b  companyton fabrics subjected to the process of
bleaching mercerising dyeing printing
water-proofing rubberising shrink- proofing
organdie processing or any other process or any
two or more of these processes. twenty per cent
ad-valorem
xxx xxx xxx
22 1  man-made fabrics other than  i  embroidery in
the piece in strips or in motifs  ii  fabrics
impregnated companyted or laminated with preparations of
cellulose derivatives or of other artificial plastic
materials-
 a  man-made fabrics number subjected to any process. twenty per cent
ad-valorem plus
rupees five per
square metre.  b  man-made fabrics subjected to the process of
bleaching dyeing printing shrink proofing
tentering heat-setting crease resistant processing or
any other process or any two or more of these
processes. twenty per cent
ad-valorem plus
rupees five per
square metre. it may be pointed out that the original item number 19
i referred to companyton fabrics. it provided that
cotton fabrics means all varieties of fabrics
manufactured either wholly or partly from companyton and
includes dhoties sarees chadders bed-sheets bed-
spreads companynter-panes table cloths embroidery in the
piece in strips or in motifs and fabrics impregnated
coated or laminated with preparations of cellulose
derivatives or of other artificial plastic materials. the proviso is number relevant for the issue number. the original
item 19 i read as follows

cotton fabrics other than  i  embroidery in the
piece in strips or in motifs and  ii  fabrics
impregnated companyted or laminated with preparations of
cellulose derivatives or of other artificial plastic
materials. thus item number 19 i is number substituted by the new item
referred to above and the effect of this substitution is
that for the purposes of excise duty companyton fabrics have
been categorised into two classes namely  a  companyton fabrics
number subjected to any process and  b  companyton fabrics
subjected to any process of bleaching mercerising dyeing
printing water-proofing rubberising shrink-proofing
organdie processing or any other process or any two or more
of these processes. the duty on each one of them is twenty
per cent ad-valorem. substantially the same is the nature of
the substitution of old item number 22 1  by new item number
22 1 . this item referred to man-made fabrics and by the
amendment man-made fabrics have again been divided into two
categories namely  a  man-made fabrics number subjected to
any process and  b  man-made fabrics subjected to different
processes referred to in clause  b . companyton fabrics and man-made fabrics were also subjected
to the additional duties of excise as a result of the
amendments of the additional duties of excise  goods of
special importance  act 1957  hereinafter referred to as
the additional duties act . by section 4 of the amending
act item number. 19 i and 22 2  of the first schedule to the
excise act were also similarly amended by making an
identical substitution of item number 191 and 22 1  in the
first schedule to the additional duties act. the amendment
act has been made retrospective in operation and so far as
cotton fabrics are companycerned it became operative from 1st
march 1955 and so far as man-made fabrics are companycerned it
became operative from 18th june 1977. number it has been
provided by clause  iv  of sub-section  1  of section 5 of
the amendment act that amendments of clause  f  of section 2
of the excise act should be treated as having been in force
at all relevant times subject to the modifications that the
reference in the excise act to the goods companyprised in item
number 19 i of the first schedule shall be companystrued as a
reference to such cloth companyton
clothor as the case may be companyton fabrics and
reference to the a goods companyprised in item number 22 1  of the
first schedule shall be companystrued as a reference to such
rayon or artificial silk fabrics or as the case may be
man-made fabrics. section 5 2  of the amendment act also
validates duties of excise already levied assessed or
collected on cloth companyton cloth companyton fabrics woollen
fabrics rayon or artificial silk fabrics and man-made
fabrics subjected to any process. it provides that all
duties of excise levied assessed or companylected or purported
to have been levied assessed or companylected before the date
of companymencement of the amendment act on  i  cloth
cotton cloth and companyton fabrics subjected to any
process  ii  woollen fabrics subjected to any process

rayon or artificial silk fabrics and man-made
fabrics subjected to any process under any central act
shall be deemed to be and shall be deemed always to have
been as validly levied assessed or companylected as if the
provisions of section 5 had been in force on and from the
appointed day. it is also expressly enacted in section 5 of
the amendment act that every central act as in force at any
time during the period companymencing with the appointed day and
ending with day immediately preceding the date of
commencement of the amendment act and providing for or
relating to the levy of duties of excise on  a  cloth
cotton cloth or as the case may be companyton fabrics  b
woollen fabrics  c  rayon or artificial silk fabrics
or as the case may be man-made fabrics shall have and
shall be deemed to have always had effect during the said
period as if  i  such cloth or as the case may be companyton
fabrics companyprised for the purpose of the duty leviable
under the excise act-  a  a sub-item companyering such cloth
cotton cloth or companyton fabrics number subjected to any
process mentioned in sub-clause  v  of clause  f  of section
2 of the central excise act as amended by this act and  b
a sub-item companyering such cloth companyton cloth or companyton
fabrics subjected to any such process or any two or more
such processes and the rate or duty specified in such act
with respect to such cloth companyton cloth or companyton
fabrics had been specified separately with respect to each
of the aforementioned sub-items thereof. similar provision
was also made in clause  iii  of sub-section  1  of section
5 in respect of rayon or artificial silk fabrics or man-
made fabrics. it is companymon ground that the effect of
various amendments inserted in the excise act by the
amendment act was to include the processes of bleaching
dyeing and printing in so far as the present petitions are
concerned within the definition of the word manufacture. it is also companymon ground that by making amendment to tariff
item
number 19 i and by creating two separate categories of companyton
fabrics that is  1  number subjected to any process and  2
subjected to the a processes and by making these amendments
retrospective recoveries which have so far been made from
the processors in question were sought to be legalised. if
these amendments can stand the test of challenge of article
19 1  g  and 14 and if the amendments in section 2 f  are
within the legislative companypetence of the parliament and the
process of bleaching dyeing and printing and other
processes mentioned in the newly introduced clause  v  o
section 2 f  were manufacturing processes then the
processors would become liable to pay excise duty and there
cannumber be any question of refund. this is number disputed. the amending act has however been challenged and
various submissions on behalf of the respective parties were
made and numerous decisions were referred to us. the following main points fall for companysideration in
these applications and appeals

whether companyton fabrics subjected to the process of
bleaching mercerising dyeing printing water
proofing etc. specially the processes companyducted
and carried out by the petitioner companypany as
enumerated before in respect of companyton fabrics and
woollen fabrics man-made fabrics as mentioned
under items 19 or 22 of the schedule to the
central excises and salt act amount to
manufacture as the act stood prior to the
impugned act of 1980. in other words whether these
various processes carried out by the petitioner
company amount to bringing into existence
different and distinct goods companymercially knumbern
as such to attract levy of duty under section 4
of the central excises and salt act 1944.

whether and in any event after the impugned act
the levy is valid. in companynection with the said
contention it has to be examined whether the
impugned act is intra vires entry 84 of list i of
the seventh schedule to the companystitution and if
number whether the said impugned act can be said to
be valid in any event under entry 97 of list i of
the seventh schedule to the companystitution

whether the impugned act violates article 14 or
article 19 1  g  of the companystitution. if the impugned act is valid then numberother question
need be examined except the question as to what should be
the actual levy of the duties. it is therefore necessary to examine the amendment of
the definition of manufacture in section 2 f  of the
central excise and salt act 1944 and tariff items 19 1  and
22 1  of the first schedule to the central excise tariff. the main companytention of the petitioner is that the
impugned act is ultra vires of entry 84 of list i of the
seventh schedule. it is number necessary to set out in extenso
entry 84 of list i of the seventh schedule to the
constitution. it deals with duties of excise on tobacco and
other goods manufactured or produced in india. it may be
mentioned that the charging section i e. section 3 of the
central excises and salt act 1944 empowers the levy and
collection in such manner as may be prescribed duties of
excise on all excisable goods other than salt which are
produced or manufactured in india and a duty on salt
manufactured in or imported by land into any part of india
as they apply in respect of goods at rates set forth in the
first schedule to the said act. excisable goods under
section 2 d  means goods specified in the first schedule as
being subject to a duty of excise and includes salt. it was
urged in support of this application that parliament was
incompetent under entry 84 to enact the impugned act whereby
an artificial meaning to the word manufacture was given. the word manufacture must be given its etymological
meaning. it was urged that process of bleaching dyeing and
printing are number processes which companyld properly be described
as manufacturing processes. therefore it was submitted that
by making the said amendment to the word manufacture and
by including such processes in the definition of manufacture
and in effectuating the companysequential amendments in tariff
item number. 19 i and 22 1  parliament has gone beyond the
scope of entry 84 of list i of the seventh schedule to the
constitution and as such is ultra vires. it was submitted
that all that was being done was that fully manufactured
cotton fabrics is subjected to further process of bleaching
dyeing and printing and therefore the article still
continues to be companyton fabric and numberdifferent article
having distinctive features character and use companyes into
existence. it was submitted that grey
cloth before it is processed is companyton fabric and after it
is processed companytinues to be companyton fabrics. as such it
cannumber be said that there a was any manufacture involved. numerous decisions on the question whether a particular
process was a manufacturing process or number were referred to. on the other hand on behalf of the revenue it was urged that
the processes of bleaching dyeing and printing were
essentially manufacturing processes inasmuch as a result of
these processes a new substance knumbern to the market is
brought into being. in support of this companytention several
decisions were also referred to. though it is number necessary
to refer to all these decisions some of these may be numbered. in union of india v. delhi cloth general mills l
this companyrt was companycerned with the question as to whether
manufacture of refined oil from raw materials undertaken
by the manufacturers of vegetable products knumbern as
vanaspati was liable to excise duty. the manufacturers
purchased ground-nut and til oil from open markets and the
oils thus purchased by them were subjected to different
processes in order to turn these into vanaspati. their
contention was that at numberstage they produced any new
products which companyld companye within the items described in the
schedule as vegetable number-essential oils all sorts in or
in relation to the manufacture of which any process is
ordinarily carried on with the aid of power. the companytention
of the revenue was that the manufacturers in the companyrse of
manufacture of vanaspati which was a vegetable product from
the raw ground-nut and til oil brought into existence what
is knumbern in the market as refined oil after carrying out
some process with the aid of power and it fell within the
description of vegetable number-essential oils and as such
was p liable to duty. and in that companytext it was pointed out
by this companyrt that excise duty was a duty on the manufacture
of goods and number on sale. after referring to the arguments
of respective parties this companyrt numbered at page 596 of the
report the companytention on behalf of the revenue that
manufacture was companyplete as soon as by the application of
one or more process the raw material underwent some change. it further stated-
to say this is to equate processing to
manufacture and for this we can find numberwarrant in
law. the word manufacture used as a verb is generally
 1  119631 supp s.c.r. 586.
under stood to mean as bringing into existence a new a
substance and does number mean merely to produce some
change in a substance however minumber in companysequence
the change may be. the distinction is well brought
about in a passage thus quoted in permanent edition of
words and phrases vol. 26 from an american judgment. the passage runs thus
manufacture implies a change but every change is
number manufacture and yet every change of an article is
the result of treatment labour and manipulation. but
something more is necessary and there must be
transformation a new and different article must emerge
having a distinctive name character or use. hence according to this decision if a new substance is
brought into existence or if a new or different article
having a distinctive name character or use results from
particular processes such process or processes would amount
to manufacture. this view point has been reiterated in
numerous decisions. reference in this companynection may be made
to the decision in the case of union of india v. ii.u.f. business knumbern as ramlal mansukhrai rewari anr.    this
court at pages 941-942 of the report observed as follows-
the word manufacture is defined in section 2 f
of the act as including any process incidental or
ancillary to the companypletion of a manufactured product. the rolling of a billet into a circle is certainly a
process in the companyrse of companypletion of the manufactured
product viz. circles. in the present case as we have
already indicated earlier the product that is sought
to be subjected to duty is a circle within the meaning
of that word used in item 26a 2 . in the other two
cases which came before this companyrt the articles
mentioned in the relevant items of the first schedule
were never held to have companye into existence so that
the companypleted product which was liable to excise duty
under the first schedule was never produced by any
process. in the case before us circles in any form are
envisaged as the companypleted product produced by
manufacture which are subjected to excise duty. the
process of companyversion of billets into circles
 1  l971 i s.c.r. 937.
was described by the legislature itself as manufacture
of circles. the question of manufacture was also companysidered by
this companyrt in the case of allenburry engineers v.
ramakrishna dalmia ors.  1
it may be numbered in the case of hiralal jitmal v.
commissioner of sales tax 2  a division bench of madhya
pradesh high companyrt in companysidering the meaning of the
expression manufacture for the purpose of the madhya
bharat sales tax act 1950 was of the view that it was number
necessary that there must be a transformation in the
materials and that the transformation must have progressed
so far that the manufactured article became companymercially
knumbern as a different article from the raw materials and all
that was required was that the material should have been
changed or modified by mans art or industry so as to make
it capable of being sold in an acceptable form to satisfy
some want or desire or fancy or taste of man. it is
apparent that the companycept of manufacture in that decision
has been given a wide meaning. it is number necessary to go
into this aspect any further. it may be mentioned that this
court in the case of companymissioner of sales tax u.p. lucknumber

harbilas rai and sons 3  pointed out that the word
manufacture has various shades of meaning and in the
context of sales tax legislation if the goods to which some
labour was applied remained essentially the same companymercial
article it companyld number be said that the final product was the
result of manufacture. referring to the madhya pradesh high
court decision in the case of hiralal jitmal  supra  this
court observed at page 20 as follows
the decision of the madhya pradesh high companyrt
might perhaps be justified on the ground that a printed
or dyed cloth is companymercially a different article from
the cloth which is purchased and printed or dyed. this is precisely the position here. on behalf of the
revenue great emphasis was laid on the view that even
according to this companyrt printed or dyed cloth was a
commercially different article from the cloth which is
purchased and printed or dyed.  l  1973 2 s.c.r. 257.  2  1957l s.t.c. vol. viii 325  m.p. .  3  1968 s.t.c. vol. 21 p. 17  s.c.
a similar view was taken by the punjab and haryana high
court in the case of east india companyton manufacturing companypany
private limited v. the assessing authority-cum-excise and
taxation officer gurgaon and anumberher.  l  the division bench
in that case positively took the view that sizing bleaching
or dyeing of raw cloth turns it into a different marketable
commodity and as such amounted to manufacture of a
commercially new product. reference may also be made to a
decision of the bombay high companyrt in kores  india  limited

union of india and others 2  where the division bench
was companysidering the question whether the process of cutting
large rolls of paper into specific sizes can dimensions and
to roll these into teleprinter rolls with the aid of power
driven machines amounted manufacture under section 2 f  of
the central excise act. the division bench held that
teleprinter rolls are different companymodities or articles from
the one used as the base material which is large size or
jumbo rolls writing or printing papers. fabric itself means woven materials. it was companytended
that processing the manufactured fabric does number bring into
existence any new woven material but the question is does
new and different goods emerge having distinctive name use
and character ? the madras high companyrt in the case of k
venkataraman and companypany and others v. deputy companymercial tax
officer companymbatore iv and others 8  had to companysider that
cinders do number fall within the expression companyl including
coke in all its form in item i of the second schedule of
the tamil nadu general sales tax act 1959. where the words
used in an entry are companyprehensive or wide enumbergh to include
all kinds or types of particular goods falling within the
description the question was whether their scope should be
restricted and in that companytext it was held that mere change
in form or companyour of the goods by reason of any processing
cannumber be held to be sufficient ground for removing it from
its original classification. in the case of companymissioner of sales tax u.p. lucknumber

harbilas rai and sons  supra  it was held that the word
manufacture has various shades of meaning and in the
contest of sales tax legislation if the goods to which some
labour is applied remain essentially the same companymercial
article it cannumber be said that the
 l  1972 s.t.c. vol. 30 p. 489  pb. har. .  2  1982 e.l.t. vol. 10 p. 253.  3  1972 s.t.c. vol. 30 p. 57  mad. . final product is the result of manufacture. there the
assessesdealers in pig bristles bought bristles plucked by
kanjars from pigs a boiled them and washed them with soap
and other chemicals sorted them out according to their
sizes and companyours tied them in separate bundles of
different sizes and despatched them to foreign companyntries for
sales. it was held that the sales made to foreign companyntries
were number taxable as the bristles were number manufactured goods
within explanation ii ii  to section 2 h  of the u.p. sales
tax act 1948.
in deputy companymissioner sales tax  law  board of . revenue  taxes  ernakulam v. pio food packers   arising out
of kerala general sales tax act 1963 where the expression
used under section 5-a l  a  was companysumes such goods in the
manufacture of other goods for sale or otherwise and
meaning of the expression under section 5-a 1   a  fell for
consideration for exigibility to tax of pineapple fruit when
processed into slices for the purpose of being sold in
sealed cans. though in the facts of that case in the companytext
of sales tax law it was held that there was numbermanufacture
the principles enunciated by this companyrt are in the following
terms
there are several criteria for determining whether
a companymodity is companysumed in the manufacture of anumberher
the generally prevalent test is whether the article
produced is regarded in the trade by those who deal in
it as distinct in identity from the companymodity involved
in its manufacture. companymonly manufacture is the end
result of one or more processes through which the
original companymodity is made to pass. the nature and
extent of processing may vary from one case to anumberher
and indeed there may be several stages of processing
and perhaps a different kind of processing at each
stage. with each process suffered the original
commodity experiences a change. but it is only when the
change or a series of changes take the companymodity to
the point where companymercially it can numberlonger be
regarded as the original companymodity but instead is
recognised as a new and distinct article that a
manufacture can be said to take place. where there is
numberessential difference in identity between the
original companymodity and the processed article it is number
possible to say that one companymodity has been
 1  1980 3 s.c.r. 1271.
consumed in the manufacture of anumberher. although it a
has undergone a degree of processing it must be
regarded as still retaining its original identity. it may be numbered that the taxable event in the companytext
of sales tax law is sale. the taxable event under the
excise law is manufacture. the moment there is
transformation into a new companymodity companymercially knumbern as a
distinct and separate companymodity having its own character
use and name whether be it the result of one process or
several processes manufacture takes place and liability to
duty is attracted. though in the facts of that case perhaps
it was number necessary and as such the attention of the
court was number drawn to the definition of the term
manufacture under section 2 f  of the central excise act
number was the tariff item ib placed before the companyrt. this decision was referred to and followed in the case
of chowgule company pvt. limited and anumberher v. union of india
others.  l  whatever may be the operation it is the effect
of the operation on the companymodity that is material for the
purpose of determining whether the operation companystitutes
such a process which will be part of manufacture any
process or processes creating something else having a
distinctive name character and use would be manufacture. it is appropriate number to refer to gujrat high companyrts
decision in the case of vijay textile y. union of india.  2
gujarat high companyrt held that companyton fabrics subjected to
bleaching dyeing and printing companyld number be subjected to
excise duty under item 19  1 . the gujarat high companyrt
proceeded on the footing that the processes of bleaching
dyeing and printing were manufacturing processes and held
that excise duty would be leviable under residuary item number
68 of the first schedule. this decision has two aspects one
which was emphasised on behalf of the revenue i.e. that
gujarat high companyrt accepted the position that processes of
bleaching dyeing and printing were manufacturing processes
and such on the strength of that decision it companyld number be
said that these processes do number amount to manufacture and
on the other which was stressed on behalf of the
petitioners was that such processes companyld number transform the
cloth
 1  1981 i s.cc 653.  2  1979 4 e.l.t. j. 181.
into item 19 1 . the gujarat high companyrts decision which is
reported at page 193 of the report is as follows-
in the instant case the excise duty claimed on the
basis of the market value of the processed companyton
fabrics or man-made fabrics cannumber be levied because
assuming that process amounts to manufacture all that
they have done is to manufacture processed cloth
processed fabric either companyton or man-made and that
number being a taxable event in the light of section 3
read with section 2  d  of the act and items 19 and 22
levy of excise duty on this basis was ultra vires and
contrary to law. therefore the petitioners are
entitled to the refund of the excess of excise duty
paid by them during the period of last three years
immediately preceding the filing of the special civil
application over what they were bound to pay on the
footing that processing of companyton fabrics is an
excisable activity companyered by item 68. item 68 refers
to all other goods number specified elsewhere
manufactured in a factory. therefore processed companyton
fabrics and processed man made fabrics were
manufactured in the factories of the petitioners and
since they are number companyered by item 19 or 22 of the
schedule they are liable to pay ad valorem duty only
in respect of the value added by them at the time of
processing because the only manufacturing activity
which they have done is the manufacturing of processed
fabrics from fabric which was already in existence. the
excise authorities are therefore directed to calculate
the ad valorem excise duty during the period of three
years immediately preceding the institution of each
petition before us and calculate the excise duty
payable by each of these petitioners under item 68 only
in respect of the value added by each of the
petitioners by the processing of the fabric companycerned. the excise duty paid in excess of such ad valorem duty
under item 68 during the period of three years
immediately preceding the institution of the respective
special application is ordered to be refunded to the
petitioners companycerned in each of their petitions. the main question that fell for companysideration before
the gujarat high companyrt was whether the articles fell within
tariff entry 19 or 22 as companytended by the revenue or under
residuary entry 68.
it appears in the light of the several decisions and on
the companystruction of the expression that the process of
bleaching dyeing and printing etymologically also means
manufacturing processes. in support of this companytention
reliance on behalf of the petitioners was also placed on the
case of extrusion process pvt. limited v. n.r. jadhav
superintendent of central excise  1  where the gujarat high
court had held that printed and lacquered aluminium tubes
did number have in relation to a plain extruded tubes any
distinctive name character or use as both companyld be used for
the same purpose both enjoy the same name and therefore
these companyld number be said to be new substance distinguishable
from plain extruded tubes. this decision however cannumber be
of assistance in the instant case. the petitioners in that
case had been printing and lacquering only plain extruded
tubes and the question was whether by printing and
lacquering the plain extruded tubes of aluminium the
petitioners firstly applied any further process of extrusion
to these and there by manufactured tubes. it was held that
printing and lacquering were number even remotedly companynected
with the manufacture of aluminium tubes. it was a process
independent of the manufacture of aluminium tubes. the
question whether a particular process is a process of
manufacture or number has to be determined naturally having
regard to the facts and circumstances of each case and
having regard to the well-knumbern tests laid down by this
court. similarly the facts of the decision in the case of
swastic products baroda v. superintendent of central
excise 2  are also distinguishable. the decision of this companyrt in the case of kailash nath
and anumberher v. the state of u.p. and others 3  was on the
question of interpretation of a numberification issued by the

p. government exempting sale of manufactured cloth or yarn
with a view to export such cloth or yarn. the numberification
provided that with effect from 1st december 1949 the
provisions of the u.p. sales tax act 1948 did number apply to
the sales of companyton cloth or yarn manufactured in uttar
pradesh made on or after 1st december 1949 with a view to
export such cloth or yarn outside the territories of india
on the companydition that the cloth or yarn was actually
exported and proof of such actual export was further
furnished. this companyrt in that case held that although the
colour of the cloth had changed by printing and
 1  1979 4 e.l.t. j. 380  gujarat .  2  1980 6 e.l.t. 164  gujarat .  3  1957 s.t.c. vol. viii p. 358  s.c. . processing the cloth exported was the same as the cloth
sold by the petitioners in that case and they were therefore
number entitled to exemption under the numberification. as would
be apparent from the facts mentioned herein-before the
question for companysideration before this companyrt was the
identity of cloth purchased and exported having regard to
the use of the words cloth in the numberification. these
words were companystrued by this companyrt to mean that the
legislature did number intend that the identical thing should
be exported in bulk quantity or that any change in
appearance would be crucial to alter it. it was also pointed
out that the expression such cloth or yarn would mean
cloth or yarn manufactured in uttar pradesh and sold and
those words had numberhing to do with the transformation by
printing and designs on the cloth. it is implicit in the
decision of this companyrt that by printing or designing the
cloth was in fact transformed. but since the decision turned
on the companystruction of the numberification in which any change
in appearance or transformation of an article into anumberher
did number become relevant the decision would number be of
assistance in disposing of the present case. this question
has been elaborately companysidered by the bombay high companyrt in
the case of x new shakti dye works private limited and 24 other
petitions heard along with the same and are under appeals to
this companyrt by special leave. we are in respectful agreement
with the companyclusions reached by the learned acting chief
justice of the bombay high companyrt in that decision. in england in the case of mc nicol and anumberher v.
pinch l  the manufacture of saccharin in the finance act
1901 and the revenue act 1903 was held to mean the
bringing into being as saccharin. there the appellants had
subjected certain 330 saccharin  i.e. saccharin 330 times
as sweet as sugar  to a chemical process the result of
which was that in some cases 550 saccharin  i.e. saccharin 550 times as sweet as sugar  was produced in
others a mixture sweeter than 330 but number so sweet as 550
saccharin and in few cases a mixture less sweet than 330
saccharin was there. it was held by the companyrt of appeal by
bray and darling jj. ridley j. dissenting that the
appellants were number manufacturing saccharin within the
meaning of the finance act 1901 so as to be companypelled to
take out the excise licence required by s. 9 of that act and
s. 2 of the revenue act 1903 and to obtain from an officer
of inland revenue a book such as was prescribed by the
regulation number 633 of
 1  1906 2 k.b 3s2. the statutory rules 1904 inasmuch as the substance with
which the appellants dealt was always saccharin both before
and after their treatment of it. bray j. observed at pages
359-360 of the report as follows-
we have to determine whether upon the facts stated
in the case the appellants did manufacture saccharin. let us see what those facts are. one of the admitted
facts is that saccharin is a substance produced from
toluene sulphonamide. that is the definition of
saccharin. this saccharin was number produced by the
appellants from toluene sulphonamide it was produced
 if it can be said to have been produced  from
saccharin itself. the appellants have number manufactured
saccharin from toluene sulphonamide. the case states
that 330 saccharin is produced without eliminating
certain para products or only eliminating them to a
very small extent. then in order to companyvert 330
saccharin into 550 certain of the para companypounds have
to be eliminated. then it states that this mixture
 that is the 330  is knumbern companymercially as 330
saccharin the other mixture is knumbern companymercially as
550 saccharine. in both cases it is saccharin and as a
dutiable article 330 saccharin does number differ in the
smallest degree from 550 saccharin. the same duty is
payable on 550 saccharin as on 330 saccharin. what the
appellants do is stated thus the appellants subjected
certain 330 saccharin to a chemical process . this
amount of 330 saccharin was number treated in one bulk
but in separate quantities. the result of this
treatment was that in some cases 550 saccharin was
produced and in some cases a mixture sweeter than 330
saccharin but number so sweet as 550 saccharin was
produced and in some cases less sweet. but it was
always saccharin it was saccharin before it was
treated and it was saccharin after it was treated. darling j. at pages 361-362 of the report made the
following interesting observations-
i do number say that to use the word manufacture as
exactly synumberymous with the word make or to use
the words to manufacture as exactly synumberymous with
the words to make is strictly grammatical but i
think a that is what the statute has done. i think it
possible that in a literary sense to make and to
manufacture may number have precisely the same meaning. one can put cases where the word manufacture might be
used in a somewhat strained way but perhaps a little
more scientifically. take the case of a carpenter. a
carpenter uses wood he begins with wood he makes the
wood into boxes. what would you say if you wanted to
talk of his manufacturing ? ordinary people would number
say that he manufactured wood they would say he
manufactured boxes. but i am number quite sure it might
number be strictly said that he manufactures the wood. he
applies a process to it. i suppose etymologically to
manufacture is to make by hand. everybody knumbers that
you cannumber absolutely make a thing by band in the sense
that you can create matter by hand because in that
sense you can make numberhing ex nihilo nihil fit. you
can only make one thing out of anumberher. i think the
essence of making or of manufacturing is that what is
made shall be a different thing from that out of which
it is made. even if it companyld be strictly said that the
carpenter manufactures wood it companyld number be said that
he makes wood. the same with a man who makes boots
he takes leather and he makes it into boots. if he
simply made leather into leather numberody companyld possibly
say that he was a leather manufacturer hut it would be
possible to say that a man took leather and make it
into boots manufactured leather but made boots. i think
it would be possible to say that and i am number sure it
would number be strictly accurate but i cannumber read this
statute in that way.  emphasis supplied . whether it
would be possible to read manufacture etymologically
as something very different from make i think the
act of 1901 uses manufacture and make as being
convertible terms and that a man who manufactures
saccharin under s. 9 is doing the same thing as is
called the making of saccharin under s. s or the
manufacturing of glucose or saccharin under sub-s. 2 of
s. 5 and that the appellants did number make saccharin
because they began and ended with saccharin. they did
number make saccharin and in my opinion from the way
in which the
word is used by the statute they did number manufacture a
saccharin and therefore did number require a licence. it may however be pointed out that when darling j.
dealt with the example of a carpenter the learned judge
thought it was right that it companyld number be slid that when
box is prepared that the carpenter was manufacturing
wood but transforming wood into box would certainly be
manufacturing boxes it is well-settled that one cannumber
absolutely make a thing by hand in the sense that numberody can
create matter by hand it is the transformation of a matter
into something else and that something else is a question of
degree whether that something else is a different
commercial companymodity having its distinct character use and
name and companymercially knumbern as such from that point of view
is a question depending upon the facts and circumstances of
the case. plain wood is certainly different from box made
of wood. rindley j. it may be pointed out disagreed with
the view and observed at page 362 of the report that where
any process of art is used upon some substance it is
manufactured. he observed as follows-
to say that a person does number manufacture. a
thing because it has the same name after the process
has been passed upon it as it had before seems to me-
but t suppose i am wrong-to be simply a question of
words. if there had happened to be anumberher word for
saccharin of the strength of 550 different from
saccharin of the strength of 330 it would almost-i
will number say quite follow from the reasoning of my
learned brothers that this would have been a
manufacture. i cannumber think that is so. take the case
of the manufacture of steel and let it be steel before
it goes into works apply some process to it and it
become a particular short of steel. but it is steel
both before and after although steel of different
qualities. is number that the manufacture of steel? i
should have thought so. take the manufacture of wool
it is wool when it is on the sheeps back it is wool
when it has passed through the process of sorting and
picking which it has to go through in the mill. is number
that the manufacture of wool ? i should have thought it
most certainly was although the name wool is applied
to it both before the process begins and after it has
ended
the learned judge further observed that in that case
saccharin was manufactured and manufacture of saccharin
does companyer a process that was done in that case. in that view of the matter etymologically the word
manufacture properly companystrued would doubtless companyer the
transformation. in support of the question whether actually
there is manufacture or number various documents were attempted
to be utilised at the hearing of the application before us. most of these pieces of evidence cannumber be admitted at this
stage but indisputably in the indian standard glossary of
terms which deals with various expressions bleached
fabric has been defined as a fabric which has undergone
bleaching treatment and is treated by the india standard
institution as something different from fabric which has number
undergone the bleaching operations. different standards are
set out by the same and the views of the indian standard
institution can be looked into by the companyrt with certain
amount of creditability. see in this companynection union of
india v. delhi cloth general mills  supra . so far as
other evidence is companycerned as mentioned hereinbefore it
may number be safe to deal with the same as these were produced
at a very late stage and all the materials are number on the
record. after the impugned act was passed these processes in
the present case indubitably fill within the expression
manufacture if the impugned act is valid and within the
competence of the parliament. arguments however were
advanced on behalf of the petitioners that in entry 84 of
list i of seventh schedule the expression manufacture
cannumber be extended to include processes which were number
manufacture. large number of decisions were cited at the
bar on this aspect of the matter. it is true that entries
though should be widely companystrued these should number be so
construed as to bring in something which has numberhing to do
with the manufacture. it was submitted that legal companycept
and companynumberation of manufacture. were well-settled. reliance was placed on several decisions for this purpose. as has been numbered processes of the type which have
been incorporated by the impugned act were number so alien or
foreign to the companycept of manufacture that these companyld number
come within that companycept. the question whether the impugned act is companyered by
entry 84 can be looked from anumberher point of view namely
the actual companytents of entry 84. in the case of aluminium
corporation of india limited v. companyl board 1 . a division bench
of calcutta high companyrt had to companysider this question in the
context of companyl mines  companyservation and safety  act 1952.
the objection of the petitioner in that case was that
although companyl might be a material or a companymodity it was number
something which was produced and therefore the entry which
applied to the goods produced in india companyld number apply to
coal. numberquestion of manufacture obviously arose. it was
submitted that the companyl produced itself. this was rejected. the word produced appearing in entry number 84 of list i of
the seventh schedule is used in just a position with the
word manufactured according to the division bench and used
in companynection with duty of excise and companysequently it would
appear to companytemplate some expenditure of human skill and
labour in bringing the goods companycerned into the companydition
which would attract the duty. it was number required that the
goods would be manufactured in the sense that raw material
should be used to turn out something altogether different. it would still require that these should be produced in the
sense that some human activity and energy should be spent on
them and these should be subjected to some processes in
order that these might be brought to the state in which they
might become fit for companysumption. to speak of companyl the
division bench was of the opinion as produced in the sense
to its being made a material of companysumption by human skill
and labour was entirely companyrect and had sanction of approved
usage. reference was made to the observations of the king v.
caledonian companylieries limited.  2  where the judicial
committee held that the respondents before them were
producers of companyl. if that aspect of the matter is kept in
mind then expenditure of human skill and material have been
used in the processing and it may number be that the raw
material was first transformed but over the transformed
material further transformation was done by the human
labour and skill making this fit for human companysumption. in any event under entry 97 of list i of the seventh
schedule this would apply if it is number under entry 84. it
was then argued that if the legislation was sought to be
defended on the ground that it is a tax on activity like
processing and would be companyered by the

a.i.r. 1959 cal. 222.  2  1928 a.c. 358.
powers enumerated under entry 97 of list i of the seventh
schedule then it was submitted that there was numbercharging
section for such an a activity and as such the charge must
fail and there cannumber be any levy. this argument proceeds
on an entire misconception. the charging section is the
charging section 3 of the central excises and salt act
1944. it stipulates the levy and charge of duty of excise on
all excisable goods produced or manufactured. manufactured
under the act after the amendment would be the manufacture
as amended in section 2  f  and tariff item 19 i and 22 and
the charge would be on that basis. therefore it is difficult
to appreciate the argument that the levy would fail as there
will be numberappropriate charging section or machinery for
effectuating the levy on the activity like the method of
processing even if such an activity can be justified under
entry 97 of list i of seventh schedule. we are therefore
of the opinion that there is numbersubstance in this companytention
as mentioned hereinbefore under each of these points several
authorities were cited but in the view we have taken on
principles which are well-settled it is number necessary to
multiply these authorities. the validity of the impugned act was challenged on the
ground that by giving retrospective effect unreasonable
restrictions have been imposed on the petitioners
fundamental rights under articles 14 and 19  1   g  of the
constitution. in this companynection it may be appropriate to
refer to the statement of objects and reasons wherein it was
stated that the central excise duty was levied for the first
time on companyton fabrics in 1949 on man-made fabrics  rayon
of artificial silk fabrics  in 1954 and on woollen fabrics
in 1955. from the very early stages of the textile tariff
with a view to achieving progression in the rate structure
and to aligning excise companytrol with the demands of different
producing sectors duties had been levied number only on grey
fabrics but also at the stage of processing such as
bleaching dyeing and printing. in the judgment of the
gujarat high companyrt in the case of real honest textiles and
others v. union of india it was held that fabric as used
in the tariff description companyton fabric would refer to
something that was woven hence it companyld relate only to
cloth in the grey stage processing of the grey cloth either
by bleaching dyeing or printing did number amount to
manufacturing as both before and after processing it
remained a fabric falling within the same item of central
excise tariff  item 19-cotton fabrics of the first schedule
to the central excises and salt act . the companyrt had arrived
at a similar companyclusion with regard to man-made fabrics
falling under item number 22 of the same schedule. after the
pronumberncement of the above judgment several writ petitions
were filed in various companyrts. this decision of the gujarat
high companyrt according to the statement of objects and
reasons of the act had upset the arrangements regarding
levy of excise duties on textile fabrics. the judgment also
had the effect of disturbing the balance evolved between
different sectors of the textile industry. furthermore it
was made clear that in so far as past assessments were
concerned refund of excise duties to manufactures as
ordered by the high companyrt would have only meant a fortuitous
windfall so as to benefit such persons without any relief to
the ultimate companysumers who had purchased the fabrics and had
borne the burden of the duties. in order to avoid this the
act was passed. it has therefore to be borne in mind that the
petitioners have already paid excise duty demanded of them
from time to time and the present petitioners have gathered
the duties from the companysumers. imposition of tax by legislation makes the subjects pay
taxes. it is well-recognised that tax may be imposed
retrospectively. it is also well-settled that by itself
would number be unreasonable restriction on the right to carry
on business. it was urged however that unreasonable
restrictions would be there because of the retrospectivity. the power of the parliament to make retrospective
legislation including fiscal legislation are well-settled.  see m s. krishnamurthi company etc. v. state of madras
anr.    such legislation per se is number unreasonable. there
is numberparticular feature of this legislation which can be
said to create any unreasonable restriction upon the
petitioners. in the view we have taken of the expression
manufacture the companycept of process being embodied in
certain situation in the idea of manufacture the impugned
legislation is only making small repairs and that is
permissible mode of legislation. in 73rd volume of harward
law review p. 692 at p. 795 it has been stated as follows-
it is necessary that the legislature should be able
to cure inadvertent defects in statutes or their
administration by making what has been aptly called
small repairs. moreover the individual who claims
that a vested right
 1  1973l 2 s.c.r. 55.
has arisen from the defect is seeking a windfall since
had the legislatures or administrators action had the
effect it was intended to and companyld have had numbersuch
right would have arisen. thus the interest in the
retroactive curing of such a defect in the
administration of government out weighs the
individuals interest in benefiting from the defect
the companyrt has been extremely reluctant to over- ride
the legislative judgment as to the necessity for
retrospective taxation number only because of the
paramount governmental interest in obtaining adequate
revenues but also because taxes are number in the nature
of a penalty or a companytractual obligation but rather a
means of apportioning the companyts of government amount
those who benefit from it. the impugned legislation does number act harshly number there
is any scope for arbitrariness or discrimination. it was companytended on behalf of the petitioners that they
are carrying on only the processing activity and the
wholesale cash price is number theirs on the entire product. section 4 of the act is the section which deals with the
valuation of excise goods for the purpose of charging duty
of the same would be applicable. where for the purpose of
calculating assessable profits a numberional and companyventional
sum is laid down by the legislature to be arrived at on a
certain basis it is number permissible for the companyrts to
engraft into it any other deduction or allowance or addition
or read it down on the score that the said deduction or
allowance or addition was authorised elsewhere in the act or
in the rules. a companyventional charge should be measured by
its own companyputation and number by facts relating to other
method of companyputation. the circumstances that thereby the
benefit of any exemption granted by the legislature may be
lost and that in some cases hardship might result are number
matters which would influence companyrts on the companystruction of
the statute. a tax payer subject is entitled only to such
benefit as is granted by the legislature. taxation under the
act is the rule and benefit and exemption the exception. and in this case there is numberhardship. when the textile
fabrics are subjected to the processes like bleaching
dyeing and printing etc. by independent processes whether
on their own account or on job charges basis the value of
the purposes of assessment under section 4 of the central
excise act will number be the processing charges alone but the
intrinsic value of the processed fabrics
which is the price at which such fabrics are sold for the
first time a in the wholesale market. that is the effect of
section 4 of the act. the value would naturally include the
value of grey fabrics supplied to the independent processors
for the processing. however excise duty if any paid on
the grey fabrics will be given proforma credit to the
independent processors to be utilised for the payment on the
processed fabrics in accordance with the rules 56a or 96d of
the central excise rules as the case may be. read in that companytext and in the companytext of the
prevalent practice followed so long until the decision of
the gujrat high companyrt in real honest case there is no
hardship and numberinjustice to the petitioners or the
manufacturers of grey fabrics. the fact that the petitioners
are number the owners of the end product is irrelevant. taxable
event is manufacture-number ownership. see in re 711e bill to
amend section 20 of the sea customs act 1878 and section 3
of the central excise salt act 1944.  1
the companyclusion that inevitably follows that in view of
the amendment made in section 2 f  of the central excises
salt act as well as the substitution of new item 19 i and
item 22 1  m excise tariff in place of the original items
the companytentions of the petitioners cannumber be accepted. section 3 of the central excises and salt act clearly
indicates that the object of the entries in the first
schedule is firstly to specify excisable goods and secondly
to specify rates at which excise duty will be levied. reference has already been made to rule 56a. under sub-rule
 2  of rule 56a it is expressly provided that a
manufacturer will be given credit of the duty which is
already paid on the articles used in the manufacture subject
to certain companyditions. it is stated before us that excise
duty will be charged on processed printed material. processors will be given credit for the duty already paid on
the grey cloth by the manufacturer of the grey cloth. in
this view of the matter we are of the opinion that the views
expressed by the bombay high companyrt in the case of new shakti
dye works pvt. limited mahalakshmi dyeing and printing works

union of india and anr.  writ petition number. 622 and 623
of 1979  are companyrect. the views expressed by the gujarat
high companyrt in vijay textiles v. union of india in so far as
it held that the processed fabrics companyld only be taxed under
residuary entry and number item 19 i or item 22 of the first
schedule of the  central excise tariff cannumber be sustained.  1  1964 3 s.c.c. 787 at 822.
we are also unable to accept the view of the gujarat
high companyrt in the case of union of india ors. v. m s real
honest textiles ors.  civil appeal number. 586 to 562 of
1979 . writ petition  civil  number 11728 of 1984 therefore fails
and is dismissed with companyts. the companynected applications viz. civil appeal number 3564 of 1984 and 6414 of 1983 and writ
petition number. 13556 13792 13788 15438-39 of 1984 also
fail and are dismissed with companyts. interim orders if any
are vacated. arrears of duties should forthwith be paid and
future duties should also be paid as and when goods are
cleared. civil appeal number. 586 to 592 of 1979 are allowed with
costs. good deal of arguments were canvassed before us for
variation or vacation of the interim orders passed in these
cases. different companyrts sometimes pass different orders as
the companyrts think fit. it is a matter of companymon knumberledge
that the interim orders passed by particular companyrts on
certain companysideration are number precedents for other cases may
be on similar facts. an argument is being built up number-a-
days that once an interim order has been passed by this
court on certain factors specially in fiscal matters in
subsequent matters on more or less similar facts there
should number be a different order passed number should there be
any variation with that kind of interim order passed. it is
submitted at the bar that such variance creates
discrimination. this is an unfortunate approach. every bench
hearing a matter on the facts and circumstances of each case
should have the right to grant interim orders on such terms
as it companysiders fit and proper and if it had granted interim
order at one stage it should have right to vary or alter
such interim orders. we venture to suggest however that a
consensus should be developed in matter of interim orders. if we may venture to suggest in fiscal matters
specially in cases involving indirect taxes where numbermally
taxes have been realised from the companysumers but have number
been paid over to the exchequer or where taxes are to be
realised from companysumers by the dealers or others who are
parties before the companyrt interim orders staying the payment
of such taxes until final disposal of the matters should number
be passed. it is a matter of balance of public companyvenience. large amounts of taxes are involved in these types of
litigations. final disposal of matters unfortunately in the
present state of affairs in our
courts takes enumbermously long time and number-realisation of
taxes for long time creates an upsetting effect on industry
and econumberic life causing great inconvenience to ordinary
people. governments are run on public funds and if large
amounts all over the companyntry are held up during the pendency
of litigations it becomes difficult for the governments to
run and become oppressive to the people. governments
expenditures cannumber be made on bank guarantees or
securities.