<NAME>, J.

1. Heard the learned counsel for the parties.

2. The present application has been moved by <ORG>, a body corporate established under the Industrial Finance Corporation Act , 1948 (Act No. XV of 1948) (hereinafter referred to as the Act) under Section 30 of the Act for the sale of the mortgaged property under Section 30(1)(b)(c) of the Act and for the appointment of the Receiver over the same.

3. According to the petitioner No. 1, the respondent No. 1 as an incorporated company, on 7-11-1972 took a loan of Rs. 52 lacs for its project for manufacture of mild steel ingots in the State of U.P. The said loan was taken on the terms and conditions contained in the Loan Agreement dt. 5-7-1973. It was entered into between the petitioner No. 1 and respondent No. 1. A security for the said loan together with interest etc. was agreed to and a Deed of Hypothecation was also made in favour of petitioner No. 1 by the respondent No. 1. Similarly a further security for the said loan in favour of petitioner No. 1 was made by deposit of title deeds of the immovable properties on 5-11-1974. On 7-7-1978 the petitioner No. 1 further advanced a loan of Rs. 15 lacs for the project of the respondent No. 1 and it was advanced on the terms and conditions contained in the Loan Agreement dt. 12-4-1979. Similarly security for this loan was also taken by the petitioner No. 1 according to its satisfaction. On account of breach of the terms and conditions of the Loan Agreement as aforesaid committed by the respondent No. 1, the details of which have been mentioned in paragraph No. 19 of the application, is the cause for making the present application. On account of the said breach, the petitioner No. 1 exercised its powers under the said Agreements by means of letter dt. 2-9-87 by which it recalled the entire amount due for principal, interest and other monies in respect of the said loans and Called upon the respondent No. 1 to pay forthwith an aggregate amount of Rs. 92,09,563/-. It is further urged that the respondent No. 1 has suspended its production since Feb., 1987 and the factory has been lying closed since then. The plant and machinery have been lying idle and are rapidly deteriorating in value for want of maintenance and proper care to the detriment of petitioner No. 1 and is also in danger of being damaged, destroyed, pilfered and removed, since there is no proper security arrangement in respect of the said properties. It is also averred that the properties which have been mortgaged and charged, the value of which would not be sufficient for realisation of the amount which the petitioner No. 1 is entitled even if the entire property is sold (this part of the averment has been resiled by the other side). It is in the light of the present petition, a prayer for ad interim order was made for passing the order under Section 30(3) of the Act.

4. After hearing the learned counsel for the petitioners this Court on 5-10-1987 passed 'the necessary orders in terms of prayer (d) of the petition and further called upon the respondent No. 1 to show cause why an order be not granted as sought in terms of prayers (b) and (c). It is after notice given to the other side and after their appearance and after the counter-affidavit being filed, the present application has come up before me for the grant of reliefs (b) and (c) as prayed in the said application. The prayer (b) is for the appointment of the Receiver in respect of, the said properties and prayer (c) is for the attachment of the said properties mentioned in prayer (a).

5. In the counter-affidavit filed it is stated respondent No. 1 was incorporated in the State of Maharashtra and financial assistance thereof had been sanctioned by <ORG> and about 40 acres of land had been allotted and handed over to the company by <ORG> in its industrial area at Nagpur. However, after the said sanctions, U.P. State authorities prevailed upon the Company to change its plant site to set up it industrial unit in the State of Uttar Pradesh for the industrialisation of a notified backward area of the western U.P. It is averred that after the said loan was sanctioned an immediate sanction of power load on 31-3-1973 was made but the powers were made available to the Company only in the last week of Dec., 1979 and thus the said unit has to lie idle for several years. It is further averred that non-payment of amount was not on account of any laches on behalf of the respondent No. 1 but on the aforesaid factor. It is- also averred that all the <ORG> financial institutions have their representatives on the Board of Directors of the Company. <ORG> represented sometimes even by person of I.A.S. Officer concerned of the rank of Resident Commissioner in New Delhi or a person of a senior technical manager. The petitioner No. 1 has also been nominating one of officers to represent the Board of Directors of the Company and is presently represented by its Assistant General Manager.

6. There is no dispute in support of the loan being advanced or breach having been committed in terms of the loan agreements. The main contention raised on behalf of the petitioners is that in terms of Section 30(3) of the Act the interim order as contemplated therein if conditions as stipulated are satisfied, should be passed.

7. It has been urged that Section 30 speaks about where an industrial concern is in breach of any agreement, makes any default in repayment of any loan or advance or any instalment thereof or otherwise fails to comply with the terms of its agreement. Then any officer of the <ORG> generally or specially authorised by the <ORG> may apply to the Court for the relief mentioned therein. It is thus urged that since in the present case all the conditions mentioned therein, namely, the breach of the agreements and the nonpayment of the loan, therefore, the order as contemplated under Sub-section (3) of Section 3 of the Act is mandatory and the court should pass such an order. It is in view of the arguments made the reliefs both as prayed under prayers (b) and (c) should be granted.

8. The learned counsel for the respondent No. 1, in the present case, has made a preliminary objection to the maintainability of the present proceedings in view of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1885 (Act No. 1 of 1886). The argument is that in view of this section no further proceedings could be gone into in the present case as there is bar under this section. It has been averred in para No. 10 of the counter-affidavit that the company has made reference to the said <ORG> under Section 14(1) of the said Act and the same has been duly registered for the enquiry as Case No. 209 of 1987 is annexed, a photostat copy of the letter received from the Registrar of the <ORG> for its registration. Further in the same paragraph it has been stated that on personal enquiry from the office of the <ORG> of Industrial and Financial Reconstruction, New Delhi, that the proceedings for the enquiry had started by assigning our reference to one of the <ORG>. It is on this basis an argument is raised that actually since enquiry is pending under Section 16 , no further proceedings be gone into.

9. Learned counsel for the petitioners vehemently urged that mere registration of an application by the Registrar on a reference made under Section 15 of the said Act would not constitute an enquiry being pending and, therefore, this court, is precluded from passing the necessary orders in terms of Section 30(3) of the aforesaid Industrial Finance Corporation Act . In the rejoinder-affidavit, the averment made in paragraph No. 10 of the counter-

affidavit about the enquiry has been denied. It is averred that whenever the meeting of <ORG> is called the petitioner's nominee director has also been intimated regarding the meeting of <ORG> and since the <ORG> was not intimated about the said meeting there could not be any enquiry before the said <ORG>. In fact before the enquiry could be initiated, a notice should be issued by the said <ORG> for holding the said enquiry.

10. Learned counsel for the petitioners could not show any such rules that before initiating the enquiry a notice must be issued as stated by him. Neither any Act nor Rule has been shown nor any practice of the Board has been intimated by means of an affidavit. In view of these the contention cannot be accepted that enquiry only can be initiated after issuing the notice as averred in the rejoinder-affidavit.

11. It is next urged that under Section 16 of Act No. 1 of 1986 the language used is : --

'The <ORG> may make such inquiry as it may deem fit."

The argument is that the word 'may' used here itself indicates that it is directory in the nature and not mandatory. The argument to my mind is not sustainable. Looking to the scheme of the Act after a reference'under Section 15 of the Act has been made and the same having been registered the <ORG> cannot decline to enquire into the matter. It may on enquiry come to the conclusion that the application that for treating the company concerned as sick unit is not acceptable and thus reject the application but it cannot be said that <ORG> has discretion not even to enquire specially after reference being registered and after nominating a Bench of the <ORG>. The word 'may' only qualifies the word 'make' such inquiry is mandatory. In fact Sub-section (2) of Section 16 of the Act lays down that the enquiry may be made either by <ORG> or its agency or it may require any operating agency to enquire into and make a report.

12. Even if in law if it could be argued that there is some gap between the actual holding of the enquiry and registration, it would not be proper for this <ORG> on the facts and circumstances of this case to exercise its powers specially keeping in view of the object for which the aforesaid Sick Industrial Companies (Special Provisions) Act has been enacted. The main object is to salvage a viable Company by making available funds by other assistance or by making alterations etc. as contemplated under the said Act.

13. It is significant under Section 22 of the Act. It further provides that : --

"no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof shall lie or be proceeded with further, except with the consent of the Board."

Thus it is open to the petitioners to apply to the Board and obtain its consent on the facts of this case in its own and in the interest of the properties as stated, in the present petition for permitting the Receiver to be appointed. Without such consent as stated in this section, it would not be proper to further continue the present proceedings in view of Section 22 . On the facts of this case and on the basis of affidavits filed by the parties, I am of the, opinion that the circumstances are such which lead to irresistible inference that enquiry is pending under Section 16 of the Act.

14. In view of the aforesaid position, it is not possible to this <ORG> to grant any relief, or reliefs (b) and (c), at this stage.

15. With these observations, the present application is disposed of.

16. A copy of this order may be given to the learned counsel for the parties on payment of usual charges within three days.


<NAME>, Senior Vice-President

1. The facts of this case, which are not in dispute, as taken from the appeal are set out below :-

1. "M/s. Parmali Wallace Ltd., Bhopal (hereinafter called the respondents) are manufacturers of among other goods, Wood-based <ORG> and articles thereof falling under Tariff Item 16(B) of Central Excise Tariff, prior to 28-2-1982 the Wood-based <ORG> and articles thereof were classifiable under the residuary head of he goods not elsewhere specified i.e. Tariff Item 68 of C.E.T. and chargeatble to duty of excise accordingly. The tariff structure of Tariff Item 16B was revised w.e.f. 28-2-1982 vide Finance Bill, 1982, so as to cover the wood-based <ORG> and articles thereof within its scope. Accordingly the goods viz. Wood-based <ORG> and articles thereof manufactured by the respondents have become classifiable under the new structured Tariff Item 16B of the C.E.T. w.e.f. 28-2-1982 and liable to duty of excise at the appropriate rate.

1.2. Due to above change in Tariff classification, Respondents, submitted an application in form AL 4 for the issue of licence in form L4 for manufacture of excisable goods falling under Tariff Item 16B of Central Excise Tariff. The respondents also filed a classification list in respect of the said goods claiming its approval w.e.f. 28-2-1982, classifying <ORG> <ORG> and articles thereof under Tariff Item 16B of C.E.T. with effective Basic Excise duty at the rate of 20% ad valorem. Simultaneously, they filed another classification list claiming approval of basic excise duty at the rate of 8% ad valorem under Tariff Item 68 of C.E.T. on pre-budget stock of <ORG> <ORG> and articles thereof. The Superintendent Central Excise, <NAME>, having jurisdiction over the factory of respondents, however, rejected the respondents' claim, as inadmissible in terms of the provisions of Rule 9A of Central Excise Rules, 1944, which stipulates inter alia that in such cases the rate of duty and tariff valuation, if any, applicable to any excisable goods shall be the rate and valuation in force on the date on which duty is paid, which is apparently the date on which the clearances of goods are effected."

2. Against the above order of the Superintendent, the respondents went in appeal to the Collector of <ORG>Appeals), New Delhi. The Collector allowed the appeal with the following observations :-

"It is clear that the pre-budget stock of goods, which can be segregated and shown separately is liable to duty only under tariff head 68 of C.E.T. and not under 16-B into which the goods fall only with the introduction of the Finance Bill. Excise being a levy on manufacture and not on removal as has been held by the Courts including <ORG> and the correct tariff heading under which the pre-budget stock should have been classified happens to be Item 68 and not Item 16-B. The order of the Superintendent is, therefore, liable to be quashed."

It is against this order that the Collector of <ORG>, Indore has come up in appeal to the Tribunal.

3. A large number of authorities were cited by the learned representatives of both sides. Most of them were with reference to the interpretation of Section 3 of the Central Excises and Salt Act and Rule 9A of the Central Excise Rules. Some were with reference to the similar provisions in Section 15 of the Customs Act. A few were with reference to other enactments. Most of the judgments were only listed and not referred to in detail. In this order we shall refer only to such of the judgments as were actually gone into or can be said to be directly relevant to the issue before us.

4. The arguments of <NAME>, the learned representative of the Collector, were basically with reference to the interpretation of Rule 9A of the Central Excise Rules. He submitted that in the Order-in-Original of the Superintendent, reliance had been placed on the above Rule". However, in the order of the Collector (Appeals) there was no reference to the Rule] and it had been by-passed on general considerations, resulting in a wrong decision.

5. <NAME> referred to the definition of "excisable goods" in para (d) under Section 2 of the Central Excises and Salt Act . That expression is defined as meaning "goods specified in the First Schedule as being subject to a duty of excise ...". According to him inclusion in the First Schedule with a rate of duty brought the goods within the scope of this definition. Admittedly the goods in this case were excisable goods both before and after introduction of the 1982 Finance Bill. The only difference was that immediately on the introduction of the Bill, together with the invocation of the Provisional Collection of Taxes Act , the excisable goods were specified under a different entry of the Schedule.

6. <NAME> submitted that in some of the authorities reference had been made to the point of time when the goods came into existence. He submitted that the only reference which he had been able to find in the Act or in the Rules to "coming into existence" was in the proviso to Sub-rule (2) of Rule 224. That Rule imposed certain restrictions on the removal of goods beyond office hours, and also on the day of introduction of a Finance Bill or similar legislation. Even in this case, where "pre-budget" stocks were allowed to be removed with the permission of <ORG>, the applicant had to undertake to pay duty at the enhanced rate applicable in terms of the Finance Bill.

7. <NAME> therefore submitted that if excise duty was interpreted as a tax on manufacture, and this in turn was interpreted with reference to the date of the manufacture being complete, there would be no need for the provisions of Rule 9A, relating the rate of duty to different dates dependant on different sets of circumstances. No doubt Sub-section (1) of Section 3 of the Act stated that "there shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in India ..." If, however, this was interpreted to mean that the late of duty was fixed immediately the manufacture was completed, then Rule 9A would have to be taken as either ineffective or inconsistent with the provisions of Section 3 . He submitted that we should not adopt an interpretation of either the Section or the Rule which would lead to the above result.

8. <NAME> referred to the recent judgment of <ORG> in the case of <ORG> v <ORG>. 1984 (17) E.L.T. 217, delivered on 16-7-1984. This being a recent judgment which took into account a number of earlier judgments, no doubt, carried considerable weight. In this case <ORG> had held as follows (para 26) : -

"We unhesitatingly hold that the excise duty would arise the moment the manufacture or production of the commodity is complete irrespective of the fact that the assessment and collection is postponed to a later point of time when the said commodity is cleared or removed : the incidence for the impost being the manufacture or production of goods. If that be so, the petitioners are entitled to have the benefit of the exemption notification and so, the refund of the excess duty paid."

<NAME> submitted that even in this judgment Rule 9A had no been struck down but only "by-passed". Therefore, that Rule was still before us, and it was open to us to take a view regarding its interpretation, in th light of other relevant judgments.

9. <NAME> submitted that no doubt excise duty was a (sic) on manufacture. This, however, was a constitutional concept, derived from th provisions of the Seventh Schedule to the Constitution. For actual assessment of duty, the terms of the statute itself, namely the Central Excises an- Salt Act , would have to be taken into account. In terms of the statute-whether the Central Excises and Salt Act itself or the Rules framed there under-it was not permissible to apply for the purpose of assessment a Tari Item or a notification which was not in existence (or in existence in a amended form). <NAME> further submitted that if Rule 9 were to be ignored, on the ground that the necessary provision was incoporate in Section 3 there would be left no provision to determine the rate of (sic) in the varying circumstances set out in that Rule.

10. <NAME> submitted that under Section 3(1) , the aspect relevant for levying and collecting excise duties were (a) whether they (sic) excisable goods, (b) whether they were produced or manufactured in India and (c) what was the relevant rate in the First Schedule. The point of (sic) for determination of the rate of duty came only at the time of removal (sic) the goods. Section 3 of the Act did not contain a time element, which was provided by Rule 9A, framed under the Act. The Rule could not be considered as repugnant to Section 3 . Linking the rate of duty to the time of removal, would not make the tax a tax on removal. There was a clear next between the production and the removal of goods. At the time of removal the tariff item applicable would be that in force at that time.

11. From the economic angle, <NAME> submitted that good which were cleared at a particular point of time should bear the same rate of duty, and this could be achieved only through Rule 9A.

12. The respondents had argued (as seen from para 2 of the Order-in-Appeal) that the order of the Superintendent was faulty because according to them it would make the action of the provisions of the Finance B retrospective. According to him this was not correct, as the application the provisions of the Bill at the time of removal of the goods did not amount giving retrospective effect.

13. <NAME> submitted that in the Andhra Pradesh if <ORG> judgment in the case of <ORG>, the case was one where B exemption notification was rescinded (as seen from para 3 of the judgment This was not the case in the matter before us. It had been held in para 18 in the judgment that the answer to the question which fell for determination that case was found in Section 3 and not in any other Section or Rule including Rule 9A. He submitted that these observations did not take in account the pivotal role of Rule 9A. Section 3 of the Act laid down the duties of excise should be collected "in such manner as may be prescribed This clause qualified both the levy and the collection of duty. Therefore while the "contours of assessment and production" were to be within t! frame work of Section 3 , the manner of levy and collection could legitimate be governed by rules in pursuance of that section. In this connection She. Raghavan Iyer referred to para 13 of the judgment of the Hon'ble Supreme <ORG> in the case of <CITATION> . (1983 E.L.T. 1896 S.C.), where it had been observed that "it is apparent therefore, that when enacting a measure to serve as a standard for assessing the levy the legislature need not contour it along lines which spell out the character of the levy itself". Earlier, in para 12 of the judgment the Supreme <ORG> had referred with approval to the observations of the Federal <ORG> in the <CITATION> (1978 E.L.T. J 272) :

"There is in theory nothing to prevent <ORG> from imposing a duty of excise on a commodity as soon as it comes into existence, no matter what happens to it afterwards, whether it be sold, consumed, destroyed, or given away. A taxing authority will not ordinarily impose such a duty, because it is much more convenient administratively to collect the duty (as in the case of most of the Indian Excise Acts) when the commodity leaves the factory for the first time, and also because the duty is intended to be an indirect duty which the manufacturer or producer is to pass on to the ultimate consumer, which he could not do if the commodity had, for example, been destroyed in the factory itself. It is the fact of manufacture which attracts the duty, even though it may be collected later."

In para 12, it had been pointed out that while the levy of excise duty in our country has the status of a constitutional concept, the point of collection is located where the statute declares it will be.

14. <NAME> submitted that the observations of <ORG> in the case of <ORG> had to be read in the light of the position set out in the <ORG> judgment above. The observation of <ORG> in para 19 of the judgment that the provisions of that Rule laid down the mode and manner of assessment did not take due account of the fact that these aspects were covered by Rule 52 and that Rule 9A was confined to fixing the rate of duty.

15. <NAME> then referred to the judgment of <ORG> in the case of <CITATION> . (1978 E.L.T. 33). That was a case where there was initially a total exemption from duty on power-driven pumps subject to certain conditions. The total exemption was modified with effect from 17-3-1972 and a concessional rate of duty made applicable. In that case it had been held that the goods which had been manufactured during the duty-free period were not liable for payment of duty at all. In that case there had been an appeal to <ORG>, which had been "dismissed on merits". <NAME> submitted that there was a clear distinction between that case and the present case where the goods were dutiable both before and after the date of introduction of the Finance Bill.

16. <NAME> also submitted that there were a number of judicial decisions with reference to the parallel provisions of Section 15 of the Customs Act, 1962, in which the view had been taken that the rate of duty would depend not on the date of importation (corresponding to the date of manufacture in the case of excisable goods) but in the manner specified in Section 15 (corresponding to Rule 9A in the case of excisable goods). The application of the principle followed in those judgments would lead to the conclusion that Rule 9A should be applied for determining the rate of Central Excise duty, and would also lead to consistency in approach with reference to the two important indirect taxes. <NAME> referred to the judgment of <ORG> delivered on 16-10-1984 in the case of <CITATION> , wherein it had been held that the rates applicable were those in force on the date on which they were determined in terms of Section 15 , Customs Act , and that there was no substance in the contention that the rates had been applied retrospectively.

17. When <NAME>, the learned advocate for the respondents, started his reply, the Bench suggested to him that there were two relevant aspects which he might deal with in the course of his arguments. One was the effect of the provisions of the Provisional Collection of Taxes Act , 1931, in a case like the one under consideration. The other was the view taken in a number of cases relating to Section 15 of the Customs Act, as for instance the judgment of <ORG> in the case of <CITATION> AIR 1979 S.C. 675 .

18. <NAME> commenced his reply by referring to the provisions of Section 3 of the Central Excises and Salt Act . Sub-section (1) of this Section delegated only the manner of the levy and collection of duties of excise, the power to impose a duty being only with <ORG>. No doubt, Rule 9A laid down the manner in which duty should be collected. <NAME> clarified that it was not his case that Rule 9A was not applicable here. Sub-rule (1) was obviously applicable. However, his submission was that on a true interpretation of this sub-rule, what it governed was only the rate of duty (the question of tariff valuation would not arise in this case) and not the classification of the goods based on their description. In other words, it was the description of the goods at the time of completion of manufacture which would determine their classification, in the light of the Tariff in force at that point of time. If between the date of manufacture and the date of removal there was a change in the rate of duty with reference to the classification which had already been determined, the revised rate would be applicable at the time of removal. However, if there was a change in the classification, such a change could not, in view of the wording of the Rule, be applied at the time of removal of the goods.

19. <NAME> placed reliance on the very extensive discussion contained in the advisory opinion of <ORG> in AIR 1963 S.C. 1960 (in re Sea Customs Act). He particularly referred to paras 24 and 25 of that opinion at pages 1775 and 1776 wherein it was laid down that the taxable event in the case of duties of excise is the manufacture of goods and the duty is not directly on the goods but on the manufacture thereof. Therefore, one would have to see under what entry any particular excisable goods fell at the time of manufacture. It was only <ORG> which could vary the description of the goods, and not <ORG> by invoking any rules. Even assuming that Section 3 of the Act gave certain powers to <ORG> in this regard. Rule 9A as it stood did not refer to the tariff description of the goods but only to the rate of duty.

20. <NAME> submitted that if Rule 9A were to be interpreted in the manner advocated by <NAME>, anomalous and inequitable results would follow. Thus, under Rule 53, a manufacturer is required to maintain a daily stock account in a prescribed form (known as the R.G. 1). Sine? this is written up from day-to-day, the entries would be in accordance with the Tariff description as in force at the time of manufacture. If it were held that a different Tariff description would be applicable to the goods because of a change subsequent to the completion of manufacture, it would mean that the accounts properly maintained would stand falsified and an innocent manufacturer would be liable to penal action. Such a result surely could not be intended.

21. <NAME> had referred to the provisions of Rule 224. <NAME> submitted that the object of this Rule was only to ensure that a proper account of the goods manufactured was kept, and it would not justify shifting of goods already manufactured from one entry 10 another.

22. <NAME> thereafter submitted that no provision of an Act could given retrospective effect unless this was specifically provided for. In the present case, if Tariff Item 16-B as amended were applied at the time of removal, this would amount to giving retrospective effect, which was not permissible, in the absence of a specific provision in the Finance Bill. He referred in this connection to the judgment of <ORG> in the case of <CITATION> , etc. (AIR 1968 S.C. 223). In para 6 of that judgment <ORG> had quoted with approval the observations of <NAME> that:

"The general rule is that all statutes, other than those which are merely declaratory, or which relate only to matters of procedure or of evidence, are prima facie prospective and retrospective effect is not to be given to them unless, by express words or necessary implication, it appears that this was the intention of the legislature."

23. Shri <NAME> also referred to the case of <ORG> This elated to dyes derived from coal-tar which prior to the 1961 Budget were not excisable. In the Finance Bill of that year a new Item 14D was introduced, he Provisional Collection of Taxes Act being made applicable. There was a series of judgments in this case, the final one being that of <ORG>, reported in 1980 CENCUS 242D. The question which <ORG> had to decide, in pursuance of" the order of <ORG> demanding the matter to it, was whether the goods sought to be taxed under he new item were manufactured before or after the midnight of the 28th February, 1961. <ORG> held that it was incumbent on the respondents (<ORG>) to establish that the goods in question were manufactured after the midnight of 2S-2-1961 and they had failed to do so in the result, the matter was decided in favour of the manufacturers and against the <ORG>. This would also show that the taxable event was the ate of completion of manufacture. In coming to this conclusion <ORG> had also taken into account a trade notice issued by the <ORG> which said that "goods will not be considered as fully manufactured unless at midnight of 28th February/1st March, 1961 they were ready for delivery". While the controversy in that case was whether in fact the goods were ready 'or delivery, the trade noted also showed that had they been taken as fully manufactured, they would not have been sought to be taxed. This was also he view taken by <ORG>.

24. Referring to the Provisional Collection of Taxes Act , which enables the provisions of the statute to be implemented even before it is passed into law, <NAME> submitted that this was an exception to the general rule against the retrospectivity of statutes. Unless there was clearly a statutory (revision authorising retrospective application, it would not be legal to apply it thus.

25. <NAME> referred to an article in the February 1982 issue of "The Excise and Customs Reporter", bearing the title "Central Excise in Easy Lessons-Budget Day instructions" (page 11C et seq). At para 6 of this article it was stated that "unless otherwise stated in the Budget proposals, articles which become excisable for the first time on introduction of the Finance Bill will be only those articles which are in fully manufactured condition". He submitted that judicial notice could be taken of this article, which might be regarded as a kind of contemporanea expositio. When it was pointed out by the Bench that this was apparently an article by some practitioner and not an official publication, <NAME> submitted that we could still take notice of it.

26. <NAME>, therefore, submitted that, in the view propounded by him, Rule 9A would get full effect. By the same Finance Bill the rate of duty under Item 68 was raised from 8% to 10%, and this increase would, no doubt, be applicable to the goods under consideration. However, the change in classification from Item 68 to Item I6-B would not apply to these goods.

27. It was pointed out to <NAME> that in the relevant clauses of the Finance Bill and the Schedule, no distinction had been made between the description and the rate of duty, whether with reference to their provisional application or their final effect. <NAME> submitted that the amendment only had the effect that whatever was henceforth manufactured and fell within the amended description in Item 16-B would be classifiable under that item. Whatever had already been manufactured and had attracted the charge of duty in terms of Section 3 would not be affected by the change in description.

28. The Bench drew the attention of <NAME> to the judgment of <ORG> in the case of <CITATION> . (1983 E.L.T. 285 (All.), on which reliance had been placed by <NAME>. That case related to molasses, which was liable to duty under Item 68 before 1980, but by the Finance Bill of that year was brought under a specific item, namely 15CC. The position, therefore, would be identical in material respects to that in the present case. The Hon'ble Allahabad High Court had held that duty in accordance with the new item was leviable even on goods manufactured before the date of introduction of the Finance Bill. This decision would, therefore, appear to be against the view advanced by <NAME>. On this <NAME> submitted that <ORG> had assumed that the taxable event was the date of removal and not the date of manufacture of the goods. He submitted that in view of the authorities cited by him, particularly the advisory opinion of <ORG> (vide para 19 above), this assumption was not correct, and since the decision in that case was based on this assumption it was also not an authority to be followed.

29. Replying to <NAME>, <NAME> submitted that the provisions of the Provisional Collection of Taxes Act were clear. Section 3 of the Act referred to the introduction of a Bill which "provides for the imposition or increase of a duty of customs or excise". The substance of the provision was that there should be increase in the duty leviable on a particular article. The form through which the increase was effected, whether by directly modifying the rate of duty or by modifying the description with a resulting increase in the rate of duty, was not material. Any such change had to be given effect from the midnight of that day and this would not mount to giving retrospective effect. Since the goods had not as yet been taxed and were still in the hands of the manufacturer, assessment of those goods at the time of removal in accordance with the rate of duty then in force would not amount to retrospective application.

30. <NAME> further submitted that even if it was assumed that the application of the amended rate of duty was retrospective in nature, this was still permissible by necessary implication, because Rule 9A clearly applied, and that Rule made no exception in the case of goods manufactured prior to the change. He cited the reference at page 63 of "The Law of Central Excise (Second Edition) by <NAME> and <NAME>, to the case of <NAME> v. Assistant Collector of Central Excise, wherein reference was made to a decision of <ORG>. This was a case where vegetable non essential oils became excisable in 1956, a new item being introduced in the Finance Bill of that year, to which the Provisional Collection of Taxes Act was applied. The Court had held that the fact that the petitioner's goods were manufactured prior to 29-2-1956 was irrelevant and that the liability to duty attached the moment an item was included in the First Schedule to the Central Excises and Salt Act .

31. <NAME> also referred to the judgment of <ORG> in the case of <CITATION> . (1978 E.L.T. 680). in para 13 of the judgment it had been held that "the point of time at which we have to see whether the goods were liable to duty would be thus the date of removal of the goods from the factory or warehouse and not the date of manufacture or production, for the date when the goods were sought to be removed from the factory or warehouse they were goods of the description mentioned in one of the items in the First Schedule as being subject to a duty of excise and were goods which were manufactured or produced in India they could not be removed unless duty at the rate set-forth in the First Schedule to the Act was paid". This would also support his contention.

32. <NAME> also referred to the judgment of <ORG> in the case of <CITATION> .-(1978 E.L.T. (J 355)-ECR C 281 S.C.). At para 48 of the judgment there is a quotation from Halsbury's Laws of England to the effect that where the statute provides that subordinate legislation is to have effect as if enacted in the statute such legislation may be referred for the purpose of construing a provision in the statute itself. (Since there is no such provision in Section 38 of the Act, this argument is not very relevant). He submitted that Rule 9A in no way conflicts with Section 3 .

33. On <NAME> argument based on Rule 53 (vide para 20 above), <NAME> submitted that in the R.G 1 account only the physical description of the goods had to be entered, and not necessarily the tariff description. The physical description would not undergo change with a change in the tariff. The tariff description was required only with reference to the provisions of Rule 173B, relating to the filing of classification lists, and Sub-rule (4) of that Rule specifically provided for filing a fresh list or an amendment, when there was an amendment to the First Schedule whether it related to a change in the description or in the item or sub-item number. [<NAME> intervened to say that in the RG 1 account the rate of duty and the amount of duty had to be entered, as would be seen from Sub-rule (1) (g) of Rule 53].

34. We have carefully considered the submissions from both sides on the very interesting question which has been raised in this appeal. The facts are not in dispute. The goods were excisable under [tern 68. at the time of completion of manufacture (referred to for convenience as "(he time of manufacture"), they were classifiable under Item 68 and were not exempt from duty; at the time of removal from the factory the goods were excisable, classifiable under Item 16B (as amended), and not exempt from duty. The question is whether their tariff classification for the purpose of levy and collection of duty should be determined by the tariff as it stood at the time of manufacture or as it stood at the time of removal.

35. As seen from what has been stated above, detailed arguments were addressed by both sides, and several authorities relied upon. We observe that there can be a number of different situations, based on two variables. One is the point of time, i.e. whether the time of completion of manufacture or the time of removal. The other variable is the nature of duty liability : whether not excisable, excisable but fully exempt and excisable but not exempt (goods partially exempt are considered as "not exempt"). The various judgments which were relied upon cover one or other of the situations which would arise from combinations of the two variables. Naturally, some of these are more frequent and more important than the others. The situations which are covered by the cases cited and are relevant to the present issue appear to be the following :

(i) Goods excisable but fully exempt at the time of manufacture, and excisable and not exempt at the time of removal ;

(ii) Goods excisable and not exempt at the time of manufacture, and excisable and not exempt at the time f r oval (there being only a variation in the quantum of exemption

(iii) Goods not excisable at the time of manufacture and excisable and not exempt at the time of removal; and

(iv) Goods excisable and not exempt at the time of manufacture and excisable (under a different tariff entry) and not exempt at the time of removal.

We shall now refer briefly to the cases relating to each of these situations and also to cases relating to the parallel provisions in Section 15 of the Customs Act.

36. The first situation is covered by the judgment of (sic) Madhya Pradesh High Court in the case of <CITATION> . (1978 E L.T. 33). This case has been referred to in para 1 5 above. (For convenience we are referring to this as "the first judgment" and to the subsequent judgment rejecting the petition for a certificate of fitness for leave to appeal to <ORG>, and reported in 1978 E.L.T. 690 MP, as "the second judgment"). In the first judgment <ORG> of <ORG> held that the liability for tax, namely, the excise duty, would arise no sooner the manufacture or production is completed and it is immaterial as to what machinery may be devised by <ORG> under the rule-making powers for recovery of a tax. The point of recovery or any restriction on removal will not be the determining factor for grant of exemption in respect of goods manufactured during the duty-free period. In that view, the contention of the manufacturers was upheld. A petition was made to the same <ORG> of <ORG> for a certificate of fitness for leave to appeal to <ORG>. In the second judgment the said <ORG> refused a certificate of fitness for leave to appeal to <ORG> (1978 E.L.T. 690). Thereafter, an application for special leave was made to <ORG>, of which the result was that <ORG> "dismissed the SLP on merits".

37. The second situation was before the Hon'ble Madhya Pradesh <ORG> in the case of <ORG>, Ujjain v Union of India and Ors. 1982 E.L.T. 97 M.P. In that case, the goods were excisable throughout but there was a partial exemption at the time of manufacture, which was modified, so that a higher rate was prevailing on the date of removal. There was a change in the statutory rate also, but this does not affect the discussion). In that case, <ORG> held that Rule 9A was valid and was rightly applied with reference to the rate of duty prevailing on the date of removal. The attention of <ORG> was drawn to the decisions of the same <ORG> and of <ORG> in the case of <NAME> Brothers to which reference has been made above. The <ORG> distinguished the case before it from that of <NAME> Brothers, in the following terms:

"When an application for leave to appeal to <ORG> was made, <ORG> rejected the leave application by a speaking order which is reported as <CITATION> 690). It appears that at the time of hearing the leave application the attention of the <ORG> was drawn to Rule 9-A and the decision of <ORG> in <CITATION> -AIR 1967 S.C. 1564. After referring to them the <ORG> observed : "There can be no doubt that as laid down by their Lordships, the rate would be as existing at the time of removal". The <ORG>, however, made a distinction where duty was imposed for the first time after manufacture by saying : "The question will be different where the charging section, namely, Section 3 of the Act is to be considered to ascertain as to at what point of time excise duty is payable when the impost is made for the first time." As in that case, the goods were wholly exempt on the date of manufacture, it was held that they would not be subjected to duty even though they were not exempt on the date of removal. Special leave was applied for by <ORG> in that case which was refused. By order passed on 1st September, 1977, <ORG> "dismissed the <ORG> on merits". The learned counsel for the petitioner argues that the view taken by this <ORG> in <NAME> Brothers' case must be taken to have been approved by <ORG> as the <ORG> was dismissed on merits. The order of <ORG> does not give any reasons. The words "dismissed the <ORG> on merits" are too vague for declaration of any law under Article 141 of the Constitution. Moreover, as pointed out by us earlier, this <ORG> when refusing leave to appeal to <ORG> made a distinction and held Rule 9-A to be not applicable because the goods in that case were wholly exempt on the date of manufacture. In the <ORG>'s opinion in that case, if goods are liable to excise duty both on the date of manufacture and on the date of removal, then only the rate of duty applicable would be that prevailing on the date of removal but if the goods are wholly exempt on the date of manufacture they would not be liable to excise duty even if before the date of removal the exemption is withdrawn. All that we need say here is that <NAME> Brothers' case is distinguishable on facts and the decision in that case must be confined to its own facts. In the case before us, the goods were exigible to excise duty both on the date of manufacture and on the date of removal. They were never wholly exempt. The exemptions were only partial in that the rate of duty as fixed by Tariff Item No. 18 of the First Schedule was reduced from time to time by notifications issued under Rule 8. As the goods were never wholly exempt, <NAME> Brothers' case has no application here."

38. A similar case was the subject of the decision of <ORG> in the case of <CITATION> . 1984 (17) E.L.T. 217 AP (vide para 8 above). <ORG> took into account the judgments of <ORG> in the cases of <ORG> and also <ORG>. It held that the answer was to be found in Section 3 and not in Rule 9A and held that the petitioners were entitled to the benefit of the exemption notification as in force at the time of manufacture. The Court also, evidently with reference to the observations of <ORG> in the <ORG> case, observed as follows :

"Likewise, the contention in regard to the dismissal of the <ORG> on merits by <ORG> passed on September 1, 1977 against the aforesaid judgment of <ORG> in <NAME>'s case, it should not be taken to be really a decision on merits, also merits no consideration, as it is fairly settled by now that when the <ORG> records its order as dismissal on merits, it must be taken to have been a decision on merits."

39. The third situation has been covered by the judgment of <ORG> in the case of <NAME> of <ORG>, referred to in para 30 above. In that case, although the goods were not excisable at the time of manufacture, it was held that they would be liable to duty as applicable at the time of removal. However, as against this, there is the case of <ORG> (vide para 23 above). In that case, a new tariff item was introduced. Certain goods were sought to be assessed to duty by the <ORG> authorities at the time of their removal (after the introduction of the new item). It was ultimately held by <ORG> that it was incumbent on the excise authorities to establish that the goods were manufactured after the midnight of 28-2-1961 (that is, when the new item had become applicable) and that they had failed to do so, and accordingly the matter was decided in favour of the manufacturers. We have seen the judgment of <ORG> 1978 E.L.T. (J 429) remanding the matter to <ORG>. It is a brief judgment in which the stress is on the question whether the process of manufacture of the goods could have been said to have been completed before the midnight of the 28th February, 1961. Since the material on the record was not sufficient to enable <ORG> to come to a conclusion one way or the other, the matter was remanded back to <ORG> to enable both parties to produce evidence on the disputed questions and decide the matter accordingly. Apparently, before <ORG>, it was accepted or assumed by both parties that where the process of manufacture was completed before the date of imposition of the duty, that duty would not apply to the goods, However, even though this question was not argued, it could be said that there is the authority of <ORG> to the effect that in such a case, where duty is newly levied, it would not apply to goods already manufactured.

40. We now come to the fourth situation, which is the one before us in the present case. The same situation was before the Hon'ble <ORG> in the case of Kesar Sugar Works (vide para 28 above). As already stated, that case was identical in material respects to the present case. When this was mentioned to <NAME>, he had submitted that the Hon'ble <ORG> had, in reaching its conclusion, assumed that the taxable event was the date of removal and not the date of manufacture of the goods. He was apparently reading from the headnote to the judgment as reported in one journal, where <ORG> is reported as having held as follows :

"It is true that excise duty is on the manufacture or production of goods but the above rules leave no room for doubt that it is leviable at the time of removal of goods from the place of manufacture and not with reference to the manufacture of excisable goods. Thus, the taxable event is the date of removal and not the date of manufacture of goods."

We find, however, that there is no such observation or assumption in the judgment that the taxable event is the date of removal and not the date of manufacture of goods. What has been observed by <ORG> is as follows :

"These rules leave 110 room for doubt that excise duty is leviable not with reference to the date of manufacture of the excisable goods but at the time and at the rate on the date of removal of goods from the place of manufacture or from the approved place of storage. Thus, the duty is linked in point of time to the date of removal and not to the date of manufacture."

Thus, it would not be correct to say that the Hon'ble Allahabad High Court had gone contrary to the advisory opinion of <ORG> which held that the taxable event is the manufacture of goods. On the other hand, <ORG> had fully taken into account the judgments of <ORG> in the case of <CITATION> (AIR 1977 S.C. 1459) and <CITATION> (AIR 1976 S.C. 182), which cases themselves refer to leading cases decided earlier.

41. In the Kesar Sugar Works case, <ORG> held that duty would be leviable in accordance with the new item even on goods manufactured earlier.

42. There are also some decisions of the <ORG> itself on some of the above situations. These decisions were taken after considering the various authorities which were cited. In its Order No. C-7/1985, dated, 31-12-1984 in the case of <ORG>, Calcutta, where the situation was identical to that in the <ORG> case (in respect of a commodity which though excisable was, at the time of manufacture, totally exempt from duty through an exemption notification), the Bench held by a majority judgment that no duty could be demanded, even though the goods were cleared subsequent to the withdrawal of the notification. (It is our impression that in some other similar cases other Beaches of the <ORG> might have taken the opposite view, following other authorities, but it is not necessary here to detail those cases). In its Order No. C-502/84, dated 31-7-1984, in the case of <ORG>, Bombay 1984 (18) E.L.T. 606, where the situation was similar to that in the <ORG> case and the case before us, the <ORG> followed the judgment in the case of <ORG> and the <ORG> judgment in the case of <ORG> (1978 E.L.T. 680) and held that duty was leviable in accordance with the amended item.

43. Reference was also made to a number of decisions on the parallel provisions of Section 15 , Customs Act . One was the judgment of <ORG> in the case of <ORG> (AIR 1979 S C. 675). In that case, <ORG> held that the rate of duty applicable to the imported goods had to be determined according to the law which was prevalent on the date they were actually removed from the warehouse, namely, the amended Sections 14 and 15 of the Customs Act. We may also refer to another judgment, which although not cited before us, has come to be well-known. This is the judgment of <ORG> in the case of <CITATION> . (1984) 1 ECC 49. In this judgment, <ORG>, after a very detailed discussion, held that the calculation for the purpose of rate of duty must be done with reference to the date mentioned in Section 15 in various circumstances; and that under the Customs Apt the incidence of chargeability to duty arises under Section 15 itself, and the same cannot be treated as a mere machinery provision for effectuating the assessment. There are also a number of other judgments to the same effect, differentiating the date of importation or the date of entry into the territorial waters from the date of filing of the bill of entry (or other date as mentioned in Section 15 ), and holding that it is the latter date which determines the rate of duty.

44. In the above discussion, we have indicated the different types of situation which can arise, and the decisions available with reference to the respective situations. The various judgments which have been referred to above contain very detailed reasoning for the conclusions reached, and we would not venture to comment on the reasoning of <ORG>. What we have to observe is that different conclusions have been reached with reference to different situations (and sometimes even with reference to the same situation). It might be objected that the same conclusion should be reached in all the situations, but we do not think this objection would be valid. It is axiomatic that the law can apply differently to different situations, and that distinctions can legitimately be drawn between one situation and another. Indeed, in the <ORG> case (vide para 37 above), <ORG> of <ORG>, headed by the Hon'ble Chief Justice of that <ORG>, after taking note of the decision of the same <ORG> in the <NAME> Brothers case, and of the fact that the <ORG> in that regard had been dismissed on merits, considered that the <NAME> Brothers case was distinguishable on facts and the decision in that case must be confined to its own facts. We are in respectful agreement with <ORG> that, in considering the effect of the various judgments, it is necessary to take into account the situations to which they are applicable, and to draw distinctions wherever such distinctions are justified. It is on the basis of distinctions between relevant factors that we have set out in para 35 above four different situations. We have also set out the judicial decisions relating to each situation. The situation before us is squarely covered by the judgment of the Allahabad <ORG> in the case of <ORG>, and no contrary decision relating to such a case has been brought to our notice.

45. It would appropriate here to refer to the effect of the. <ORG> order in the <NAME> Brothers case. The course of events in that case has been set out ia para 37 above. In the subsequent judgment in the <ORG> case (vide para 37 above), <ORG> of the Madhya Pradesh had observed that the order of the <ORG> did not give any reasons and that the words "dismissed the SLP on merits" were too vague for the declaration of any law under Article 141. In the Sirpur Paper Mills case (vide para 38 above), <ORG> has observed that (although detailed reasons were not recorded by the <ORG>) the <ORG>'s decision must be taken to have been a decision on merits. In other words, the <ORG> must be held as having endorsed the reasoning contained in the judgment of <ORG>. Thus, <ORG> and <ORG> have adopted somewhat different approaches to the effect of the order of the <ORG>. However, it appears to us that, so far as the present case is concerned, this difference in approach is really not material. From the passage in <ORG> judgment in the <ORG> case which has been reproduced in para 37 above, it will be seen that <ORG> had recognised a distinction between the situation covered by the <NAME> Brothers judgment and that in the <ORG> case, and held that the judgment in the <NAME> Brothers case, even though approved by the <ORG>, had no application to the <ORG> case. We would like to stress that the scope, for distinction was not newly introduced by <ORG> which decided the <ORG> case, but was found by them in the second order of <ORG> in the <NAME> Brothers case. One particular distinction contained in the second judgment of <ORG> in the <NAME> Brothers case and quoted by <ORG> in the <ORG> case is found in the sentence "the question will be different where the charging section, namely Section 3 of the Act, is to be considered to ascertain as to at what point of time excise duty is payable when the impost is made for the first time". There are further observations in <ORG> judgment in the <NAME> Brothers case which are of relevance to the present case. For convenience, we are reproducing below para 5 of that judgment:

"The learned counsel for the petitioner further invited attention to the provision of Section 4 of the Act as also to Rules 9, 9A, 49 and Rule 224(2) of the Central Excise Rules, 1944. We may observe that the said rules relate to time and manner of payment of duty. It is, no doubt, true that the rules provide for payment of duty at the rate prevailing on the date of removal of the goods. As such, there can be no doubt that so far as the rate is concerned, the one prevailing on the date of removal of the goods from the godowns will be relevant. But the liability for payment of excise duty cannot be determined with reference to Section 4 of the Act or the Rules framed thereunder, where exemption has for the first time been revoked and an article is subject to excise duty with effect from a particular date. Excise duty being a tax on production or manufacture, the liability for tax will arise at the time the production or manufacture is completed and not at the time the goods are removed from the godowns by the producer or the manufacturer, of course, if that liability under Section 3 be established, then the matter relating to rate will be governed by the provisions of Section 4 of the Act and the relevant rules pertaining thereto. In view of this position, we do not think that the present case is a fit one for a certificate of fitness for leave to appeal to <ORG>, as, in our opinion, no substantial question of law of general importance is involved in this case."

It will be seen that reference has been made above to applicable rules including Rule 9A ; it has been observed that the relevant rate will be the one prevailing on the date of removal of the goods; and that if liability under Section 3 is established, then the matter relating to rate will be governed by the provisions of Section 4 of the Act and the relevant rules pertaining thereto. The last-quoted observation would clearly indicate that where liability to duty under Section 3 is established as having existed at the time of manufacture, the actual rate of duty will be at the rate prevailing on the date of removal of the goods, in terms of the, relevant rules including- Rule 9 A. This is quite consistent with the view taken in the <ORG> judgment and with' the stand of the <ORG> in the present case. It goes against the stand of the respondents in this case because if in terms of Section 3 the liability to duty as well as the rate of duty is held to be established once for all at the time of manufacture, the references to the rate being the rate prevailing on the date of removal would be superfluous.

46. What emerges clearly from a study of the <ORG> judgments is that in the first decision in this case, there was a categorical view that the liability for tax would arise no sooner the manufacture or production is completed, and the point of recovery or any restriction on removal would not be the determining factor for grant of exemption in respect of goods, manufactured during the duty-free period. In the second judgment dealing with the petition for a certificate of fitness, the observations made in the first judgment were amplified and explained as discussed above. It is relevant to note that both judgments were delivered by the same Bench headed by the then Chief Justice of <ORG> and therefore, must be taken as complementary to each other. Therefore, when <ORG> dismissed the special leave petition on merits without recording reasons, it can certainly be taken that it approved the reasoning of <ORG> : but it would not be justified to hold that <ORG> approved the reasoning only as expressed in the first judgment and not the explanation or elaboration as contained in the second judgment which, as we have mentioned, was also delivered by the learned Chief Justice who delivered the first judgment. Therefore, a close study of the judgment in the <ORG> case would confirm the view that while <ORG> had upheld the finding of <ORG> in the situation covered by that case, it had also left open the position in regard to other situations.

47. The above discussion would lead to the conclusions that :

(i) There are a number of situations which can be distinguished and where the position m law would be different;

(ii) The order of <ORG> in the Kirloskar Brothers case should be taken as applicable to the situation in that case, other cases having to be considered on their own merits ;

(iii) The order of <ORG> in the <ORG> case was on the basis of the assumed or admitted position in that case, and the situation there was different from that in the present case ;

(iv) The decisions in the <ORG> case and the <ORG> case on the parallel provision in Section 15 of the Customs Act are in line with the decisions in the <ORG> case and the <ORG> case ; and

(v) The situation in the present case is squarely covered by the judgment of <ORG> in the Kesar Sugar Works case. Following that judgment, the stand taken by the <ORG> in this case would be correct in law and consequently the appeal deserves to be allowed. Having come to this conclusion on a very careful study of the case law, it may not be necessary for us to go further. However, we still think it would be useful to refer to some of the other aspects which were argued before us.

48. One of these was the argument of <NAME> (vide para 22 above) that the view advanced by the <ORG> would involve the retrospective application of law. We would observe that, if it is held that Rule 9A applies, the question of retrospectivity does not arise, because that Rule itself fixes the relevant point of time which determines the rate of duty as the time of removal. <NAME> did not contend that Rule 9A was not valid or that' it was not applicable (though he had his own explanation as to the scope of its application). Once Rule 9A is held as valid and applicable, the question of retrospectivity really should not arise.

49. We shall, however, examine the matter on the basis that the application of Rule 9 A in a case like the present could have an element of retrospectivity. Even in the quotation from <ORG> relied upon by <NAME> it is laid down that retrospective effect could be given to a provision if by express words or necessary implication it appears that this was the intention of the legislature. This is where the effect of the declaration under the Provisional Collection of Taxes Act comes in.

50. Sections 3 and 4(1) of the Provisional Collection of Taxes Act read as under :

"3. Power to make declaration under this Act : Where a Bill, to be introduced in <ORG> on behalf of Government, provides for the imposition or increase of a duty of customs or excise, the Central Government may cause to be inserted in the Bill a declaration that it is expedient in the public interest that any provision of the Bill relating to such imposition or increase shall have immediate effect under this Act.

4. Effect of declaration under this Act and duration thereof-(1) A declared provision shall have the force of law immediately on the expiry of the day on which the Bill containing it is introduced."

Section 49 of the Bill read as follows :

"Amendment of the First Schedule-The First Schedule to the Central Excises Act shall be amended in the manner specified in the Third Schedule."

There was appended to the Bill a declaration under the Provisional Collection of Taxes Act which read as under :

"It is hereby declared that it is expedient in the public interest that the provisions of clauses 33, 44, 45, 46, 47, 49, 50, 51, 52 and 53 of this Bill shall have immediate effect under the Provisional Collection of Taxes Act , 1931 ."

The Third Schedule directed as follows :

"In the First Schedule to the Central Excises Act , -

* * * * * (xv) for Item No. 16B, the following Item shall be substituted namely :- "16B. Wood and Articles of Wood, Thirty per cent The Following, Namely :- ad valorem. [The detailed description of the Item follows, but is not reproduced as it is not necessary for the purpose of this discussion].

51. The combined effect of the above provisions was that the amendment to Item 16B had the force of law from the midnight of the 2/th February, J982. It appears to us that, even if the application of the amended provision to goods manufactured earlier and cleared after 27-2-1982 could be considered as having an element of retrospectivity, it could still be held that by virtue of the provision in the Provisional Collection of Taxes Act and the further specific provisions in the Finance Bill, that effect was the specific intention of the legislation.

52. We may now advert to the argument of <NAME> (vide para 26), namely that, in the matter of application of Rule 9A, a distinction should be made between the rate of duty and tie description. Since the same Finance Bill raised the rate of duty on Item 68 from 8% to 10%, and this provision also had immediate effect under the Provisional Collection of Taxes Act , <NAME> had conceded that the increased rate of duty under Item 68 as in force at the time of removal would be applicable to the goods in question, even though they had been manufactured earlier. He, however, contended that the changed description of Item 16B, which brought these, goods within the scope of that Item, would not be applicable. We are unable to see any justification for drawing such a distinction in the matter of application of Rule 9A or of the provisions of the Finance Bill. <NAME> had laid stress on the fact that Rule 9A refers to the rate of duty and not to the description. But this obviously is because what finally determines an assessment is the rate of duty : the description is only an intermediate step, a signpost so to speak, which points out the correct rate of duty. This in our view is why Rule 9A refers only to the rate of duty. We have already seen that the Fifth Schedule to the Bill did not make any distinction between the description and the rate of duty. Both were covered in one clause. Nor did the declaration under the Provisional Collection of Taxes Act make or justify any such distinction. Further, as pointed out by <NAME>, the substance of the change with reference to any particular goods was in the rate of duty, and it was not material whether this change was effected by amending the rate or the description. We do not, therefore, think that the distinction between the description and the rate of duty, which <NAME> sought to draw, in the matter of application of Rule 9A, can be sustained. Indeed, after conceding that Rule 9A would apply, at least so far as the rate of duty is concerned, the respondents cannot with any force contend that the effect of a change in description should be ignored.

53. We have covered all the salient arguments put forward by both sides. We do not consider it necessary to refer specifically to some of the other arguments put forward by <NAME>, which would only go to reinforce our conclusions; or to discuss some minor points advanced by <NAME> such as that based on the article contained in a journal (vide para 25 above), or en the unlikely possibility of a manufacturer's accounts being held to stand retrospectively falsified (vide para 20 above), as these would not affect the conclusions reached.

54. In the result, we hold that the Order-in-Appeal No. 331-CE/IND/83, dated 22-6-1984 of the Collector of Central Excise (Appeals), New Delhi, was not correct and in accordance with law. We accordingly allow the appeal, set aside the Order of the Collector of Central Excise (Appeals) and restore the Order C. No. CEX-20/Misc/16-B/82/197, dated 12-3-1982 of the Superintendent of Central Excise, Range IV, Bhopal.


JUDGMENT <NAME>, C.S.I., Acting C.J.

1. The main question before us is whether <ORG> at Aden, as constituted by Act II of 1864, is subject to the superintendence of <ORG> within the meaning of Clause 13 of the Letters Patent, dated 28th December, 1865. If it is, then <ORG> has power to remove the present suit from <ORG> and to try and determine that suit, and it is dear on the admitted facts that for the purposes of justice it is proper that this should be done if <ORG> has that power. In <NAME> v. <NAME> and <ORG> (1871) 8 Bom. 4214, Mr. Justice <NAME> held that <ORG>, as constituted under Act IX of 1850 (amended by Act XXVI of 1864, Section 7), must be considered to be subject to the superintendence of <ORG> for the following reasons: Subject to the conditions prescribed in Section 54 of Act IX of 1850, <ORG> had authority under that section to remove causes from <ORG> and itself to try and determine them. By Section 41 of the same Act, any general rules for regulating the practice and proceedings of <ORG> made and issued by the Judges of that Court were to be sent to <ORG> for approval.

2. Then there was the power of <ORG> to prohibit <ORG> from proceeding where it was acting without jurisdiction or in excess of jurisdiction...and there was the power of reserving questions of law or equity for the opinion of <ORG>, and the obligation to do so in oases above the value of Rs. 500, on the application of either of the parties such a power of reference was termed by Mr. Justice <NAME> in the matter of <NAME> (1870) 6 Beng. L.R. 180 a " modified form of apneal."

3. For the above reasons Mr. Justice <NAME> held that <ORG>, though not subject in all respects, or perhaps generally, to the superintendence of <ORG>, nor, strictly speaking, subject to its appellate jurisdiction at all, was so far subject to its superintendence as to give the latter <ORG>, under Clause 13 of the Letters Patent, power to remove, and try and determine any suit pending in the former <ORG>, when <ORG> for purposes of justice should think proper to do so.

4. The learned Advocate-General, who appeared before us against the rule, referred Section 6 of the present Presidency Small Cause Courts Act (XV of 1882) as showing that the <ORG> deemed it necessary by special enactment to declare <ORG> subject to the superintendence of <ORG> within the meaning of the Letters Patent. But this may well have been for the sake of greater caution, and it is quite possible that the <ORG> in framing the Presidency Small Cause Courts Act of 1883 had in mind the decision of Mr. Justice <NAME>, which was delivered in 1871, For instance, Section 6 of Act XV of 1882 declares that <ORG> shall have, in respect of <ORG>, the same powers as it has under the Charter Act in respect of Courts subject to its appellate jurisdiction; and these powers include the power to make and issue general rules for regulating the practice and proceedings, the same power being given by Section 9 of the Act.

5. Act II of 1864 was passed after the Charter Act of 1861 and after the original Letters Patient of 1862. Not only is it stated in the preamble of Act II of 1864 that it is expedient to provide for the superintendence or revision of certain of the judgments and proceedings of the Resident at Aden by <ORG>, but the Act provides in Section 31 that <ORG> shall have power to make and issue general rules for regulating the practice and proceedings of <ORG>, and also to frame forms, &c., all almost in the same language as is to be found in Section 15 of the Charter Act. It would seem therefore that the <ORG> expressly intended that <ORG> should have superintendence over <ORG>. No doubt <ORG> is not <ORG>" at Aden for such purposes as are governed by the definition of <ORG> in the General Clauses Act ; for it is not the highest <ORG> of appeal. There is no appeal from decisions or orders, civil or criminal, of the Resident (Sections 3 and 29 of Act II of 1864). But nevertheless <ORG> may have superintendence over the Resident's <ORG>; and it is clear from Sections 8 to 13 of the Act II of 1864 that in certain oases a litigant in the Resident's <ORG> has of right what is practically an appeal to <ORG>. Mr. <NAME> would have us read Clause 13 of the Letters Patent and Section 15 of the Charter Act, together so strictly that <ORG> can have no superintendence over a <ORG>, unless an appeal properly so called lies from the decisions of such <ORG> to <ORG>. But that, as remarked by the present Chief Justice in <NAME> v. <NAME> (1902) 4 Bom. L.R. 970 p. 971 would be to apply a narrow meaning not warranted by the Act.

6. For these reasons I think that this <ORG> has jurisdiction under Clause 13 of the Letters Patent; and I would make the rule absolute. Costs to abide the result.

<NAME>, J.

7. This is an application made by <NAME> under Section 13 of the Amended Letters Patent of 1865 for a transfer to this Court of the suit filed by the applicant in <ORG> at Aden against the opponent, the Municipal Officer at Aden. The ground of the application is that the opponent has in his written statement in the suit sought to justify the act complained of in the plaint as one done under the orders of the Resident.

8. The application is opposed by the learned Advocate-General, appearing for the opponent, on two grounds: first, that the Resident's <ORG> is not subject to the superintendence of this <ORG> within the meaning of Section 13 of the Amended Letters Patent of 1865, and second, that on the merits this is not a proper case for transfer.

9. Dealing first with the preliminary objection to the jurisdiction of this <ORG>, it is clear from the preamble of Act No. II of 1864 (An Act to provide for the administration of civil and criminal justice at Aden) that one of the objects with which it was passed was "to provide for the superintendence or revision of certain" of the judgments and proceedings of <ORG> by this <ORG>. It is contended, however, that the power of superintendents given by the Act to this <ORG> is not a judicial but a purely 1 ministerial power. It is true that according to Section 8 of the Act no appeal lies to this <ORG> from any decision or order of the Resident; but the power given to this <ORG> to hear and pass judgments in certain cases mentioned in the said Section when those oases are referred to this <ORG> as prescribed thereby is undoubtedly a judicial, not a purely ministerial power. According to Section 8 , in the trial of any suit in which the claim shall not exceed one thousand rupees in value, the Resident may, either of his own motion or on the application of any of the parties, refer, to this <ORG> any question of law, or of usage having the force of law, or of the construction of a document affecting the merits of the decision, when he entertains reasonable doubt on the question. In the trial of any suit in which the claim exceeds one thousand rupees in value, the Resident of his own motion may, and on the application of any of the parties, shall refer "for the decision" of this <ORG> any question of fact or of law, or of usage having the force of law, or of the construction of the document affecting the merits of the decision. Cases so referred to this <ORG> have to be heard, under Section 9 by two or more Judges and this <ORG> has to give "Judgment in every case." Under Section 11 , the parties to the case are entitled to appear and be heard in this <ORG> in person or by a pleader. According to Section 12 , "the High <ORG>, when it has heard and considered the case, shall transmit to the Resident a copy of its judgment under the seal of the <ORG> and the signature of the Registrar." The combined effect of all these sections is that when this <ORG> acts on a reference by the Resident, it acts as a <ORG> superintending judicially certain judgments and proceedings of the Resident. It is true that this <ORG> cannot of itself under the Act pass a decree in any case referred to it; the duty of disposing of the case is cast by Section 12 of the Act on the Resident; but, according to that section, the Resident has to dispose of the case "conformably to the decision of the High <ORG>." It is this <ORG> which in effect decides the case, it is the tribunal which gives judgment and, according to Section 9 , that judgment is an order of the <ORG>.

10. But it was urged that in any case the Resident's <ORG> was not within the meaning of Section 13 of the Amended Letters Patent of 1865, because, it was argued, a <ORG> subject to this <ORG>'s "superintendence" must be a <ORG>, subject, according to Section 15 of the Charter Act, to the appellate jurisdiction of this <ORG>. Section 13 of the Letters Patent ordains: "That the said High <ORG> of Judicature at Bombay shall have power to remove, and to try and determine as a <ORG> of Extraordinary Original Jurisdiction, any suit being or falling within the jurisdiction of any <ORG>, whether within or without the Presidency of Bombay, subject to its superintendence, when the said High <ORG> shall think proper to do so, either on the agreement of the parties to that effect, or for purposes of justice, the reasons for so doing being recorded on the proceedings of the said High <ORG>." Section 15 of the Charter Act enacts that "each of the High <ORG>s established under this Act shall have superintendence over all <ORG>s which may be subject to its appellate jurisdiction." The contention of the learned Advocate-General before us is that) Section 13 of the Letters Patent) must be read with Section 15 of the Charter Act, and a <ORG> contemplated as subject to this <ORG>'s superintendence in the former is a <ORG> subject to this <ORG>'s appellate jurisdiction as pointed out in the latter, and no other. The difficulty of accepting that view is that the Letters Patent of 1865 were granted, as the preamble shows, for the express purpose of conferring additional powers on this <ORG>. Section 15 of the Charter Act dealt with <ORG>s which might be subject to the appellate jurisdiction and brought them within the superintendence of this <ORG>: but that it was not meant to exhaust those <ORG>s as the only <ORG>s subject to this <ORG>'s superintendence is apparent from Section 16 of the Letters Patent of 1865, which ordain that "the said High <ORG> of Judicature at Bombay shall be a <ORG> of appeal from the Civil <ORG>s of the Presidency of Bombay, and from all other <ORG>s subject to its superintendence." The result is that, as pointed out by <ORG>, in <NAME> v. B.B. & <ORG> (1871) 8 Bom. H.C.R. 59, 60, taking the Act and the Letters Patent together, "the High <ORG> has superintendence where it has appellate jurisdiction, and has appellate jurisdiction where it has superintendence." The view taken by <ORG>, in the case just cited was this. He said: "Section 15 of the Charter Act does not, in my opinion, limit the superintendence of the High <ORG> to the <ORG>s which may be subject to its appellate jurisdiction; it only says that over such <ORG>s the High <ORG> shall have superintendence, not that it shall have superintendence over those <ORG>s which are subject to its appellate jurisdiction, and over no others." This view, I think, is borne out by Act II of 1864, which provides for the administration of civil and criminal justice at Aden. The Charter Act was passed in 1861; Act II of 1864 brought the Resident's <ORG> at Aden under the superintendence of this <ORG> for certain purposes and in certain matters without giving any appellate jurisdiction to the latter over the former. Before the Letters Patent of 1865, there was then a <ORG> subject to this <ORG>'s superintendence, but not subject to its appellate jurisdiction. Section 13 of the Letters Patent was obviously meant to include such <ORG>s and not merely those referred to in Section 15 of the Charter Act. Even if we assume that the <ORG>s referred to in Section 13 of the Letters Patent are <ORG>s subject to the appellate jurisdiction of this <ORG> and no other, I do not see any good ground for restricting the term "appellate jurisdiction" to its strict and technical sense. Where there is an appeal to the <ORG> allowed by any law or regulation, in hearing the appeal it exercises its appellate jurisdiction; but the same jurisdiction may be exercised and is, as a matter of fact, exercised for all practical purposes where the <ORG> decides a suit referred to it by law oh Questions both of fact and of law. That was the view taken by <NAME> and <NAME>, JJ., in <NAME>, (1870) 6 Beng. L.R. 180 where they held that a reference was "a modified form of appeal." That decision was noticed in terms of approval by <ORG> in <NAME> v. B.B. & <ORG> and I see no reason to dissent from the view there taken. This view derives further support from the ruling of this <ORG> in <NAME> v. <NAME> and <NAME>. (1902) 4 Bom. L.R. 970 where the present Chief Justice held that the term "appellate jurisdiction" in Section 15 of the Charter Act should be construed to include the power of revision.

11. But it was urged before us that this last ruling is opposed to the decision of <ORG> of this Court in <NAME> v. <NAME> (1895) 20 Bom. 480 and the remarks of <NAME>, <NAME>, in his judgment in that case that "a power of revision is not an incident of appellate powers, but, on the contrary, can only be exercised where there is no appeal" were relied upon. But the conflict between the two decisions is, in my opinions more apparent than real. In the <ORG> case the fact was, as pointed out by <NAME>, J., in his judgment, that by an Order in Council <ORG> were, for merely jurisdictional purposes, assimilated to the area of a Bombay District "in order that the application of the Procedure Act s" to those Courts "may be exactly denned." And the exact definition was, among other things, that this Court should be a Court of appeal according to the Civil Procedure Code from the decisions of <ORG>. The inclusion of the power to hear appeals under the Civil Procedure Code necessarily implied the exclusion of the power to act in revision under Section 622 of that Code. That was the ratio decidendi in the <ORG> case; but that reasoning can have no bearing on the question whether the term "appellate judisdiction," as used, in the Charter Act and the Letters Patent, is not large enough to mean a jurisdiction of superintendence.

12. It follows then, from these considerations, that <ORG> is a <ORG> subject to the superintendence of this <ORG> within the meaning of Section 13 of the Amended Letters Patent of 1865. The fact that the superintendence is of a partial and limited character cannot affect the question. There are some <ORG>s subject to the appellate jurisdiction of a High <ORG> in certain cases only, appeals in other oases being allowed by law direct to <ORG>. As pointed put by <NAME>, J., in the Bombay case above cited and by <NAME>, J., in the case already mentioned, the existence of appellate jurisdiction, though limited, is sufficient to bring a <ORG> within the superintendence of the High <ORG>. A fortiori, the power of interference given by Act II of 1864 to this <ORG> on a reference, though limited to certain suits, does not make the Resident's <ORG> less a <ORG> subject to this <ORG>'s superintendence.

13. The preliminary objection must, therefore, be overruled. On the merits, it has not been denied before us that the act complained of in the plaint of the applicant was done under the Resident's orders. If it was so done, the Resident is practically interested in the suit. We have no doubt that that circumstance is not likely to weigh with him in drying and deciding the case; but the decided oases show that if a party has reasonable grounds for apprehending that the Judge who is to try his case is likely to be biased, he is entitled to a transfer of the case from that Judge. It is true that the applicant can have the suit referred to this <ORG> under Act II of 1864; but I think that upon the whole the proper course to adopt is to order the transfer prayed for. Costs of this application to be costs in the cause.


CASE NO.: Appeal (civil) 391 of 1999 PETITIONER: <ORG> RESPONDENT: M/s. Pushpalaya Printers DATE OF JUDGMENT: 25/02/2004 BENCH: <NAME> & Dr. AR.Lakshmanan. JUDGMENT:

J U D G M E N T <NAME>, J.

The respondent filed a complaint before <ORG> (<ORG>) under Section 12 of the Consumer Protection Act, 1986 (for brevity 'the Act') praying for settlement of an insurance claim at Rs.75,000/- along with interest at the rate of 18% per annum. The appellant repudiated the claim on the ground that damage caused to the building and printing press of the respondent was not covered by Clause 5 of the insurance policy. The <ORG> accepting the contention urged on behalf of the appellant held that there was no deficiency of service on the part of the appellant and dismissed the complaint as not maintainable. The respondent filed appeal before <ORG> (<ORG>) against the order of the <ORG>. The <ORG>, on interpretation of the word "impact" contained in Clause 5 of the insurance policy, allowed the appeal, set aside the order of the <ORG> and granted relief to the respondent directing the appellant to pay a sum of Rs.75,000/- with interest at the rate of 12% per annum with effect from 18.10.1994 till the date of payment. The appellant, dissatisfied with the order of the <ORG>, filed revision petition before <ORG> (<ORG>). The <ORG>, while accepting the interpretation given by the <ORG>, however, reduced the amount of payment to the respondent from Rs.75,000/- to Rs.56,000/-. Aggrieved by said order of the <ORG>, this appeal is brought before this Court by the appellant. Before us, learned counsel for the parties in their arguments reiterated their respective contentions, which were urged before all the forums. In order to consider the respective contentions urged on behalf of the parties, it is both necessary and useful to quote the relevant portions from the insurance policy: -

"IN CONSIDERATION OF THE insured named in the Schedule hereto having paid to <ORG> (hereinafter called THE COMPANY) the premium mentioned in the said schedule. Till company agrees, (subject to the condition and exclusion contained herein or endorsed or otherwise expressed hereon) that if after payment of premium the property insured described in the said schedule or any part of such property, be destroyed or damaged by the following: -

1. .......

2. .......

3. .......

4. .......

5. Impact by any rail/road vehicle or animal."

In the order of <ORG> it is noticed that the appellant contested the claim by filing written objection contending that the damage caused due to vibration from the operation of bulldozer was not an incident of impact by any road vehicle, as per Clause 5 of the insurance policy for risk, and so the complaint was not maintainable. Para 4 of the order of <ORG> reads: -

"4. Neither party led any evidence because it was admitted by <ORG> that in connection with a road construction with the help of a bulldozer near the complainant's printing press in question there was damage to that building. And, both parties agreed that it all depends upon the interpretation of the term (5) of the Insurance Policy."

Thus, from the order of <ORG> it is clear that the appellant did not dispute as to damage caused to the building and machinery of the respondent on account of the bulldozer driven close to the building on the road for the purpose of road construction and that both the parties agreed that the sustainability of the claim depended upon the interpretation of Clause 5 of the insurance policy. <ORG> took a narrow view that the word "impact" contained in clause 5 of the insurance policy covered risk of only contingent impact of a road vehicle forcibly coming in contact with another. It held that the damage caused to the building and machinery in the instant case was not due to such forcible contact but it was due to the consequential effect of vibration on account of operating of a bulldozer by the side of the respondent's printing press building and as such it was not covered by clause 5 of the insurance policy; thus, there being no deficiency of service on the part of the appellant the complaint filed by the respondent was not maintainable.

According to <ORG> the only point, which arose for decision in the appeal was whether the damage caused to the building and the machinery of the respondent was the resultant of the impact by the bulldozer. Considering the meaning of the word "impact" given in various dictionaries <ORG> took the view that when the word "impact" has got meanings more than one and the word "impact" not only means "coming forcibly in contact with another", it also means "to drive close", "effective action of one thing upon another" and "effect of such action". The "impact" covered damage caused to the building and machinery in view of the admitted fact that such damage was caused because of close drive by the bulldozer on the road. Expressing thus <ORG> set aside the order of <ORG> and granted relief to the respondent. <ORG> concurring with the view expressed by the <ORG> commission interpreting the expression "impact" observed that the said word has to be construed liberally and in its wider sense. The only point that arises for consideration is whether the word "impact" contained in clause 5 of the insurance policy covers the damage caused to the building and machinery due to driving of the bulldozer on the road close to the building. It is evident from the terms of the insurance policy that the property was insured as against destruction or damage to whole or part. The appellant company agreed to pay towards destruction or damage to the property insured to the extent of its liability on account of various happenings. In the present case both the parties relied on clause 5 of the insurance policy. Clause 5 is also subject to exclusions contained in the insurance policy. That a damage caused to the building or machinery on account of driving of vehicle on the road close to the building is not excluded. Clause 5 speaks of "impact" by any rail/road vehicle or animal. If the appellant company wanted to exclude any damage or destruction caused on account of driving of vehicle on the road close to the building, it could have expressly excluded. The insured possibly did not understand and expect that the destruction and damage to the building and machinery is confined only to the direct collusion by vehicle moving on the road to the building or machinery. In the ordinary course, the question of a vehicle directly dashing the building or the machinery inside the building does not arise. Further, "impact" by road vehicle found in the company of other words in the same clause 5 normally indicates that damage caused to the building on account of vibration by driving of vehicle close to the road is also included. In order to interpret this clause, it is also necessary to gather the intention of the parties from the words used in the policy. If the word "impact" is interpreted narrowly the question of impact by any rail would not arise as the question of a rail forcibly coming to the contact of a building or machinery would not arise. In the absence of specific exclusion and the word "impact" having more meanings in the context, it cannot be confined to forcible contact alone when it includes the meanings "to drive close", "effective action of one thing upon another" and "the effect of such action", it is reasonable and fair to hold in the context that the word "impact" contained in clause 5 of the insurance policy covers the case of the respondent to say that damage caused to the building and machinery on account of the bulldozer moving closely on the road was on account of its "impact". It is also settled position in law that if there is any ambiguity or a term is capable of two possible interpretations one beneficial to the insured should be accepted consistent with the purpose for which the policy is taken, namely, to cover the risk on the happening of certain event. Although there is no ambiguity in the expression "impact", even otherwise applying the rule of contra proferentem, the use of the word "impact" in clause 5 in the instant policy must be construed against the appellant. Where the words of a document are ambiguous, they shall be construed against the party who prepared the document. This rule applies to contracts of insurance and clause 5 of the insurance policy even after reading the entire policy in the present case should be construed against the insurer. A Constitution Bench of this Court in <CITATION> . [1966 (3) SCR 500] has expressed that "in a contract of insurance, there is requirement of uberrima fides, i.e. good faith on the part of the assured and the contract is likely to be construed contra proferentem i.e. against the company in case of ambiguity or doubt." In the light of what is stated above, no fault can be found with the impugned order. The interpretation placed by <ORG> as well as by <ORG> in relation to the expression "impact" is in order and appropriate. Hence the point is answered in the affirmative. Under the circumstances we find no merit in the appeal. Consequently it is dismissed. No costs.