Holding

The 1977 notification must be given effect before the 1978 notification; the Tribunal's order is affirmed.

Summary

Premier Tyres Ltd. challenged a Customs, Excise and Gold Control Appellate Tribunal order on the sequence of applying three Central Excise notifications granting duty exemptions. The dispute centered on whether the 1977 notification (exempting duty equal to that paid on inputs) should be applied before or after the 1978 notification (exempting a percentage of duty on tyres, subject to any relevant notification). The Tribunal held that the 1977 notification must precede the 1978 one, a view the appellant contested, arguing for the opposite order and citing a prior Supreme Court decision. The Supreme Court examined the language of the 1978 notification, which expressly required reading it with any relevant notification in force, concluding that the earlier 1977 notification must be given effect first. The Court also rejected the contention that a general principle against double taxation dictated a different construction. Consequently, the Tribunal's order was affirmed and the appeal dismissed with costs.

Issues considered

What is the correct order of priority for giving effect to the 1977 and 1978 notifications issued under Rule 8(1) of the Central Excise Rules?
Does a principle of avoiding double taxation in excise duty require a different sequence of applying the notifications?

Legislation cited

Central Excise and Salt Act, 1944
Central Excise Rules, 1944s. Rule 8(1)

Subjects

Excise dutyExemption notificationRule 8Double taxationSequence of applicationCentral Excise ActSupreme Court

Judgment

PREMIER TYRES LTD. v. COLL. OF C. EXCISE !REDDY, J.] 199

HELD: 1. The Tribunal was right in taking the view that effect A
'' had to be given first to the notification dated June 16, 1977 and then to
the notification dated July 14, 1978. The words "read with any relevant
notification issued under the said sub-rule (I) of Rule 8 in force for the
time being" super-added by the latter notification show conclusively
that the earlier notification dealing with exemption to the extent of the B
duty paid on the inputs which was already in force had first to be given
effect to. [201E-G]

Assistant Collector of Central Excise v. Madras Rubber Factory
-= -.J-·
. · Limited, Civil Appeal No. 3195of1979, distinguished.

2. There is no general principle that there can be no 'double C
taxation' in the levy of excise duty. The Court may lean in favour of a
construction which will avoid double taxation, but in the instant case there
does not appear to be any lean question of construction at all. l202B-C]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 943
D
Of 1986.

From the Judgment and Order dated 4th July, 1985 of the Appel-
J. late Tribunal in Appeal no. 244 of 1985-D.

L.M. Singhvi and K.K. Bhaduri for the appellant.
E
.- A Subba Rao and Ms. S. Relan for the Respondent.

The Judgment of the Court was delivered by

CHINN APPA REDDY, J. This appeal is directed against a judg- F
ment of the Customs, Excise and Gold Control Appellate Tribunal in
regard to the manner and sequence in which certain notifications
under Rule 8 Sub-rule (1) of the Central Excise Rules granting exemp-
tions from duty have to be worked out. By a notification dated August
l, 1974 the Central Government, in exercise of its powers under sub-
rule( 1) of Rule 8 of the Central Excise Rules exempted.
G
"Tyres for motor vehicles falling under sub-item(l) of Item
No. 16 of the First Schedule to the Central Excise and Salt
Act, 1944(1 of 1944) from so much of the duty of excise
leviable thereon as is in excess of fifty-five per cent Ad
valorell!". H
200 SUPREME COURT REPORTS (19871 2 S.C.R.

A Thereafter on June 16, 1977 another notification was issued in the \ •.
following terms:

"In exercise of the powers conferred by sub-rule (1) of
Rule 8 of the Central Excise Rules, 1944 the Central
Government hereby exempts all excisable goods (herein-
B after referrnd to as the "said goods") on which the duty of
excise is leviable and in the manufacture of which any
goods falling under Item No. 68 of the First Schedule to the
Central Excise and Salt Act, 1944 (1 of 1944) (hereinafter
referred to as the inputs) have been used, from so much of
the duty of excise leviable thereon as is equivalent to the
duty of excise already paid on the inputs. Notification No.
c 205i77 dated 28.9.77, subject to the conditions that the
manufacturer furnishes to ·the proper Officer a statement
showing the quantity of the inputs used in the manufacture
of every unit of the said goods.

D Provided that where the duty of excise leviable on the sai-'1
goods is less than ihe amount of duty of excise paid on the
inputs the extent of exemption shall be restricted to the
duty of excise on the said goods."

A Further notification was issued on July 14, 1978 and this was in the
E following terms:

"In exercise of the powers conferred by sub-rule(!) of rule
8 of the Central Excise Rules, 1944, the Central Govern-
ment hereby exempts tyres and tubes excluding flaps falling
under Item No. 16(1) and 18(3) of the First Schedule to the
F Central Excist:s and Salt Act, 1944 (I of 1944) (hereinafter
referred to as the specified goods) from so much of the duty
of excise leviable thereon (read with any relevant notifica-
tion issued under the said sub-rule(l) of rule 8 and in force
for the time being) as is in excess of

G (a) eighty-sevtm and a half per cent, of such duty, if pr-0-
duced in any factory which commenced production of the
specified goods for the first time earlier than the !st day of
April 1976: and

(b) Seventy-five per cent of such duty, if produced in any
H factory which commenced production . of the specified
PREMIER TYRES LTD. v. COLL. OF C. EXCISE [REDDY. J.] 201

goods for the first time on or after the !st day of April, A
1976,

subject to the conditions that:-

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B
-j ************************************************** ,,
•,

There is no controversy regarding evaluation Accoding to the
assessee as well as the department effect has first to be given to the
notification dated August I, 1974 and the duty calculated in terms of
that notification. There is also no controversy at this stage. The con-
troversy beging thereafter. According to the dapartment, there- c
after, effect has to be given first to the notification dated June 16, 1977
and then to the notification dated July 14, 1978 whereas according to
the assessee effect has to be given, in the first instance, to the notifica-
tion dated July 14, 1978 and then to the notification dated 16, 1977.
The Department's contention was accepted by the Tribunal. In this
appeal, Dr. L.M. Singhvi, learned counsel for the appellant argued D
that on principle the effective duty has to be first determination by
applying the notification dated July 14, 1978 first and the duty paid on
the inputs should be set off under the notification dated June 16, 1977
against the duty determined as payable after applying the notification
dated July 14, 1978. In support of his argument, the learned counsel
relied upon a recent judgment of this court in Assistant Collector of E
Central Excise v. Madras Rubber Factory limited, Civil Appeal No.
3195 of 1979 etc. We are afraid that in the face of the language of the
notifications, it is not possible to agree with the submission of Dr.
Singhvi. We have already extracted the notification dated June 16,
1977 and July 14, 1978. The notification dated July 14, 1978, it is to be
F
noticed, has super-added the words "read with any relevant notifica-
tion issued under the said sub-rule( 1) of Rule 8 and in force for the
time being." These super-added words show conclusively that the
notification dealing with exemption to the extent of the duty paid on
the inputs, which was already in force, had to be given effect before
giving effect to the notification dated July 14, 1978. This was the G
submission of Shri A. Subba Rao, learned counsel for the department
and it is difficult to see any escape from it. The case upon which
reliance was placed by Dr. Singhvi does not appear to have any rele-
vance to the question at issue. There, the court was concerned with the
determination of the assessable value and not with the present ques-
tion relating to the order of priority in which the notifications granting H
202 SUPREME COURT REPORTS [1987] 2 S.C.R.

A exemption from duty had to be applied. There, what the court decided
was that Excise Duty cannot be computed without proper determina-
tion of the assessable value namely assessable value exclusive of
permissible deductions. That principle cannot come in aid of the ques-
tion involved in this appeal. The learned counsel also argued that to
a give effect first to the notification dealing with exemption to the extent
of the duty paid on inputs and thereafter to the notification dated July
14, 1978 would mean that the assessee would not be getting full credit
for the entire duty paid on the inputs but only to a percentage of it and
that there would, therefore, be double taxation atleast to that extent.
There is no general principle that there can be no 'double taxation' in
the levy of Excise Duty. The court may lean in favour of a construction
C which will avoid double taxation but in the present case there does not
appear to be any lean question of construction at all. On the language
of the notification date:d July 14, 1978 only one result can follow. That
is the view taken by the Tribunal in the order under appeal. We agree
with that view of the matter. The appeal is dismissed with costs.

P.S.S. Appeal dismissed.

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