Madras High Court
Sulochana Enterprises (P) Ltd. vs Union Of India on 22 February, 1991
Equivalent citations: 1991(56)ELT22(MAD)
JUDGMENT
1. The petitioners in all the writ petitions are manufacturers of aerated water and soft drinks under brand names. The Products are liable for liable for excise duty under the Central Excises and Salt Act, 1944 (hereinafter called 'the Act'). Prior to 1-3-1986, duty was leviable at the rates mentioned in the First Schedule of the Act itself and the subject goods fell under Item (d) of the First Schedule of Notification No. 201 of 1979 dated 4-6-1979 as amended from time to to time, the Central Government exempted all excisable goods in so far as raw materials or component parts which went into the manufacture of such goods which had been assessed to excise duty, were concerned. In respect of the raw materials used for the manufacture of soft drinks, only synthetic essence fell under Item No. 68 of the First Schedule to the Act. Even this Notification No. 201/79 was rescinded on 1-3-1986.
2. To alleviate the cascading effect of the levy of excise duty the raw materials as well as the finished products, certain new measures were brought in from time to time. They were variously called set-off procedures or Proforma Credit Schemes. Thereafter, what is known as the Value Added Tax (VAT) system was sought to be introduced. A Modified form in vogue in the western countries was introduced at the level of the manufacture and was called MODVAT Scheme. In December, 1985, the first respondent introduced a long term fiscal policy which for the first time included the proposal to introduce a modified system of value added value added tax or MODVAT as is popularly called. The sum and substance of this scheme is to alleviate the cascading effect of the excise duty on inputs by giving credit to the excise duty suffered by the inputs at the time of computing excise duty on the end products. The Central Excise Tariff Act, 1985 contains a chapter with the heading "Beverages, Vinegars and Spirits" being chapter 22. Heading Nos. 22.01 and 22.02 covers the aerated waters, soft drinks, soda etc. In the Budget speech for the year 1986, it was announced that the MODVAT schemes were extended only to goods falling under 37 Chapters of the Schedule to the Central Excise Tariff. Chapter 22, relating to aerated waters, was not included in the notification under Rule 57-A of the MODVAT Rule. However, the MODVAT Rules were extended to other Chapters with effect from 1-3-1987. However, textiles, tobacco and petroleum still remain out of the MODVAT Rules. Therefore, from 1-3-1987, the petitioners availed of the MODVAT Rules. With effect form 9-9-1987, the first respondent issued Notification No. 203/87 thereby excluding Heading 22.01 and 22.02 of the Central Excise Tariff from the benefit of MODVAT Rules. The notification was made to take effect from 1-10-1987. The writ petitions challenge the validity of this Notification No. 203/87 dated 9-9-1987 and for a direction to continue the benefit of MODVAT Scheme in respect of the goods manufactured by the petitioners.
3. Mr. P. S. Raman, learned Counsel for the petitioner, raises the following Grounds : (1) Having made a budget speech that the MODVAT Scheme was being implemented to all the goods and having, in fact, extended the scheme to aerated waters with effect from 1-3-1987, the impugned notification withdrawing the scheme are arbitrary and invalid. (2) The withdrawal of the Scheme to aerated waters is also hit by the doctrine of promissory estoppel. (3) There is a clear discrimination in respect of the goods manufactured by the petitioners and goods manufactured by others. (4) The impugned notification is in violation of Article 19(1)(g) of the Constitution of India and (5) Article 19(6) of the Constitution of India does not save the notification.
4. It is not necessary to go into the merits of the above contentions because all of them are covered by judgments of various courts in India. Mr. K. Jayachandran, learned Counsel for the respondents, relies on the decision in Black Diamond Beverages Ltd. v. Union of India [1988 (36) ELT 225 (Cal.)]. The Calcutta High Court had to consider the validity of the very same notification and almost identical questions were raised by the petitioners in that case. Rejecting every one of the contentions the court held that there was no illegality in the matter of withdrawing the concession under the MODVAT Scheme by the impugned Notification 203/87 dated 9-9-1987. The Bombay High Court in Goa Bottling Co. Pvt. Ltd., Goa & Another v. Union of India and Others (Writ Petition No. 245 of 1987 dated 25-4-1988), also considered the identical Notification 203/87 dated 9-9-1987 and after rejecting the plea of promissory estoppel and the contention made under Article 14 of the Constitution of India, dismissed the writ petition and upheld the notification. I am in respectful agreement with the view expressed in those judgments. It is not, therefore, necessary to discuss these contentions once over again. The writ petitions fail and they are accordingly dismissed. There will be no order as to costs.