Indian Kanoon - Search engine for Indian Law

ORIGINAL JURISDICTION: Petition No. 94-of 1955. Petition under Art. 32 of the Constitution of India for the enforcement of Fundamental Rights.

Bishan Narain, Rameshwarnath, S. N. Andley and P. L. Vohra, for the petitioner.

H. N. Sanyal, Additional Solicitor General of India, N. S. Bindra and P. D. Menon, for the col respondents. 1962. August 20. The Judgment of the Court was delivered by HIDAYATULLAH, J.-This is a petition under Art. 32 of the Constitution challenging the imposition of Excise Duty on the petitioner by virtue of item No. 17 "Footwear" of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) with effect from February 28, 1954, and the calculation of the duty advaloram by including in the price, charges for freight, packing and distribution.- The petitioner, the British India corporation Ltd. is a public limited company which was formed to take-over other companies and to amalgamate them. Among the companies which the petitioner took-over were Cooper Allan & Company Ltd., and the North West Tannery Company Ltd., b )that Kanpur. These two Companies manufature shoes and other leather goods and operate as a single unit manufacturing the well-known brand of "F L E X" shoes. As a result of the financial proposals of the Central Government for the financial year 1952-55, a bill (No. 9 of 1954) was introduced in parliament on February 27,1954. Under el. 8 of the Bill foot-wear were proposed to be taxed at 10% advaloram if produced in any factory as defined in the factories Act, 1948 (63 of 1948). When the Finance Act, 1954 (17 of 1954) was enacted, the Central Excises and Salt Act, 1954, was amended by the inclusion of item 17 in the Schedule, though in a slightly different form. The item as finally enacted read as follows:-

The argument suffers from a fundamental fallacy in that it assumes that there can be no classification of manufacturers on the basis of the number of workers or the employment of power above a particular horse-power. Manufacturers who employ 50 or more workers can be said to form a well-defined class. Manufacturers whose manufacturing process is being carried on with the aid of power exceeding 2 H.P. are also a well-defined class. Legislation of this type depending upon the number of workers or the extent of power employed, is frequently to be found. The most obvious example is the Factories Act which defines a factory with reference to the employment of a certain number of workers or the employment of power. The contention that size makes no difference is not valid. It is well-known that the bigger manufacturers are able to effect economics in their manufacturing process and their out-turn being both large and rapid they are able to undersell am-all manufacturers. If this were not so mass production would lose all its advantages. No doubt the manufacturers are now required to bear burdens which previously did not exist, like bonus, expenses on labour welfare etc. but still the manufacturers, provided the business is well ran, can by mass production offer the same commodity at a competitive price as against small' manufacturers and bear the burden as well. Therefore, in imposing the Excise Duty, there was a definite desire to make an exemption in favour of the small manufacturer who is unable to pay the duty as easily, if at all, as the big manufacturer. Such a classification in the interests of co-operative societies, cottage industries and small manufacturers has often to be made to give an Impetus to them and save them from annihilation in competition with large industry. It has never been successfully assailed on the ground of discrimination. Recently, this Court in the Orient Weaving Mills (P) Ltd. v. The Union of India(1) considered a similar argument in relation to an exemption granted to societies working a few looms on co-operative basis as against big companies working hundreds of looms. The. exemption was held to be constitutional and the classification of co-operative societies was held to be reasonable. A similar consideration applies in the present case, where the exemption operates in respect of very small manufacturers employing not more than 50 workers and carrying on their manufacturing process with power not in excess of 2 H.P. This affords a protection to small concerns who, if they were made to pay the duty, would have to go out of business.