CIBATUL LIMITED Vs. UNION OF INDIA
LAWS(GJH)-1979-2-5
HIGH COURT OF GUJARAT
Decided on February 21,1979

CIBATUL LIMITED Appellant
VERSUS
UNION OF INDIA Respondents

JUDGEMENT

S.H.SHETH - (1.) Cibatul Limited a company registered under the Companies Act 1956 is the petitioner (hereinafter referred to as the manufacture). They are manufacturing U. F. Resins M.F. Resins and Expoxy Resins. They are excisable goods within the meaning of that expression given in sec. 2 (d) of the Central Excises and Salt Act 1944 (1 of 1944) (hereinafter referred to as the Excise Act). Ciba Geigy of India Limited are their wholesale buyers. They are a company incorporated in India and are hereinafter referred to as the buyer. Ciba Geigy Limited is a third company incorporated in Switzerland and is referred to hereinafter as the Swiss company. 65% of the share capital of the manufacturer is held by Atul Products Limited 35 of its share capital is held by the Swiss company and the remaining 55% of its share capital is held by the buyer. So far as the buyer is concerned 65 of its capital is held by the Swiss company. The Swiss company has registered trade marks in respect of which licence has been granted by it to the buyer to use them. Two agreements dated 24th March 1971 and 7 h December 1971 were entered into between the manufacturer and the buyer. Agreement dated 24th March 1971 provided for the sale of certain manufactured goods to the buyer. Agreement dated 7th March 1971 is a tripartite agreement between the manufacturer the buyer and the Swiss company. Under this agreement the manufacturer is permitted to affix a certain trade mark of the Swiss company on goods manufactured by the manufacturer and sold to the buyer under the agreement dated 24th March 1971. Two more agreements similar in character dated 1st June 1973 and 1st December 1973 in respect of certain other goods manufactured by the manufacturer were entered into.
(2.) The manufacturer is required by Central excise authorities to pay excise duty not on the price which the manufacturer charges the buyer but which the buyer charges his buyer on the ground that the manufacturer and the buyer are related persons. Therefore the manufacturer has filed this petition in which broadly speaking it has raised the two-fold challenge:- I. The concept of related person introduced by Parliament in amended. sec. 4 of the Excise Act is ultra vires the Legislative competence of Parliament under Art. 246 read with Entry 84 in List I in Seventh Schedule to the Constitution of India (hereinafter referred to as the Union List). II. The manufacturer and the buyer are not related persons within the meaning of that expression given in the Excise Act.
(3.) The examination of the first contention necessarily involves the examination of the legislative competence of the Parliament in this behalf under Art. 246 with read Entry 84 in the Union List. Entry 84 reads thus:- "84 Duties of Excise on tobacco and other goods manufactured or produced in India except (a) alcoholic liquors for human consumption; (b) opium Indian hemp and other narcotic drugs and narcotics but including medicinal and toilet preperations containing alcohol or any substance included in sub-paragraph (b) of this entry What is the width and amplitude of the expression Duties of excise ? We may state that the Government of India Act 1935 also contained a similar entry. It was Entry 45 in List I in VII Schedule to that Act. For the sake of convenience it may be reproduced here:- "45 Duties of excise on tabacco and other goods manufactured of produced in India except (a) alcoholic liquors for human consumption; (b) opium Indian hemp and other narcotic drugs and narcotics; non-narcotic drugs (c) medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry. Comparison of these two entries makes it abundantly clear that they are pari materia except that Entry 45 in the Federal legislative list excluded non-narcotic drugs. They are not excluded by Entry 84 in the Union List. Secondly while the Federal legislative list excluded medicinal and toilet preparations specified in sub-paragraph (b) of that Entry they are included in Entry 84 in Union list. These variations do not make any difference for the purpose of this case. We are concerned in the instant case with discovering the width and amplitude of the expression Duties of Excise. The question in our opinion is not open to debate because it has been the subject-matter of several decisions of the highest Court of this country. They are binding on us.;


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