Mathew, J. - (1.) In these appeals, the facts are similar and the question for consideration is same. We will take up for consideration the appeal filed by the writ petitioner in Writ Petition No. 3838 of 1968 (hereinafter called the 'respondent') against the common order in all the writ petitions.
(2.) The respondent filed the writ petition before the High Court of Madras questioning the validity of clause (b) of notification of the Government of India, Ministry of Finance (No. 205/67-CE dated September 4, 1967) on the ground that clause (b) is violative of the fundamental right of the respondent under Article 14. The High Court allowed the petition and this appeal, by special leave, is filed against the order.
(3.) Section 3 of the Central Excises and Salt Act, 1944 (for short, 'the Act') imposes excise duty on manufacture in respect of items mentioned in Schedule I of the Act. Match boxes are mentioned in Item 38 of the said schedule and duty is leviable on the manufacture of match boxes at the rates specified therein. For the purpose of levy of excise duty match factories were classified on the basis of their production during a financial year and matches produced in different factories were subject to varying rates of duty - a higher rate being levied on matches produced in factories having a higher output. In 1967, the classification of match factories on the basis of production was abandoned and they were classified as mechanised units and nonmechanised units and by Notification No. 115 of 1967 dated June 8, 1967, two rates of levy were prescribed i.e. Rs. 4.60 per gross boxes of 50 matches each cleared in mechanised units and Rs. 4.15 per gross boxes of 50 matches each cleared in non-mechanised units. A concessional rate of duty of Rs. 3.75 per gross upto 75 million matches was allowed in respect of units certified as such by the Khadi and Village Industries Commission or units set up in the co-operative sector. Notification No. 162 of 1967 dated July 21, 1967, superseded the earlier notification and the rate of duty in respect of nomechanised units was raised from Rupees 4.15 to Rs. 4.30 per gross boxes. This notification contained a proviso to the effect that if a manufacturer were to give a declaration that the total clearance from the factory will not exceed 75 million matches during a financial year, the manufacturer would be entitled to the concessional rate of duty of Rs. 3.75 per gross boxes of 50 matches each up to 75 million matches, and the quantity of matches, if any, cleared in excess up to 100 million matches will be charged at Rs. 4.30 per gross, and, if the clearance exceeds 100 million matches, the entire quantity cleared during the financial year will be charged to duty at Rs. 4.30 per gross. This notification, however, enabled the manufacturers with a capacity to produce more than 100 million matches and who were clearing more than 100 million matches during the previous years to avail of the concessional rate of duty at Rs. 3.75 per gross by filing a declaration as visulized in the proviso to the notification by restricting their clearance to 75 million matches. This would have defeated the very purpose of the notification, namely, the grant of concessional rate of duty only to small manufacturers. In order to avert this tendency on the part of the larger units, the notification dated July 21, 1967 was amended by Notification No. 205 of 1967 dated September 4, 1967. The notification reads: "In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue and Insurance) No. 162/67-Central Excises dated the 21st July, 1967, namely:- In the proviso to the said notification after clause (i) the following shall be inserted, namely:- (ia) nothing contained in the foregoing clause shall apply to any factory other than the factories; (a) whose production during the financial year 1966-67 did not exceed 100 million matches; (b) whose total clearance of matches during the financial year 1967-68, as per declaration made by the manufacturer before the 4th September, 1967 in pursuance to this proviso is not estimated to exceed 75 million matches; (c) which fall under category D under notification No. 75/66 Central Excise dated the 30th April 1966, but had no production till the 4th September, 1967; (d) whose production during any financial year does not exceed or is not estimated to exceed 100 million matches and are recommended by the Khadi and Village Industries Commission for exemption under this notification as a bona fide cottage unit or which is set up by a cooperative society registered under any law relating to co operative societies for the time being in force.";