V.R.KRISHNA IYER - (1.) THE fate of this appeal, by special leave, turns on the construction of a notification issued by the Government of India dated 20/04/1960 under R. 8 (1) of the Central Excise Rules, 1944 whereby a qualified exemption was accorded to certain types of aluminium manufactures in the matter of excise duty. The ultimate statutory revision to the Central Government having been decided against the appellant company, it has challenged the correctness of the view based on which the revision petition was dismissed.
(2.) The facts, fortunately, are few and beyond controversy although the length of the litigation has been considerable and beyond necessity, this being the second time the appellant has had to come to this Court aggrieved by the revisory authority's refusal to grant refund of over-levied excise duty, as claimed by it. Had there been disputes on facts, we would have hesitated to reassess the findings but as the record stands, the sole question is one of construction. If we may anticipate our ultimate conclusion even at the opening stage, this appeal deserves to be allowed as a matter of law, but what is more significant for society are three unhappy features which, we feel confident, the State will seriously consider. They are: (a) that good government involves not only diligent collection of taxes, but also ready refunds of excess levies; (b) that simplicity or easy comprehensibility in drafting legislation, including rules and notifications affecting the laity, is an art found absent, although not difficult to accomplish, given a fresh approach to use of statutory language; and (c) that a fair construction - not always one adverse to the assessee - is permissible and proper on the part of government and the taxing officers when enforcing fiscal legislation. The appellant manufactures aluminium plates, sheets, circles, strips and foils which are the end products of its composite factory, but, as intermediate products, it also turns out ingots, bars, slabs, billets, pellets and the like which get consumed mostly in the process of manufacture of plates, sheets, and other end products and rarely by way of sales of slabs as such. The raw material i.e. aluminium is extracted by the company from bauxite from which ingots, slabs and the like are made which, in turn, are rolled into sheets, circles etc., for sale. It is one of the admitted features of this manufacturing process that about 50 per cent of the ingots slabs and billets used for further manufacture of plates, sheets, circles etc., become scrap and are melted to be put back along with raw scrap for the purpose of recycling. In short, aluminium is first converted into items like ingots, bars, slabs etc but when they are used up for finished products like plates and sheets, nearly half of the stuff is thrown back into scrap in which state it is remelted and starts its manufacturing journey over again.
(3.) WE have now indicated how there are really two stages in the course of turn-out of the finished goods. Excise duty came to be imposed from 1/03/1960 on aluminium under the Finance Act for that year (we are not concerned with the same duty on the same commodity imposed in prior years). Item No. 27 which relates to aluminium, reads: JUDGEMENT_472_2_1975Html1.htm A note appended to the entry is of significance and states: "Under the Government of India, Ministry of Finance (Department of Revenue) Notification No. 29/60 Central Excises, dated the 1/03/1960, the following aluminium manufactures, namely plates, sheets, circles, strips and foils in any form or size in the manufacture of which duty paid aluminium in any form is used, are exempt from so much of the duty leviable thereon as is in excess of Rs. 200.00 per metric tonne." From March 1, 1960 to 24/04/1960 this two-tier system of levy at differential rates prevailed, it being noteworthy that the manufacturer of plates, sheets, and other finished products had to pay only at an overall rate of Rs. 500.00 per metric tonne. Moreover, he was also entitled to a proportionate exemption, in the event of using aluminium in any form already dutied, from so much of the duty leviable thereon as is in excess of Rs. 200.00 per metric tonne.' There was avoidable complication experienced in the enforcement of the two-tier system of duty and on the representation of the concerned composite manufacturers, the Government of India switched over to a single point levy at the ultimate stage of the manufacture and, in that behalf, issued an exemption notification on the meaning of which the parties have joined issue before us. This notification reads thus: "The Central Government exempts the following aluminium manufactures, namely, plates, sheets, circles, strips, and foils in any form or size, in the manufacture of which aluminium in any crude form including ingots, bars, blocks, slabs, billets, shots and pellets made out of old aluminium scrap or scrap obtained from the virgin metal on which the appropriate excise duty has been paid from so much of the duty leviable thereon as is in excess of Rs. 200.00 per metric tonne." (Notification No. 66/60 dated 20-4-l960) Notwithstanding the stilted style of the notification, it is, to our mind, clear that what the Central Government intended and effected by this notification was to fix the rate of levy at Rs. 500.00 for the fully manufactured aluminium products, thus making up for the levy at the rate of Rs. 300.00at an intermediate stage. But these composite mills which made both half manufactured and fully manufactured items had to be granted an exemption in cases where the half-manufactured items went into further stages of manufacture after they had suffered duty. The whole scheme of the exemption, as we see it, is that where ingots, bars, blocks, slabs, billets, shots and pellets made out of aluminium scrap or scrap obtained from the virgin metal on which excise duty has already been paid, are used for making finished items like sheets, there should be a reduction pro tanto in the rate of duty leviable on the final product. Thereby the manufacturer would have paid Rupees 300/- for the items at the intermediate stage of manufacture and if such items were used up in the later stages of manufacturing finished goods, he would get concession to that extent by being charged Rupees 200/- per metric tonne. ;