H.N.Seth, J. - (1.) By this petition under Article 226 of the Constitution the petitioner challenges the validity of order No. 13/66 of 1978 dated 26th December, 1978 passed by the Government of India under Section 36 of the Central Excises and Salt Act, 1944 rejecting the revision application of the petitioner filed against the order of the Appellate Collector, Central Excise, New Delhi, dated 30th January, 1976 in Appeal No. 69-C.E./ 76 whereby the Appellate Collector, Central Excise, upheld the order dated 13th August, 1975 passed by the Superintendent, Central Excise, Allahabad, holding that plastic torches manufactured by the petitioner were liable for the levy of excise duty under Tariff Item No. 68 of the Central Excise Tariff and not under Tariff Item No. 1 5A(2) of the same Tariff.
(2.) The petitioner manufactures flashlights, main bodies of which are made of brass, aluminium and plastic. Such flashlights are known as brass, aluminium and plastic torches respectively. For manufacturing plastic torches the petitioner has been granted industrial licence dated 22-5-1974 under the Industries (Development and Regulation) Act, 1951, Item No. 12(1) of the First Schedule of which requires obtaining of such licence in respect of plastic moulded goods. The petitioner also obtained a licence for manufacturing articles covered by entry at Item No. 68 of the First Schedule of the Excise Act which, according to it, authorised it to manufacture brass and aluminium torches as well.
(3.) Prior to the enforcement of the Finance Act of the year 1975, the position was that whereas excise duty was payable on the manufacture of articles made of plastics all sorts under Tariff Item No. 15A(2), there did not exist any item like Item No. 68 in the Tariff providing for duty on manufacture of goods not otherwise provided for in the Schedule. Thus prior to coming into force of the Finance Act of the year 1975, there was no provision for charging excise duty on the manufacture of brass and aluminium torches which admittedly were not made out of plastic. It may also be mentioned at this stage that under Notification No. 68/71-C.E., dated 29th May, 1971, the Central Government had exempted articles made of plastic, all sorts, falling under sub-item (2) of Item No. 15A of the First Schedule of the Central Excises and Salt Act, 1944, from payment of excise duty in a case where such articles were produced out of plastic on which the duty of excise or the additional duty under Section 2A of the Indian Tariff Act, 1934, as the case may be, had already been paid. The licence issued to the petitioner under the provisions of the Industries (Development and Regulation) Act, 1951 for manufacture of plastic torches issued on 22nd August, 1972 shows that the petitioner had been licenced to manufacture plastic torches out of duty paid plastic material. This licence was renewed from time to time. While renewing the said licence on 28-9-1975 for the year 1976, the licensing authority made it clear that the licence issued shall, instead of enabling the petitioner to manufacture plastic torches out of duty paid plastic material, enable it to manufacture plastic articles out of duty paid plastic material. Since the petitioner was manufacturing plastic torches by using duty paid plastic material, the manufacture of this article, if it fell under Tariff Item No. 15A(2) was exempt from payment of excise duty and in case it did not so fall, there was no other item under which any duty in respect of manufacture of such articles could be charged.;