Anil K.Sen, J. -
(1.)These are the three appeals under Clause 15 of the Letters Patent preferred by the Union of India and the Central Authority constituted under the Tax Credit Certificate (Excise Duty on Excess Clearance) Scheme, 1965. Points raised in these appeals and in the cross-objections in two of them are common and they turn on the interpretation of Section 280ZD of the Income-tax Act, 1961 (hereinafter referred to as "the said Act"). These appeals and cross objections have in such circumstances been heard together and are being disposed of by this judgment.
(2.)The sole respondent in these appeals is a company manufacturing paper and paper board in three of its paper mills--two in West Bengal and one in Orissa. The company manufactures different varieties of papers as specified in paragraph 3 of the respective writ petitions. Under the Central Excises and Salt Act, 1944, these different varieties of papers are not subjected to any uniform rate of excise duty. In entry 17 of the First Schedule, though enumerated under a broad heading of "Paper" the different varieties are not only differently enumerated but are subjected to different rates of excise duty.
(3.)The Finance Act of 1965, in providing some tax relief, introduced a new scheme of tax credit certificate in Chapter XXIIB including therein a provision for such a credit certificate in relation to increased production of certain goods in Section 280ZD. That provision is set out hereunder s
"280ZD. Tax credit certificates in relation to increased production of certain goods.--(1) Subject to the provisions of this Section, a person, who during any financial year commencing on the 1st day of April, 1965, or any subsequent financial year (not being a year commencing on the 1st day of April 1970, or any financial year thereafter) manufactures or produces any goods, shall be granted a tax credit certificate for an amount calculated at a rate not exceeding twenty-five per cent. of the amount of the duty of excise payable by him on that quantum of the goods cleared by him during the relevant financial year which exceeds the quantum of the goods cleared by him during the base year, whether the clearance in either case is for home consumption or export. (2) The goods in respect of which a tax credit certificate shall be granted under Sub-section (1) and the rate at which the amount of such certificate shall be calculated shall be such as may be specified in the scheme : Provided that different rates may be specified in respect of different goods. (3) In specifying the goods and the rates under Sub-section (1), the Central Government shall have regard to the following factors, namely : (a) the need for stimulating industrial output; (b) the need for financial assistance to industrial undertakings engaged in the manufacture or production of such goods; (c) any other relevant factor. (4) Where any undertaking begins, after the 1st day of April in the base year, to manufacture or produce any goods in respect of which a tax credit certificate may be granted under Sub-section (1), the quantum of goods cleared in that year shall, for the purposes of that Sub-section, be determined in such manner as may be provided in the scheme. (5) The amount shown on a tax credit certificate granted to any person under this section shall, on the certificate being produced before the Income-tax Officer, be adjusted against any liability of that person under the Indian Income-tax Act, 1922 (11 of 1922), or this Act, existing on the date on which the certificate was produced before the Income-tax Officer and where the amount of such certificate exceeds such liability, or where there is no such liability, the excess or the whole of such amount, as the case may be, shall, notwithstanding anything contained in Chapter XIX, be deemed, on the said date, to be refund due to such person under that Chapter and the provisions of this Act, shall apply accordingly : Provided that the adjustment or refund, as the case may be, under this Sub-section shall be only for such amount, not exceeding the amount of the certificate, as is used within such period as may be specified in the scheme- (i) for repayment of loans taken by the person from any of the financial institutions notified in this behalf by the Central Government, or (ii) for the acquisition of any capital asset in India, including the construction of any building, for the purposes of his business, or (iii) where the person is a company, also for redemption of its debentures. (6) In this section-- (a) 'base year', in relation to an existing undertaking which manufactures or produces the goods referred to in Sub-section (1), means the financial year commencing on the 1st day of April, 1964, and in relation to any other undertaking, the financial year in which such undertaking begins to manufacture or produce such goods; (b) 'duty of excise' means the duty of excise leviable under the Central Excises and Salt Act, 1944 (1 of 1944)."