- (1.) THE constitutional validity of the notification of 1st of March, 1963 (100 D) made by the Respondent, Union of India, granting exemptions on a graduated scale from payment of excise duty to units manufacturing strawboard below 5000 metric tons, has been challenged in four Civil Writ Petitions Nos. 358 -D of 1963, 377 -D of 1963, 378 -D of 1963 and 379 -D of 1963, of Jaswant Suinir Mills Ltd. Straw Products Ltd. Arvind Board and Papers Products Ltd. and Ratlam Straw Board Mills (Private) Ltd. respectively, which will all be disposed of by this judgment.
(2.) IT is common ground that there are in all twenty -seven industrial units in India manufacturing strawboard with an aggregate manufacturing capacity of 82,400 metric tons. Some of*the units are producing less than the installed or licensed capacity and the total production of strawboard in the year 1962 is stated to be 61,500 tons' which roughly represents the requirements of the country for this commodity. Under Section 3 of the Central Excises and Salt Act, 1944 (hereinafter called the Act), excise duties are levied on products manufactured in India at rates specified in first schedule, the 17th item of which relates to paper, and different varieties of it are taxed at varying rates. The 5th sub -item under the 17th item relating to paper is concerned with. "strawboard other than corrugated board" and the duty mentioned in the First Schedule is 11 naye paise per kilogram. This rate before the Finance Act of 1963 was 15 naye paise per kilogram and currently under the Finance Act of 1963 the excise duty on straw board is 35 naye paise per kilogram with a surcharge of 20 per cent, the aggregate duty being 42 naye paise per milogram. Sub -item (8) relates to corrugated board while the 10th one relates to "paper and paperboard, all sorts, not otherwise specified.
(3.) WHILE under Sub -section (1) of Section 37 of the Act the Central Government can make rules to "carry into effect the purposes of this Act", Sub -section (2), without prejudice to the generality of the powers under Sub -section (1) inter alia authorises the Central Government under Clause (xvii) to "exempt any goods from the whole or any part of the duty imposed by this Act". The Central Excise Rules were framed in 1944, and under Rule 8: 2. THE Central Government may from time to time, by notification in the official gazette, exempt (subject to such conditions as may be specified in the notification) any excisable goods from the whole or any part of duty leviable on such goods. The Central Board of Revenue may by special order in each case exempt from the payment of duty, under circumstances of an exceptional nature, any excisable goods. The impugned notification of the 1st of March, 1963 (marked as Annexure D in all the petitions) exempts "strawboard other than corrugated board, upto the quantity prescribed in column (1) of the table hereto annexed, cleared by any manufacturer for home consumption on or after the first day of April in any financial year, from so much of the duty leviable thereon as is in excess of the amount specified in the corresponding entry in column (2) of the said table". The table under this notification is as follows: TABLE Quantity Amount (1) (2) On the first 125 metric tonnes Nil On the next 375 metric tonnes 9 Naya paise per kg. On the next 1000 metric tonnes 15 Naya paise per kg. On the next 1500 metric tonnes 21 Naya paise per kg. ;