MURTHY MATCH WORKS Vs. ASSTT COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) THE core of the contention urged by the appellants in these various appeals filed by certificate under Article 133(1)(a) and (c) of the Constitution is that the excise duty on matches sought to be levied on these medium sized manufacturers of Shivakashi wears the mask of equality but in its true face bears the marks of unequal justice violative of Article 14 of the Constitution of India.

(2.) SHRI Chitale, learned counsel for the appellants, has focused his arguments on one grievance only - and, we think, with good reason - that the discriminatory fiscal treatment of his clients is unconstitutional, the vice being treatment of dissimilar categories similarly. To compress his whole argument in a single sentence, it is that the appellants, small manufacturers of matches, have been subjected by the impugned notification to excise duty at the same onerous rate as has been applied to larger producers, wilfully indifferent to a historically well-recognised classification between the smaller and the larger group of match manufacturers, and the injury sustained flows from this failure to classify and deal differentially with sets of producers who are unequal in their economic capabilities in the matter of production and marketing - a sort of traumatic egality. In brief, equal treatment of unequal groups may spell invisible yet substantial discrimination with consequences of unconstitutionality. That dissimilar things should not be treated similarly in the name of equal justice is of Aristotelian vintage and has been, by implication, enshrined in our Constitution.

(3.) THE Tariff Commission recommended, the abolition of sub-classification for the purpose of excise duty and suggested separate scales of excise duty to be levied for the four classes of units, namely, 'A', 'B', 'C' and 'D'. Based on these recommendations, the slab system of excise duty was abandoned by Government and the category wise rate was adopted. The impact on production of the differential duty scheme was a process of splintering of the 'B' group to inhale the advantages offered to the 'C' group resulting in a reduction in total production, thanks to the thinning tendency in the 'B' group. Indeed, the fiscal misdirections, the showing concessional rates to the 'C' category as against 'B' category, generated pseudo - 'C' category producers from out of the erstwhile 'B' category so that the bona fide small scale manufacturers falling in the 'C' category were flooded out. Moreover, the genuine 'C' category manufacturers were exploited by the middlemen who snapped up the margin of tax concession for themselves, defeating the object of the concessional duty for the small producer. This dilemma induced government to revise its fiscal thinking and led to the impugned notification which withdrew the tax concession to the 'C' category and equated it with the 'B' category.