SATTUR ORIGINAL MATCH CO Vs. UNION OF INDIA

JUDGEMENT

(1.) IN these batches of writ petitions, the petitioners, who are manufacturers of matches, have, in the main, prayed for the issue of a writ of prohibition prohibiting the respondents 1 and 3, namely, the Superintendent of Central Excise, and the Union of INdia, Ministry of Finance, respectively, from collecting excise duty in excess of Rs. 4.50 p. or Rs. 1.60 p. per gross of 50 matches, as the case may be, from the petitioners in respect of matches cleared for home consumption packed in boxes in which either outer slide or inner slide or both are made of cardboard without reference to the Notification 137 of 1981 and 140 of 1981, both dated 2-7-1981.

(2.) INDIGENOUS manufacture of matches in India was started in 1910 by a few Japanese families who had settled in Calcutta. But it could not survive the competition from imports. In 1922, the import duty was doubled to the level of Rs. 1.50p per gross. Soon after, a number of small factories were established all over the country. The Swedish Match Company Limited, whose associates had then a near International monopoly in matches and which had been importing practically the country's entire requirements from its parent concern in Sweden setup the Western India Match Company Limited (WIMCO) with factories all over India. Another company, namely, ASSAM MATCH COMPANY was also established in 1926 with its factory at Dhurbi (Assam). The claim of the match industry for protection was considered by the Tariff Board during 1926-28 and protection was granted in 1928 for an indefinite period. The import duty of Rs. 1.50 per gross was converted into a protective duty. With this protection, a large number of medium sized factories manufacturing matches mostly by manual labour came into being. A particularly large concentration grew in and around the towns of Sivakasi, Sattur and Kovilpatti in Tamilnadu.

(3.) AS of now, units producing matches are classified broadly under two categories, viz., the power-operated or mechanised units and the non-power operated ones. The non-power operated sector may be divided further into two categories viz., 'cottage' and 'other than cottage', depending on their output. Those producing not more than 75 million matches per year and recommended by KVIC or a cooperative society are categorised as 'cottage'/'tiny'. It may be noted that, broadly speaking, manufacture of matches involves the following processes :(i)Making of veneers (ii)Making of splints (iii)Dipping (iv)Box making (vi)Pasting of labels and banderolls, and (vii)Packing Except for making veneers and splints, in manufacturing matches, the use of machines is not indispensable. For the purpose of levy of central excise duty, a unit is deemed to be non-mechanised and thus eligible for concessional rates, if it does not use power in two processes, namely, dipping of splints in the composition for match heads and for filling of boxes with matches. AS a result, the non-mechanised units can employ machines for (i) making boxes (ii) filling up the frames with splints, (iii) side painting, (iv) grinding match composition, and (v) affixing labels and banderolls to the match boxes without losing the excise duty concession.