A UJAGAR PRINTS ETC. v. UNION OF INDIA & ORS. ETC. NOVEMBER 4, 1988 B [R.S. PATHAK, CJ., SABYASACHI MUKHARJI, S. NATARAJAN, M.N. VENKATACHALIAH AND S. RANGANATHAN, JJ.] Central Excises and Salt Act, 1944-Sections 2(f), 4 and Schedule Items 19 and 22-'Manufacture' meaning of-Processors carry out C operations on 'grey fabrics' on job work basis-Whether 'manufac- ture'-Central Excise and Salt Additional Duties Excise (Amendment) Act, 1980--Effect of.
Taxation-Under the Act is the rule-Benefit and exemption- The exception-Excise duty of goods-Levied upon manufacturer- D Imposed on production/manufacture/producer in accordance with the relevant rules. Constitution of India, 1950, Article 245, 246 and Schedule VII Lists I Entries 84, 97, Lists II and III-"With respect to"-Inter- pretation of-'Manufacture'-Concept of Entries in legislative lists- £ Not sources of legislative power-Merely topics or fields of legislation- , Legislation co•ild be 'composite legislation'-'Rag-bag' legislation-- Familiar in taxation-Competent legislature can always validate law-- Retroactivity of legislation-Test of validity how applied.
Statutory Interpretation-Referential legislation-Types of- F Effect of-Legislation could be composite legislation-'Rag-bag' legislation-What is-Competent legislature can always validate a law. Words and phrases-'Manufacture'-'In respect of-Meaning of. ' O Section 2(0 of the Central Excise Act defines 'manufacture', to include any process incidental or ancillary to the completion of a manufactured product.
The President of India promulgated an Ordinance called the Central Excises and Salt and Additional Duties of Excise (Amendment) H Ordinance 1979, which was later replaced by Central Act VI of 1980, ' 770 UJAGAR PRINTS v. U.0.1. 771 called the Central Excises and Salt and Additional Duties of Excise (Amendment) Act, 1980. The Amending Act became effective from 24th February, 1979. By section 2 of the Amending Act, Section 2(0 of the Excise Act was amended by adding three sub-items in the definition of 'manufacture' so as to include activities like bleaching, dyeing, printing etc. which were held not covered by two decisions of the Gujarat High Court.
Similar amendments were made in items 19 and 22 of the First Schedule with retrospective effect. Section 5(2)(b) of the Amending Act provided that no suit or other proceedings shall be maintained or con- tinued in any other Court for the refund of the duty collected and no enforcement shall be made by any Court of any decree or order direct- ing the refund of such duties of excise which have been collected and which may have been collected, as if the provisions of Section 5 of the Act had been in force on and from the appointed day as defined in the Act.
A B c Prior to the Amending Act, !980, the levy on the processors was challenged before the Gujarat High Court in the case of Vijay Textiles Mills v. Union of India and Real Honest Textile v. Union of India, D [1979] 4 E.L.E.J.
181. The Gujarat High Court held that cotton fabric subjected to bleaching, dyeing and printing could not be subjected to excise duty under items 19 and 22 of the First Schednle to the Central Excises and Salt Act, 1944, and that processors were liable to pay duties under tariff-entry 68 only on the value added by the processor.
Follow- ing this judgment a large number of similar claims of processing-houses E were allowed by the High Court by its judgment dated 13.3.1979. How- ever, the Bombay High Court, took a different view and held that even under the concept of 'manufacture' envisaged in section 2(0 even prior to its amendment, the operations carried on by the processors amounted to 'manufacture' and that, at all events, the matter was placed beyond any controversy by the Amending Act of 1980.
F The judgment of the Gujarat High Court in the case of Vijay Textiles and Real Honest Textiles was considered by a Bench consisting of three judges of this Court in Empire Industries v. Union of India, [1985] Supp. l SCR 292 and it was held not to have been decided · correctly. The view taken by the Bombay High Court in New Shakti G Dye Works Pvt. Ltd. v. Union of India & Anr., [I98J) ELT 1736, was approved.
The present appeals, by special leave, preferred against the judg- ments of. the High Court of Gujarat and the High Court of Bombay, and the batch of writ petitions under Article 32 of the Constitution of India, H 772 SUPREME COURT REPORTS [1988] Supp. 3 S.C.R. A involve common questions of law concerning the validity of the levy of duties of excise under tariff-items 19 and 22 of the Schedule to the' Central Excises and Salt Act 1944 ("Central Excise-Act") as amended by the Central Excises and Salt Additional Duties Excise (Amendment) 1980 Act ("Amending Act") treating as 'manufacture' the process of bleaching, dyeing, printing, sizing, mercerising, water-proofing, rub- B berising, shrink-proofing, organdie processing etc. done by the proces- sors who carry out these operations in their factories on job-work basis in respect of 'cotton-fabric' and 'Man-made fabric' belonging to their customers.
The facts in all the cases are identical. c D E The petitioners/appellants carry out the operations of bleaching dyeing, printing sizing, finishing etc. of grey fabric on job-work against payment of processing charges to it by the customers who are the ownerii of the grey-fabric. The machinery and equipment installed in the petitioners' factories are suited for and appropriate to the proces- sing of grey-fabric and are not capable to manufacturing grey-fabric.
The man-made grey-fabric, such as, Art Silk Grey-fabric is manufactured in mills and on power looms and that latter Is exempt from excise duty on its manufacture. The Art Silk Grey-fabrics which are processed in the . petitioners/appellants factories are those manufactured on power looms and not by the mills and that the Art Silk Grey:fabric received do not come from the manufacturers of the grey. fabric through the manufacturing-stream but from the various traden through the sales-stream.
The present writ petitions/appeals also include cases where the grey-fabric is also purchased by some of the processing houses and are sold by them, after processing. Io some cases, the manufacturers of the grey-fabric subject it to captive consumption and process them In their F own composite establishments. At the 11me of hearing, the correctness of the view taken In the Empire Industries case on certain aspects having been doubted by another Bench of this Court, these appeals/writ petitions were referred to a Bench of five judges on two questions namely (1) whether the G processing of grey-fabric amounted to 'manufacture' within the mean- ing of Section 2(1) as it stood prior to Its amendment, and (2) whether, even If such processing did amount to 'manufacture' what should be the proper basis for determining the assessable value of the processed fabrics.
H In the petitions and appeals, the following points arise for determination. UJAGAR PRINTS v. U.0.1. 773 A(i) Whether the process of bleaching, dyeing, printing, sizing, shrink-proormg etc. carried on in respect or cotton or man-made 'grey- fabric' amount to 'manufacture' for purposes, and within the meaning of Section 2(f) of the Central Excises and Salt Act 1944 prior to the amendment of the said Section 2(f) by section 2 of the Amending Act VI of 1980.
A(ii) Whether the decision in Empire Industries Limited & Ors. v. Union of India, (198~] Supp. 1SCR292holding that these operations amount to 'manufacture' is wrongly decided and requires reconsi- deration. A B (B) Whether the amendment brought about by the Amending Act of C 19110 of Section 2(1') and to tariff-items 19 and 22 of the Central Excise 4.ct is ultra-vires Entry 84 List I and, therefore, beyond the competence of the Union Parliament.
Whether, at all events, even if the expended concept of manufac- ;ure introduced by the Amendment is beyond the scope of Entry 84 List D I, whether the impost is, at all events, referable to and supportable by the residual Entry 97 of List I. (C) Whether, at all events even if the amendments to ·Central Excise Act are valid, the levy under the Additional Duties Act is unsup- portable and without the authority of law as there is no corresponding E enlargement of the definition of 'manufacture' under the Additional Duties Act. · (D) Whether the retrospective operation of the Amending Act is an unreasonable restriction on the fundamental right of the 'processors' under Article 19(1)(g) of the Constitution. · · F (E) Whether, even if the levy is justified, at all events, the compu- tation of the assessable-value of the processed grey-fabric on the basis of the whole-sale cash selling-price declared under classification list under Rule l 73(b) is unjustifie.d and illegal in respect oft.he assessable value ot the processed grey-fabric done on job-work-basi,, G Allowing the appeals preferred by the Union of India, HELD: (Per Majority) The \appeals preferred by the Union of India are allowed and the H 1 774 SUPREME COURT REPORTS [1988] Supp. 3 S.C.R.
A Judgment of the Gujarat High Court under appeal is set-aside. The appeals preferred by the processors against the judgment of the Bombay High Court and the Writ Petition filed by the processors directly in this Court are dismissed. The Union of India and its authorities shall be entitled to take necessary steps to seek the enforce- ment of the bank guarantees, if any, for the rerovery of the arrears. [810C-D] c D E F G H
Per Sltbyasachi Mukharji, J. (Concurring with Venkatacbaliab, J.) (1) A statutory charge should be measured by the method of its own computation as laid down in the statute and not by any other method of computation.
The circumstances that thereby the benefit of any exemption granted by the legislation may be lost and that in some cases hardship might result are not matters which would influence courts on the construction of the statute. A tax payer is entitled only to such benefit as is granted by the legislature. l811C-Df (2)(i) Where a manufacturer sells the goods manufactured by him in wholesale to a wholesale dealer at the arms length and in the usual course of business, the wholesale cash price charged by him to the wholesale dealer less trade discount would represent the value of the goods for the purpose of assessment of excise.
But the price received by the wholesale dealer who purchases the goods from the manufacturer and in his turn sells the same in wholesale to other dealer, would be irrelevant for determination of the value of the goods and the goods would be charged on that basis. [812E-F] (2)(ii) The valuation must be on the basis of wholesale cash price at the time when the manufactured goods enter into the open market.
The value of the trade-marks is not to be taken into account in comput- ing the assessable value as the affixation of the trade-marks of a particu- lar brand was extraneous to manufacture. The values of such extrane- ous or additional factors do not enter into the computation of assessable value and as such the wholesale cash price at which the goods enter into thJ.> wholesale market would be independent of the value of the trade- marks. [812G-H; 813A-B] (2)(iii) The assessable value would, therefore, include the value of the grey cloth in the hands of the processors plus the value of the job-work done plus manufacturing profits and manufacturing expenses whatever would be included in the price at the factory gate.
The· correct assessable value must be the value of the fabric at the factory gate, that' . . UJAGAR PRINTS v. U.0.1. 775 is to say, the value at which the manufactured goods leave the factory A and enter the main stream. [813E] · 3. Computation of the assessable-value is one question and as to who should be liable for the same is another. Duties of excise are imposed on production or on manufacture of goods and.are levied upon · the manufacturer or the producer in accordance with the relevant rules.
This is quite independent of the ownership of goo,!Js. it is, there- fore, necessary to reiterate that the value for, the assessment under Section 4 of the Act will not be the processing charge along but the intrinsic value of the processed fabric which is the price at which the fabrics are sold for the first time in the wholesale market. The rules are clear on the computation of that value. [813F-H) Atic Industries Ltd. v.
H.H. Dave, Asstt. Collector of Central Excise and Ors., [1975) 3 S.C.R. 563; U;;ion of India & Ors. etc. etc. v. . Bombay Tyre International Ltd. etc. etc., [1984) I S.C.R. 347 at 375; Union of India & Ors. v. Cibatul Ltd., [1985) Suppl. 3 S.C.R. 95 and Joint Secy. to the Govt. of India & Ors. v. Food Specialities Ltd., [1985) Suppl. 3 S.C.R. 165, followed.
Per Venkatachaliah, J. (for himself and on behalf of R.S.
Pathak, CJ and S. Natarajan, J.) I (i) The prevalent abd generally accepted test to ascertain that there is 'manufacture' is whether the change or the series of changes brought about by the application of processes take the commodity to the point where, commercially; it can no longer be regarded as the original commodity but is, instead, recognised as a distinct and new article that has emerged as a result of the processes. [797E-F) l(li) The view taken in the Empire Industries case that 'grey- fabrics' after they undergo the various processes of bleaching, dyeing, sizing, printing, finishing etc. emerges as·'ll commercially different com- modity with its own price:-structure, Custom and other conimerCial inci· dents and that there.was in that sense a 'manufacture' within the mean- ing of Section 2(1), even as unamended, is an eminently plausible view and is not shown to suffer from any fallacy. [798A-B] c D E G Union of India v.
Delhi Cloth & General Mills, [1963) Supp. I S.C.R. 536 at 597; TUngabhadra Industries Ltd. v. Commercial Officer Kurnool, [1961) 2 S.C.R. 14; Deputy Commissioner of Sales Tax v. Pio .l-i Food Packers, [1980) 3 S.C.R. 1271at1275; Steriing Foods v. State of A 776 SUPREME COURT REPORTS [ 1988] Supp. 3 S.C.R. Karnataka, (1986] 3 S.C.C 469 at 475 & 476; Kai/ash Nath v. State of U.P., 8 S.T.C. 358; Deputy Commissioner sales Tax v.
Sadasivan, 42 S.T.C. 2 fKerala); Swastic Products Baroda v. Superintendent of Cent- ral Excise, (1980] E.L.T .. 164 (Gujarat); Swan Bangle Stores v. As~ sistant Sales Tax Officer, 25 S.T.C. 122 (Allahabad); State of Andhra B Pradesh v. Sri Durga Hardware Stores, 32 S.T.C. 322 (Andhra Pradesh); Extrusion Process Pvt. Ltd. v. N.R. ladnav, Superintendent of Cen:ral Excise, (1979] E.L. T. 380 (Gujarat); In Health & Milligan Man.ufacturing Company, The Sherwin-Williams Company, etc. v.
J.H. Worst Director ·of the North Dakota Government Agricultural Experiment Station; Kai/ash Nath v. State of U.P., 8 S.T.C. 358; q Commissioner of Sales Tax, U.P. (Lucknow) v. Harbilas Rai, 21 S.T.C. 17; Hiralal Jitmal v. Commissioner of Income-Tax, 8 S.T.C. 325 at 326 and Kores (India) Ltd. v. Union of India and Ors., (1982] 10 E.L.T. 253, referred to. 0 2(i) Entries in the legislative lists, are not sources ofJhelegislative power but are·merely topics ·Or tields of legislation and must receive a liberal costruction inspired by a broad and generous spirit and not in a narrow pedantic sense.
The expression "with respect to" in Article 246 brings in the doctrine of "Pith and Substance" in the understanding of the exertion of the legislative power and wherever the qnestion of E legislative-competence is raised, the test is whether the legislation, looked at as a whole, is substantially 'with respect to' the particular topic. of legislation. If the legislation has a substantial and not merely a remote connection with the entry, the matter may well be taken to be legfslatfonon the topic. (799B,D] F 2(ii) Competence to legislate flows from Articles 245, 246 and the other Articles following in Part XI of the Constitution.
In defending the validity of a law questioned on ground of legislative-Incompetence, the State can always show that the law was supportable under any other entry within the competence of the legislature. Indeed in supporting a legislation snstenance could be drawn and had from a number of entries. The legislation could be a composite legislation drawing upon G several entries. Such a "rag-bag" legislation is particularly familiar in taxation. [800F-G] · Diamond Sugar Mills v.
State of U.P., [1961] 3 S.C.R. 242 at 248; Statutory Interpretation, at page 644 and Hari Krishna Bhargav v. l;I Union of India & Anr., [1966] 2 S.C.R. 22, referred to. UJAGAR PRINTS v. U.0.1. 777 2(iii) So far as, 'the exclusive competence of the Union Parliament to legislate is concerned, all that is necessary is to find out whether th• particular topic of legislation is in List II or List III.
If it is not, it ·is not necessary to go any further or search for the fie.Id in List 1. Union Parliament has· exclusive power to legislate upon that topic or field. Of course, it itas eoiicurrent power also in respect of the sub- jects in List III • .[801E-F] 2(iv) Even if the impost on prqcess is not one under Entry 84, List I, but is an impost on 'processing' distinct from 'manufacture' the levy could yet be supported by Entry 97, List I, even without the aid of the wider principle recognised a11d· adopted in Dhillon's case AIR 1972 SC 1061. [799FJ . .
3.
Section 4 of the Amending Act VI of 1980 has amended the relevant items in the schedule to the Additional Duties Act, the expres- sions' 'produce' or 'manufacture' in Section 3(1) of the Additional Duties Act must be read alongwith the entries in the Schedules. What appears; tl!erefore, dear is th>1t what applies to the main levy, applies to the additional duties as well. [803FJ Pandit Ram Narain v.
The State of Uttar Pradesh and Ors., [1956] S.C.R. 664 at 673; Macbath & Com. v. Chislett, [1910] AC 220 at 224; Commissioner of Sales Tax, Madhya Pradesh v. Jaswant Singh Charan Singh, [1967] 2 S.C.R. 720 at 725-26; Assistant Collector of Central Excise, Calcutta Division v. National Tobacco Co. of India Ltd., [1973] l S.C.R. 822 at 835; Att.-Gen. v. Lamplough, '[1878] 3 Ex. D. 214, 299; Interpretation of Statutes, 11th ed. p. 156 and Bennion"s Statutory Interpretation, p. 568-569, referred to. 4(i) A Competent legislature can always validate a law which has been declared by courts to be invalid, provided the infirmities and vitiating factors noticed in the declaratory-judgment are removed or cured.
Such a validating law can also be made retrospective. If in the light of such validating and curative exercise made by the Legislature-- granting legislative--competence--the earlier judgment becomes irrelevant and unenforceable, that cannot be called an impermissible legislative overruling of the judicial decision. All that the legislature does is to usher in a valid law with retrospective effect in the light of which earlier judgment becomes irrelevant.
Such legislative expedience of validation of laws is of particular significance and utility and is quite often applied, in taxing statutes. It is necessary that the legislature should be able to cure defects in statutes. No individual can acquire a A B D B F G H A B ( 0 B F G 778 SUPREME COURT REPORTS [1988] Supp. 3 S.C.R. vested right from a defect in a statute and seek a wind-fall from the legislature's mistakes. [804G-H; SOSA-CJ Sri Prithvi.
Cotton Mills Ltd. & Anr. v. Broach Borough Munici- pality & Ors., [1970] l S.C.R. 388, referred to. 4(ii) Validity of legislations retroactively curing defects in tax- ing statutes is well recognised and courts, except under extraordinary circumstances, would be reluctant to override the legislative judgment as to the need for and wisdom of the retrospective legislation. [805C] 4(iii) In testing whether a retrospective imposition of a tax operates so harshly as to violate fundamental rights under article I9(J)(g), the factors considered relevant include the context in which retroactivity was contemplated such as whether the law is one of valida· tion of taxing statute struck-down by courts for certain defects; the period of such retroactivity, and the decree and extent of any unfore- seen or unforeseenable financial burden imposed for the j>ast jleriod etc.
Having regard to all the circumstances of the present case, this Court in Empire Industries' case rightly held that the retroactivity of the Amend- ing provisions was not such as to incure any infirmity under Article 19(l)(g). [SOSE-GJ S(i) Section 4 of the 'Central Excise Act' envisages that the value of au article for the purposes of duty shall he deemed to be;
(a) the wholesale cash price fgr which an article of the like kind and quality was sold or was capable of being sold at the time of removal of the article froin the factory or premises of manufacture for delivery at the place of manufacture,.or (b) where such price was not ascertainable, the price at which an article of the like kind and quality was sold or capable of being sold at the time of removal of the article chargeable with duty. [808F-G] S(ii) Consistent with the provisions of Section 4 and the Central Excise (Valuation) Rules, 1975, framed under sec. 37 of the Act, it cannot be said that the assessable-value of the processed fabric should comprise only of the processing-charges.
This extreme contention, if accepted, would lead to and create more problems than it is supposed to solve,· and produce situations. which could only be characterised as anomalous. The incidence of the levy should be uniform, uninfluenced by fortuitous considerations. The view taken in the matter in Empire 'Industries case does not call for reconsideration. [809C-D] UJAGAR PRINTS v. U.0.1. 779 S(iii) The question whether the producer or the manufacturer is or is not the owner of the goods is not determinative of the liability.
The essential and conceptional nature of the tax is to be kept clearly distinguished from both the extent of the power to impose and the stage at which the tax is imposed. Though the levy is on the production or manufacture of the goods, the imposition of the duty could be at the stage which the law considers-most convenient to Impose as long as a rational relationship with the nature of the tax is maintained. [806B-D] S(iv) The nature of the excise duty is not to be confused with, or tested with reference to, the measure by which the tax is assessed.
The standard adopted as the measure of assessment may throw light on the nature of the levy but is not determinative of it. When a statutory measure for assess~ent of the tax is contemplated, it "need not contour along the lines which spell out the levy itself", and "a broader based standard of reference may be adopted for the purposes of lletermining the measure of the levy". Any statutory standard which maintains a nexus with the essential character of the levy can be regarded as a valid basis for assessing the measure of the tax. [808G-H; 809A-B] Atic Industries Ltd. v.
H.H. Dave, Asstt. Collector of Central Excise and Ors., [1975] 3 S.C.R. p. 563 and Union of India & Ors. etc. etc. v. Bombay Tyre International Ltd. etc., [1984] l S.C.~. p. 347 at 375, referred to.
Per Ranganathan, J. (Concurring with Venkatachaliah, J.) l(i) Hindustan Milkfood Manufacturers Ltd. v. Union, (The HMM case) [1980] ELT 480, was based not on the scope of legislative entry 97 in List I but on the language and scope of the amendment actually effected.
It was considered not ne.cessary or possible to stretch the language of the definition in S. 4 beyond the ambit ofthe provision as delineated in the earlier decisions. The question decided was not that the legislature could not, but that i.t did not make any redical change in the nature of the levy. [815F-G] l(ii) There is nothing in the decision HMM case thafimpports the contention of the petitioners here that the amendment of the definition of 'manufacture' cannot be sustained by reference to entry 97 of List I in the Seventh Schedule to the Constitution of India, if it cannot be upheld as falling under the purview of Entry 84. lliiiiH; 817AJ A B c D E F G H 780 SUPREME COURT REPORTS [1988] Supp. 3 S.C.R. 2(i) The words 'levied' is a wide and generic expression.
One can A say with as much appropriateness that the Income Tax Act levies a tax on income as that the Income Tax Officer levies the tax in accordance with the provisions of the Act. It is an expression of wide import and takes in all the stages of charge, quantification and recovery of duty, though in certain contexts it may have " restdded meaning. ·in the B context of sub-section (l) the word 'levied' admittedly means 'charged' as well as 'assessed'.
The words 'levy and collection' in sub-section (3) cannot be construed differently from the words 'levied and collected' used in sub-section (I). Section 3(3), therefore, also covers the entire gomut of s. 3(1) and cannot be construed as becoming operative at somewhat later stage. ~ts operation cannot be excluded in determining the scope of the charge. [818F -Hl c 2(ii) Having regard to the nature and content of the levy indicated in s. 3(1), -it is obvious that s. 3(3) has to have the effect of attracting not only the purely procedural and machinery provisions of the 1944 Act •but also some of its charging provisions.
It is, therefore, difficult to -0 -consider section 3(1) of.the 1957 Act-in contrasno the Finance Act of 1965-as covering the entire ambit of the charge linposed. In short, the language of s. 3(3) has to be given a wider meaning than under the 'Finance Act, 1965. A provision similar to that in s. 80 of ihe Finance Act, 1965_ is also found in other Finance Acts. On perusal of these provi- sions, it will be found that a like position exists there also.
These provi- -E sions are all self-contained and completely specify ihe scope of the charge either as a percentage of the excise duty normally chargeable under the Central Excises & Salt Act, 1944 or as a percentage of the 'assessable value determined under s. 4 of the 1944 Act.' This is a very -important reason why the observations in the Associated Cement Co. 's, case [1985]_ 2 S.C.C. _719 cannot be of application in the context of the F 1957 Act.1821E-HJ Mis Mahendra Pratap Rama Chandra v.
Commercial Tax Officer & Othet:s, A.I.R. 1965 Cal. 203, referred to. 3(i) Legislatures sometimes take a short cut and try to reduce the G · length of statutes by omitting elaborate provisions where such provi· sions have already been enacted earlier and can be adopted for the purpose on hand. While, on the one hand, the prolixity of modern statutes and the necessity to have more legislations than one on the same or allied topics render such a course useful and desirable, the attempt to legislate by reference is sometimes overdone and brevity is achieved at H_ the expense of lucidity.
However this legislative device is quite well UJAGAR PRINTS v. U.0.1. 781 known and the principies applicable to it fairly well settled. [823C-D] A 3(ii) Referential legis.lation is of two types. One is where an earlier Act or some of its provisions are incorporated by reference into a later Act. In this event, the provisions of the earlier Act or those so incorporated, as they stand in the earlier Act at the time of incorpora- tion, will be read into the later Act.
Subsequent changes in the earlier B Act or the incorporated provisions will have·to be ignored because, for all practical purposes the existing provisions of the earlier Act have been re-enacted by such reference into the later one, rendering irrele- vant what happens to the earlier statute thereafter. On the other hand, the later statute may not incorporate the earlier provisions. It may only make a reference· of a broad nature as to the ·law on the subject gener- C ally or contain a general reference to the terms of an earlier statute which are to be made applicable.
In this case any modification, repeal or re-enactment of tbe eadier statute will also be carried into in the later, for here, the idea is that certain provisions of an earlier statute which become applicable in certain circumstances are to be made use of for the purpose of the later Act also .. [823E-H] D 3(iii) Whether a particular statute falls into the first or second. category is always a question of construction. [824B I In the present case, the legislation falls into the second category.
S. 3(3) of the 1957 Act does not incorporate into the 1957 Act any E specific provisions of the 1944 Act. It only declares generally that the provisions of the 1944 Act shall apply "so far as may be"; that is, to the extent necessary and practical, for the purposes of the 1957 Act as well. [824B"C) Secretary of State v. Hindustan Cooperative Insurance Society, A.I.R. 1941 P.C. 149; Solani Ores Ltd. v.
State, A.I.R. 1975 S.C. 17; F Mahindra and Mahindra Ltd. v. Union, A.I.R. 1979 S.C. 798; Bhajiva v. Gopikabai, (1978] 3 S.C.R. 561; Collector of Custom' v. Nathe/la Sampathu Chetty, (1962] 3 S.C.R. 786; New Central Jute Mills Ltd. v. Assistant Collector, (1971] 2 S.C.R. 92; Special Land Acquisition Officer v. City Improvement Trust, [1977] 1 S.C.R. 569 and Madhya Pradesh v. Narasimhan, (1976] I S.C.R. 6, referred to.
G 3(ivJ The legislation presently in question is clearly in pari materia with the 1944 Act. It is also merely supplemental. While the 1944 Act imposes a general levy of excise duty on all goods manufactured and produced, and aim of the present Act is to supple- ment the levy by an additional duty of the same nature on certain goods. H 782 SUPREME COURT REPORTS [19881 Supp. 3 s:c.R. A The duration of the applicability is undefined but the ·statute is clearly enforce- able as long as it is in the statute book side by side with. the normal excise duties.
The clear intention is that the sanie provisions shall govern both the levies except that the duty under the later Act is con- fined to certain goods only and its distribntability among the States may B c D perhaps follow a different pattern from the principal duty. [8258-C] 3(v) The Finance Acts which levied special or regular or addi- tional excise dnties contained in themselves all the elements of charge or duty.
The goods were mentioned and the duty has to be levied either at a percentage of the normal excise duty payable under the 1944 Act or at ·a percentage of the value of the assessable goods as determined under t~e 1944 Act. All that was further needed was the applicability of the pro; cedural provisions oftbe 1944 Act. However, the 1957 Act'ls Incomplete as to the basis of the charge and its provisions would become totally unworkable unless the concepts of 'manufacture' and 'assessable value' as determined under the 1944 Act are carried into it.· [8250-J?] ORIGINAL JURISDICTION: Writ Petition No. 12183 of 1985 etc. eic. (Under Article 3~ of the Constitution of India).
E K. Parasaran, Attorney General, Soli J. Sorabjee, A.J. Rana, · A.K. Sen, S.K. Dholakia, Hari Swarup, V.C. Mahajan, A.K. F G Ganguli, Mrs. Shashi Rana, Mrs. J. Wad, Ms. Aruna Mathur, Subash Parekh, Dushyant Dave, P.H. Parekh, E.K. Jose, Ms1 Rashmi Chandrachud, Sanjay Bharthri, Sarve Mitter, C.L. Beri, S.K. Beri, R.C. Bhatia, Ravi P. Wadhwani, P.C. Kapur, Sukumaran, D.N. Mishra, .B.V. Desai, M.B. Lal, Mukul Mudgal, B.
Kanta Rao, Mrs. H. Wahi, Mrs. V.D. Khanna, Aruneshwar Gupta, Mrs. AnilKatiyar, R.K. 'Kapur, B.R. Kapur, Anis Ahmed Khan, Ms. Abha Jain, R. Karanjawala, Mrs. M. Karanjawala, Ms. Meenakshi, Vishnu Mat)ll!r, Kail,ish V:asudev,, P.O. Shah, Shri Narain, Sandeep Narain, M.N. Shroff, Mrs. P.S. Shroff, R. Sasprabbu, S.A. Shroff, S.S. Shroff, Praveen Kumar, M.N. Chowdhary, M.D. Chowdhary, N. Das Oupta, Rajesh Chibber, K.K.
Bhaduri, Rajiv Dutta, E.C. Agaiwala, Harjinder Singh, R.K. Nambiar, P. Paremeswaran, Ms. Bina Gupta, K. Swami and V.N. Ganpule for the appearing parties. H The following Judgments of the Court were delivered: . ,;·.. UJAGAR PRINTS v. U.O.I. [VENKATACHALIAH, J.I 783 VENKATACHALIAH J, These appeals, by Special Leave, pre- ferred against the Judgments of the High Court of Gujarat and the High Co.urt of Bombay and. the batch of writ-petitions under Article 32 of the Constitution of India are heard together and disposed of by this common judgment as they all involve questions-common to them- conceming the validity of the levy of duties of excise under tariff-items 19 and 22 of the Schedule to the Central Excises and Sali Act 1944 ("Central-Excise-Act") as amended by the Central Excise and Salt Additional Duties Excise (Amendment) 1980 Act ("Amending Act") treating as ''Manufacture" the process of Bleaching, Dyeing, Printing, Sizing, Mercerising, water-proofing, rubberising, Shrink-Proofing.
Organdie, Processing, etc. done by the processor who carry out these operations in. their factories on Job-work basis in respect of 'Cotton- fabric' and 'Man-made fabric' belooging to their customers. the Amending Act which became effective from 24.2. 1979 i' sought to render the processes of Bleaching, Dyeing, Printing, Sizing, Mercerising etc. "Manufacture" within the meaning of the Section 2(f) B c of the Central Excise Act.
The amendment was necessitated by the D Judgment of the High Court of Gujarat which had declared the levy on such 'processing' as illegal as, according to the.High Court, the proces- sing did not bring into-being a new and commercially different article with a distinctive character and use and did not, therefore, constitute ·'manufacture' for purposes, and within the meaning, of the charging section.
E The processors who carry-out these operations on cotton fabrics 01 "man-made" fabrics which are popularly go by the name 'Grey- fabric' in the particular trade also challenged the levy of the additional duties of excise under the provisions of the Additional Duties of Excise goods (of special importance) Act 1957 (Additional Duties Art) F on the ground, first, that.if the processes carried on by. them do not. amount to "manufacture" under Section 2(f) as it originally stood, then, consistent with the impermissibility of the main impost, the levy of additional duties also fails and, that at all events, even after the amendment the concept of 'manufacture' under the said Additional Duties Act had not been correspondingly widened by an appropriate G amendment.
2.
The present batch of appeals and writ-petitions comprises of a large number of cases. It is not, having regard to the questions requir- ing to be decided in these matters, necessary to go into, in any parti- cular detail, the fact-situation of each individual case. The processors H 784 SUPREME COURT REPORTS [1988] Supp. 3 S.C.R. ·in th~se cases, who may convenie~tly be referred .to as the "proces- A sors" or "jobbers", mainly carry out these operations of Bleaching, .
Dyeing, Printing, Sizing, Finishing etc. of 'Grey-fabric' on 'job-work' against payment of processing charges to them by the customers who are the owners of the Grey-fabric. The ownership of the cloth rests with the customers who get these processes' done to their specifications -8, from these processing-houses on payment of processing charges. The Grey:fabric, after processing, is returned by the processing-house to the customers.
D E F a The facts of W.P. No .. 1218,3 of 1985 '.Mis. Ujagar Prints v. Union of !ndia·and Ors.), in which the petitioner has challenged the levy by a petition' under Article 32 of the Consiitution are typical and rep- resentative of all oiher similar cases. The petitioner is a firm of partners with its Head bffice at 51, Sheikh Memon Street, Bombay. It has a factory at Sunder Baug, Deonar, Bombay, which is equipped 'with machinery and plants for processing of man-made grey: fabric.· The machinery and equipment installed in the petitioners' factory, it is averred-and that is not disputed either-are suited for and appropriate to the processing of Grey-fabric and are ~ot capable of manufacturing Grey-fabric.
The man-made grey-fabric such as Art Silk Greifabric, it is stated, is manufactured in mills and on power looms and that latter is exempt from excise d\Jty on iis manufacture. Petitioners further aver that the Art Silk Grey-fabrics which are pro- cessed in the petitioner' faetory are those manufactured on power looms and not by the mills and that the Art Silk Grey-fabric received do not come from the manufacturers of the grey-fabric through the manufacturing-stream but from the various traders through the sales- stream.
The point that the petitioners seek to make is that the proces- sing of the grey-fabric is not a part, or continuation, of the process of manufacture in the manufacturing-stream, but is an independent and distinct operation carried out in respect of the Grey-fabric, after it has left manufacturing-stage and has become part of the common-stock of goods in the market. lt-is also averred that the firm Mis.
Ujagar Prints does not purchase the Grey-fabric but is only engaged in processing it for charges 'and that in many cases the Grey-fabric would have passed on from trader to trader with the attendant increase in the prices with each successive change of hands and is entrusted to the petitioner by the last purchaser for processing against stipulated processing-charges ·on job work basis. It is contended that these job work processing operations do· not H amount to "manufacture" as the petitioners do not carry out any spin- ning or weaving operations; that what they receive from their custo- UJAGAR PRINTS v.
U.0.1. [VENKATACHALIAH, J.] 785 mers for processing is othel'Wise fully manufactured man-made fabr;c and that what is returned to the customers after processing continues to remain man-made fabric. The imposition of excise duty on the processor on· the basis of the full-value of the processed material, which reflects the value of grey-fabrics, the processing-charges, as well as the selling profits of the customers is, at once unfair and anamolous, fpr, in conceivable cases the duty itself might far exceed the pro- cessing-charges that the processors stipulate and geL · 3.
The batch of cases also includes cases where the grey-fabric is also purchased by these processing-houses and are sold by them, after processing. ln some cases the manufacturers of the grey-fabric subject A B it to captive consumption and. process them in their own composite- C establishments. The essential question is whether these situational-differences have a bearing on the principles -of determination .of the ·assessable- value of processed grey-fabric and whether the assessable value could 'be different in the different fact-situations which would be the 'logical D corollary -if the contention of the processing~houses which do not pro- cessing work fot charges on the goods not their .own, is accepted and the assessable value determined on the basis of mere processing- charges. · But the main questions that arise are whether "processing" of E the kind concerned in these cases ambunts to "manufacture", whether the provisions of section 2 of the Amending Act which impart an artificial-dimension to the concept of "manufacture" is ultra-vires Entry 84 List I; whether, at all events, the imposition ·of a tax on such 'processing' is referable to Entry 97'List I; and if the impost ·on .the processors is justified under tariff-items 19 and 22,· according as F whether the Grey-fabric is cotton ·or 'man-made', what shmild be.the assessable-value for purposes of levy of ·duty so far as processors are concerned.
4.
Prior to the Amending Act of 1980, the levy on the processors was challenged ·before the •Gujarat High Court. The Gujarat High (} Court by its judgment dated 24. 1.1979 in the cases of Vijaya Textiles Mills v. Union of India and Real Honest Textiles v. Union of India held that the processes that the processing-houses imparted to the Grey- faoric did not amount to 'manufacture' and did not attract ad-valo'"m duty under tarif