Special Leave Petition Civil No 10264 of 1988 From the Judgment and Order dated 2651988 of the Karnataka High Court in MFA No 52 of 1982
PG NO 886 SK Kulkarni and Mrs Kiran Suri for the Petitioner
Jagdish G Yadwad and section Srinivasan for the Respondents
The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
This is a petition for leave to appeal against the judgment and order of the High Court of Karnataka dated 26th of May 1988
By the said judgment the High Court affirmed the order of the learned Civil Judge Hubli
To appreciate the controversy a few facts may be necessary
On or about 18th September 1972 a partnership firm was constituted which included the petitioner and the respondents Nos 1 to 9 to run a cinema theatre and Hubli in the State of Karnataka
The said firm was reconstituted in August 1973 for a period of 25 years with one partner retiring from the first firm
In the said reconstituted firm the 1st respondent had 12 paise share
On 8th November 1980 the 1st respondent had issued a notice calling for dissolution of the firm alleging mismanagementloss and exclusion from the management
In 1981 the 1st respondent filed a suit in the Court of the Civil Judge Hubli for i dissolution of the firm and ii accounts
On 4th November 1981 the 9th respondent who is defendant No 7 in the suit filed an application under Section 34 of the 
l944 hereinafter referred to as the Act  for stay of the said suit
The learned Trial Judge after referring to the facts and the relevant decisions referred to the order sheet in this matter and observed that there is a clear record in the order sheet that the counsel appearing for the applicant had sought adjournment specifically for filing written statement The order sheet further recorded that the matter was posted to 4th November 1981 for arguments
The learned Trial Judge was of the view that the petitioner herein who is defendant No 4 in the suit had sought and secured several adjournments to file a written statement
In that view of the matter the learned Trial Judge was of the view that the petitioner had taken steps in the proceedings in the suit by seeking and securing adjournment to file the written statement
In that view of the matter of declined to exercise his jurisdiction to stay the said suit under Section 34 of the Act
There was an appeal
The Division Bench of the High Court was of the view that in view of the facts mentioned in the order of the Trial Judge it appeared that the petitioner herein had taken steps in the suit and had thereby disentitled himself from asking for the stay of PG NO 887 the said suit
The High Court therefore confirmed the order of the learned Trial Judge
Aggrieved thereby the petitioner seeks leave to appeal under Article 136 of the Constitution from the said decision
Arbitration is an alternative procedure for speedy adjudication of disputes between the parties and should normally be encouraged and parties have bound themselves to have their disputes adjudicated by arbitration so they should be held bound by the agreement between the parties
Section 34 of the Act is the statutory provision which deals with the powers to stay legal proceedings where there is an arbitration agreement
Section 34 of the Act which is relevant for our present purpose is as follows 34
Power to stay legal proceedings where there is an arbitration agreement
Where any part to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred any party to such legal proceedings may at any time before filing a written statement or taking any other steps in the proceedings apply to the judicial authority before which the proceedings are pending to stay the proceedings and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration such authority may make an order staying the proceedings
 An analysis of the aforesaid section makes it clear that in order to have the proceedings in the suit stayed there must be an arbitration agreement between the parties covering the disputes in question
The section stipulates that in order that stay may be granted under the section it is necessary that the following conditions are fulfilled i The proceedings must have commenced by a party to an arbitration agreement against any other party to the agreement ii the legal proceeding in this case the suit which is sought to be stayed must be in respect of a matter agreed to be referred PG NO 888 iii the applicant for stay must be a party to the legal proceeding the suit in this case
iv the applicant must have taken no steps in the proceeding after appearance v the applicant must satisfy that only the applicant was at the time when the proceedings were commenced ready and willing to do everything necessary for the proper conduct of the arbitration and vi the Court must also be satisfied that there was no sufficient reason why the matter should not be referred to arbitration
Several decisions of this Court and the decisions of the High Court have laid down the aforesaid position in law
See in this connection the observations in the Law of Arbitration by RS Bachawat 1st Edn  at pages 498 499
Indisputably in this case the proceeding was commenced by a party to an arbitration agreement against the other party to the agreement and the legal proceeding which was sought to be stayed was in respect of a matter agreed to be referred to
It is also clear that the petitioner is a party to the arbitration agreement
The only question that was agitated before the learned Trial Judge as well as before the High Court was whether the petitioner had taken no steps after appearance
The section requires that the application must he filed before the filing of the written statement or taking any other step in the proceeding
In the case of State of Uttar Pradesh  Anr
Janki Saran Kailash Chandra  Anr1974 1 SCR 31 the palintiff instituted a suit for recovery of damage for breach of contract impleading the State UP as the first defendant and the Divisional Forest Officers Bijnor as the second defendant
The summons in the said suit issued to the State of UP were served on the District Government Counsel
On 2nd September
1966 the said counsel filed an appearance slip in the Court and also put in a formal application praying for one month s time for the purpose of filing written statement
That prayer was granted
On 1st October 1966 the District Government Counsel filed an application under Section 34 of the Act pleading that there was an arbitration clause in the agreement between the parties to the suit and the State of UP being willing to refer the matter to arbitration the suit should be stayed
The trial PG NO 889 court held that the dispute was subject to arbitration clause and since the State of UP had not taken any steps in the suit proceedings and had also not filed the written statement the suit was liable to be stayed
On appeal the High Court held that the action of the District Government Counsel in applying for time to file the written statement amounted to taking a step in the proceedings within the meaning of section 34 of the Act
On this view the defendant was held disentitled to claim the stay of the suit
By special leave the defendant applied to this Court
This Court dismissed the appeal and observed at page 37 of the report as follows The District Government Counsel in the present case was thus fully empowered to appear and act for and on behalf of the Government and also to make applications on its behalf
If the said counsel wanted time for the purpose of having fuller instructions he could have asked for it specifically for he was not a layman ignorant about the legal position but a professional lawyer retained by the Government for the purpose of acting and pleading on behalf of the Government as a recognised agent
He however chose instead to ask for time specifically for filing written statement and this act he purported to do on behalf of the State Government which he was fully empowered to do
The State took benefit of his appearance and his successful prayer for adjournment of the case by one month for the purpose of filing the written statement
In those circumstances it is hardly open to the State Government to plead that the District Government Counsel was not authorised to seek adjournment on its behalf for this purpose
An oblique suggestion thrown on behalf of the appellant that the District Government Counsel had merely volunteered to appear without instructions presumably taking the cue from the decision of the Punjab High Court in the case of Moji Ram is merely to be stated to be rejected
A recognised agent like the District Government Counsel can scarcely be considered to appear volutarily in a case On behalf of the Government in the sense of being unauthorised by his client for the simple reason that he is authorised by virtue of statute to appear act and make applications on behalf of the Government
Indeed in the present case the District Government Counsel also filed in court the usual appearance slip
If he wanted time for further consultatioins he could and should have specifically PG NO 890 made a prayer to that effect
It is however idle to contend that he can be considered to have merely volunteered without authority to appear and ask for time for filing the written statement
The argument of appearance by a recognised agent as a mere volunteer is extremely difficult to appreciate
The State as already observed took the benefit of the adjournment
It will be somewhat irrational and perhaps incongruous to permit the State after having taken the benefit of this adjournment to plead that the application for adjournment was not made on instructions and was unauthorised
To accede to the State Government the right to do so would clearly be unjust to the opposite party which could have rightfully objected to the adjournment had there been any indication that the prayer was not being made on instructions from the State Government
September 2 1966 was fixed in the summons for filing written statement
Failure to do so would have entailed consequences prejudicial to the State Government
Those consequences were avoided by making an application for extension of time for filing written statement which must have been understood by the opposite party as also by the court to be on instructions by the State Government
 It may be noted that thereafter in UP there was amendment which added an explanation which provided that a mere application for time to file a written statement or a mere contest to an interlocutory application for injuction would not amount to taking any steps in the proceedings
In the aforesaid view of the matter without the aid of Explanation 2 added to the UP Act we have to proceed to find out the conditions required to be fulfilled in order to be entitled to stay under section 34 of the Act
As mentioned hereinbefore it is imperative to find out whether any other steps in the proceedings have been taken before making an application for stay of the suit in this case
In our opinion proceeding without being embroiled in the facts and the circumstances of the case with the controversy whether the said exprression should be construed ejusdem generis it i5 necessary to determine whether the party had evinced or indicated any intention to proceed unequivocally with the suit and not to proceed with the arbitration
This position was examined by this Court in Food Corpn
of India  Anr
vs Yadav Engineer  Contractor   where this Court referred to the decision of Uttar Pradesh PG NO 891 vs Janki Saran Kailash Chandra supra and after setting out the provisions of section 34 of the  this Court observed that apart from written statement some other step mentioned in the Section must indisputably be such step as would manifestly display an unequivocal intention to proceed with the suit and to give up the right to have the matter disposed of by arbitration
Each court must find out from the context of each case whether this has happened or not
The Court further observed therein that a step taken in the suit which would disentitle the party from obtaining stay of proceeding must be such step as would display an unequivocal intention to proceed with the suit and to abandon the benefit of the arbitration agreement or the right to get the dispute resolved by arbitration 
In our opinion that is a correct position in law as declared by this Court and it is in consonance with the principles that have been followed under section 4 of the English Arbitration Act 1889
At page 106 of the said report this Court observed that the general words taking any other steps in the proceedigs  just follow the specific expression filing a written statement  and both are used for achieving the same purpose
Hence this Court was of the opinion that the latter expression must be construed ejusdem generis with the specific expression just preceding to bring out the ambit of the latter
The expression written statement  is a term of specific connotation ordinarily signifying a reply to the plaint filed by the plaintiff
The expression taking any other steps in the proceeding  does not mean that every step in the proceedings would come in the way of enforcement of the arbitration agreement
The step must be such as would clearly and unambiguously manifest the intention to waive the benefit of arbitration agreement
From the Order sheet in this case and as noted by the learned Trial Judge it appears that the counsel appearing for the petitioner has sought adjournment specifically for filing written statement and obtained time for more than one occasions for such purpose
It was not only the time taken to consider whether written statement should be filed as a defence to the plaint to enter into an arena of controversybut it was time taken to have the matter decided by the suit
The party evinced an intention to have the matter adjudicated by the Court
If that is the position then in our opinion in view of the principle enunciated hereinbefore the party has disentitled itself to ask for PG NO 892 stay of the said suit
The High Court was therefore right in affirming the order of the learned Trial Judge
Apart from the same from the conduct of the petitioner and the narration of the events mentioned hereinbefore it does not appear that the petitioner was ever keen to have the matter adjudicated by arbitration
If that is the position then the petitioner cannot have any grievance
In that view of the matter this application under Article 136 of the Constitution must fail and is accordingly dismissed
On the prayer of the counsel for the petitioner we direct that the petitioner would have eight weeks  time from today for filing the written statement to the plaint
NVK Petition dismissed


Summary:
Section 2f 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 Ordinance 1979 which was later replaced by Central Act VI of 1980 called the Central Excises and Salt and Additional Duties of Excise Amendment Act 1980
The PG NO 770 PG NO 771 Amending Act became effective from 24th February 1979
By section 2 of the Amending Act Section 2 f 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 52b of the Amending Act provided that no suit or other proceedings shall be maintained or continued 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 directing 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
Prior to the Amending Act 1980 the levy an the processors was challenged before the Gujarat High Court in the case of vijay Textiles Mills vs Union of India nd Real Honest Textile vs Union of India 1979 4 ELEJ 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 Schedule to the  and that processors were liable to pay duties under tariff entry 68 only on the value added by that processor
Following this judgment a large number of similar claims of processing houses were allowed by the High Court by its judgment dated 133 1979
However the Bombay High Court took a different view and held that even under the concept of manufacture  envisaged in section 2f even prior to its amendment the operations carried on by the professors amounted to manufacture  and that at all events the matter was placed beyond any controversy by the Amendment Act of 1980
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 vs Union of India 1985 Supp 1 SCR 292 and it was held not to have been decided correctly
The view taken by the Bombay High Court in New Shakti Dye Works Pvt Ltd vs Union of India  Anr was approved
The present appeals by special leave preferred against the judgments 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 involve common PG NO 772 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 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 rubberising shrink proofing organdie processing etc
done by the processors 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 indenticl
The petitionersappellants 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 owners of the grey fabric
The machinery and equipment installed in the petitioners  factories are suited for and appropriate to the processing 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 petitionersappellants 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 trader through the sales stream
The present writ petitionsappeals also include cases where the grey fabric is also purchased by some of the processing houses and are sold by them after processing
In some cases the manufacturers of the grey fabric subject it to captive consumption and process them in their own composite establishments
At the time 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 appealswrit petitions were referred to a Bench of five judges on two questions namely 1 whether the processing of grey fabric amounted to manufacture  within the meaning of Section 2f 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
In the petitions and appeals the following points arise for determination
PG NO 773 Ai Whether the process of bleaching dyeing printing sizing shrink proofing etc carried on in respect of cotton or man made grey fabric  amount to manufacture  for purposes and within the meaning of Secton 2f of the prior to the amendment of the said Section 2f by section 2 of the Amending Act VI of 1980
Aii Whether the decision in Empire Industries Limited that these operations amount to manufacture  is wrongly decided and requires reconsideration
B Whether the amendment brought about by the Act of 1980 of Section 2f and to tariff items 19 and 22 of the Central Excise Act is ultra vires Entry 84 List 1 and therefore beyond the competence of the Union Parliament
Whether at all events even if the expended concept of manufacture introduced by the Amendment is beyond the scope of Entry 84 List 1 whether the impost is at all events referable to and supportable by the residual Entry 97 of List 1
C Whether at all events even if the amendments to Central Excise Act are valid the levy under the Additional Duties Act is unsupportable and without the authority of law as there is no corresponding 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 191g of the Constitution
E Whether even if the levy is justified at all events the computation 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 173b is unjustified and illegal in respect of the assessable value of the processed grey fabric done on job work basis
Allowing the appeals preferred by the Union of India HELD Per Majority The appeals preferred by the Union of India are allowed and the Judgment of the Gujarat High Court under appeal is PG NO 774 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 enforcement of the bank guarantees if any for the recovery of the arrears
810C D Per Sabyasachi Mukharji J Concurring with Venkatachaliah
J 1 A statutory charge should be measured by the method of its computation as laid down in the statute and not by any other method of computation
The circumstances that thereby the benefit of any computation granted by the legislation may be lost and that in some cases hardship might result are not matters which would influence courts on the Instruction of the statute
A tax payer is entitled only to such benefit as is granted by the legislature 811C D 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 he wholesale dealer who purchases the goods from the manufacturer and in his turn sells the same in wholesale to other dealers 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 computing the assessable value as the affixation of the trade marks of a particular brand was extraneous to manufacture
The values of such extraneous on additional factors do not enter into the computation of assessable value and as such the wholesale cash price at which the goods enter into the wholesale market would be independent of the value of the trade marks
812G H8134A B 2iii 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 is to say the value at which the manufactured goods leave the factory and enter the main stream
813E PG NO 775 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 goods
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 value813F H Atic Industries Ltd vs HH Dave Asstt
Collector of Central Excise and Ors
   Union of India  Ors etc
vs Bombay Tyre International Ltd etc
  at 375 Union of India  Ors
vs Cibatul Ltd 1985 Suppl
3 SCR 95 and Joint Secy
to the Govt
of India  Ors
vs Food Specialities Ltd 11985 Suppl
3 SCR 165 followed
Per Venkatachaliah J for himself and on behalf of R section Pathak and section Natarajan J 1i The prevalent and 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 1ii 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 a commercially different commodity with its own price structure custom and other commercial incidents and that there was in that sense a manufacture  within the meaning of Section 2f even as unamended is an eminently plausible view and is not shown to suffer from any fallacy
798A B Union of India vs Delhi Cloth  General Mills 1963 Supp 1 SCR 536 at 597 Tungabhadra Industries Ltd vs Commercial Officer Kurnool   Deputy Commissioner of Sales Tax vs Pio Food Packers  at 1275 Sterling Foods vs State of Karnataka PG NO 776  at 475  476 Kailash Nath vs State of UP 8 STC 358 Deputy Commissioner sales Tax vs Sadasivan 42 STC 2 Kerala Swastic Products Baroda vs Superintendent of Central Excise  Swan Bangle Stores vs Assistant Sales Tax Officer 25 STC 122 Allahabad State of Andhra Pradesh vs Sri Durga Hardware Stores 32 STC 322 Andhra Pradesh Extrusion Process Pvt Ltd vs NR Jadnav Superintendent of Central Excise  In Health  Milligan Manufacturing Company The Sherwin Williams Company etc
vs JH Worst Director of the North Dakota Government Agricultural Experiment Station Kailash Nath vs State of UP 8 STC 358 Commissioner of Sales Tax UP Lucknow vs Harbilas Rai 21 STC 17 Hiralal Jitmal vs Commissioner of Income Tax 8 STC 325 at 326 and Kores India Ltd vs Union of India and Ors  referred to
2i Entries in the legislative lists
are not sources of the legislative power but are merely topics or fields of legislation and must receive a liberal construction 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 question of 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 legislation on the topic
799B D 2ii 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 sustenance could be drawn and had from a number of entries
The legislation could be a composite legislation drawing upon several entries
Such a rag bag legislation is particularly familiar in taxation
800F G Diamond Sugar Mills vs State of IJP 1961 3 SCR 242 at 248 Statutory Interpretation at page 644 and Hari Krishna Bhargav vs Union of India  Anr 1966 2 SCR 22 referred to
PG NO 777 2iii So far as the exclusive competence of the Union Parliament to legislate is concerned all that is necessary is to find out whether the particular topic of legislation is in List 11 or List 111
If it is not it is not necessary to go any further or search for the field in List 1
Union Parliament has exclusive power to legislate upon that topic or field
Of course it has concurrent power also in respect of the subjects in List 111
801E F 2iv Even if the impost on process is not one under Entry 84 List 1 but Is an impost of processing  distinct from manufacture  the levy could yet be supported by Entry 97 List 1 even without the aid of the wider principle recognised and adopted in Dhillon s case  799F 3
Section 4 of the Amending Act VI of 1980 has amended the relevant items in the schedule to the Additional Duties Act the expressions  produce  or manufacture  in Section 31 of the Additional Duties Act must be read along with the entries in the Schedules
What appears therefore clear is that what applies to the main levy applies to the additional duties as well
803F Pandit Ram Narain vs The State of Uttar Pradesh and Ors
  at 673 Macbath  Com
vs Chisletr at 224 Commissioner of Sales Tax Madhya Pradesh vs Jaswant Singh Charan Singh 19671 2 SCR 720 at 725 26 Assistant Collector of Central Excise Calcutta Division vs National Tobacco Co of India Ltd  at 835 Att
vs Lamplough 1878 3 exhibit D 214 299 Interpretation of States 11th ed
p 156 and Bennion s Statutory Interpreation p 568 569 referred to
4i A Competent legislature can always validate a law which has been declared by court to be invalid provided the infirmities and vitiating factors noticed in the declaratory judgment are removed for 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 quit often applied in taxing statutes
It is necessary that the legislature should be able to cure defects in statutes
No individual can PG NO 778 acquire a vested right from a defect in a statute and seek a wind fall from the legislature s mistakes
804G H 805A C Sri Prithvi Cotton Mills Ltd  Anr
vs Broach Borough Municipality  Ors  referred to
4ii Validity of legislations retroactively curing defects in taxing 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 4iii In testing whether a retrospective imposition of a tax operates so harshly as to violate fundamental rights under article 191g the factors considered relevant include the context in which retroactivity was contemplated such as whether the law is one of validation of taxing statute struck down by courts for certain defects the period of such retroactivity and the decree and extent of any unforeseen or unforeseenable financial burden imposed for the past period etc
Having regard to all the circumstances of the present case this court in Empire Industries  case rightly held that the retroactivity of the Amending provisions was not such as to incure any infirmity under Article 91g
805E G 5i Section 4 of the Central Excise Act  envisages that the value of an article for the purposes of duty shall be deemed to be a the wholesale cash price for 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 from the factory or premises of manufacture for delivery at the place of manufactures or b where such price was not ascertainable the price at which an article of the like kind and quality as sold or capable of being sold al the time of removal of the article chargeable with duty 808F G 5ii 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 PG NO 779 5iii 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 5iv 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 assessment 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 determining 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 vs HH Dave Assn
Collector of Central Excise and Ors 1975 3 SCR p 563 and Union of India Ors
vs Bombay Tyre International Ltd etc 1984 1 SCR p 347 at 375 referred to
Per Ranganathan J Concurring with Venkatatchlliah J 1i Hindustan Milkfood Manufacturers Ltd vs Union The HMM case  was based not on the scope of legislative entry 97 in List I but on the language and scope ot the amendment actually effected
It was considered not necessary or possible to stretch the language of the definition in section 4 beyond the ambit of the provision as delineated in the earlier decisions
The question decided was not that the legislature could not but that it did not make any redical change in the nature of the levy
815F G 1ii There is nothing in the decision HMM case that supports the contention of the petitioners here that the amendment of the definition of manufacture  cannot be sustained by reference to entry 97 of List 1 in the Seventh Schedule to the Constitution of India if it cannot be upheld as falling under the purview of Entry 84
816H 817A PG NO 780 2i The words levied  is a wide and generic expression
One can 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 a restricted meaning
In the context of sub section I 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 1
Section 33 therefore
also covers the entire gomut of section 31 and cannot be construed as becoming operative at some what later stage
Its operation cannot be excluded in determining the scope of the charge
818F H 2 ii Having regard to the nature and content of the levy indicated in section 31 it is obvious that section 33 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 consider section 31 of the 1957 Act in contrast to the Finance Act of 1965 as covering the entire ambit of the charge imposed
In short the language of section 33 has to be given a wider meaning than under the Finance Act 1965
A provision similar to that in section 80 of the Finance Act 1965 is also found in other Finance Acts
On perusal of these provisions it will be found that a like position exists there also
These provisions are all self contained and completely specify the 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 section 4 of the 1944 Act
This is very important reason why the observations in the Associated Cement Co s case 19852 SCC 719 cannot be of application in the context of the 1957 Act
821E H Ms Mahendra Pratap Rama Chandra vs Commercial Tax officer  Others  referred to
3i Legislatures sometimes take a short cut and try to reduce the length of statutes by omitting elaborate provisions where such provisions 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 the expense of lucidity
However this legislative device is quite well known and the principles applicable to it fairly well settled
823C D PG NO 781 3ii Referential legislation 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 incorporation will be read into the later Act
Subsequent changes in the earlier 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 irrelevant 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 generally 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 the earlier 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 3iii Whether a particular statute falls into the first or second category is always a question of construction
824B In the present case the legislation falls into the second category
section 33 of the 1957 Act does not incorporate into the 1957 Act any 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 vs Hindustan Cooperative Insurance Society  Solani Ores Ltd vs State   Mahindra and Mahindra Ltd vs Union   Bhajiva vs Gopikabai 1978 3 SCR 561 Collector of Customs vs Nathella Sampathu Chetty   New Central Jute Mills Ltd vs Assistant Collector   Special Land Acquisition Officer vs City Improvement Trust 1977 1 section referred to 3iv 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 supplement the levy by an additional duty of the same nature on certain goods