on c No 85787 etc
Under Article 32 of the Constitution of India
Altaf Ahmed Addl
SolicitorGeneral ML Verma GL Sanghi
K Labiri Sarva Miner Narain section Bhattacharya Vivek Gambhir SK Gambhir Vijay Hansaria P Pameswaran PKJain Rajiv Dutta MN Shroff Ms ASubhashini Ms PratibhaJain LK Gupta MA Firoz Naresh K Sharma AK Goel Ashok K Mahajan Ms 54 Sushma Suri and Kailash Vasdev for the appearing parties
The judgment of the Court was delivered by BP JEEVAN REDDY J
The petitioners in this batch of writ petitions question in the validity of the levy and collection of cess under section 3 of the Vegetable Oils Cess Act 1983 for the period commencing 1st March 1986 and ending with 31st March 1987
Parliament enacted in the year 1983 the National Oilseeds and Vegetable Oils Development Board Act 1983 being Act 29 of 1983 hereinafter referred to as the Board Act
The Act was intended to provide for the development under the control of the Union of the oilseeds Industry and the Vegetable Oils Industry and for matters connected therewith
The Act contemplated establishment and constitution of a board called the National Oilseeds and Vegetable Oils Development Board
The functions of the Board were specified in section 9
In short the duty of the Board was to promote the development by such measures as it thought fit subject to the control of the Central Government the Oilseeds Industry and the Vegetable Oils Industry
Section 12 provided for constitution of Oilseeds and Vegetable Oils Development Fund
The fund was to be applied for promoting the purposes of the Act
Simultaneously with the Board Act was enacted the Vegetable Oils Cess Act 1983 being Act 30 of 1983 hereinafter referred to as the Cess Act
The purpose of this Act is stated in sub section 1 of section 3
It is to levy and collect by way of cess for the purposes of the National Oilseeds and Vegetable Oils Development Board Act 1983 a duty of excise on vegetable Oils produced in any m ill in India at such rate not exceeding Rs5 per quintal on vegetable oil as the Central Government may from time to time specify by notification in the Official Gazette
Sub section 2 of Section 3 clarified that the duty of excise levied under sub section 1 section 3 shall be in addition to the duty of excise leviable on vegetable oils under the or any other law for the time being in force
Sub section 3 stated that the duty of excise levied on section 3 1 shall be payable by the occupier of the mill in which the vegetable oil is produced
Sub section 4 provided that the provisions of the 55 Central Excise Act and the Rules made thereunder including those relating to refunds and exemptions from duty shall so far as may be apply in relation to the levy and collection of the said duty of excise as they apply in relation to the levy and collection of the duty of excise on vegetable oils under that Act
Section 4 provided that the proceeds of the duty of excise levied under section 3 1 shall first be credited to the Consolidated Fund of India
Subject to appropriation made by law by the Parliament the Central Government could pay to the Board from time to time such amounts from out of the said collections as it thought fit for being utilised for the purposes of the Board
Section 7 amended certain provisions of the 
It is thus clear that the cess which is called a duty of excise levied under section 3 of the cess Act was intended to serve the purposes of the Board Act
The said cess was accordingly levied and collected on and from 1983
The Cess Act was however repealed by section 12 of the Cotton Copra and Vegetable Oils Cess Abolition Act 1987 being Act 4 of 1987 hereinafter referred to as the Repeal Act
Chapter IV of the Repeal Act provides for the repeal inter alia of the Vegetable Oil Cess Act 1983
Section 12 is the repealing section
Chapter V containing only one section namely section 13 is relevant for purposes
Chapter V carries the heading COLLECTION OF ARREARS OF DUTIES OF EXCISE
Section 13 reads as follows 13
Collection and payment of arrears of duties of excise Notwithstanding anything contained in the amendments made to the 15 of 1966 or the repeal of the Copra Cess Act 1979 4 of 1979 or the Vegetable Oils Cess Act 1983 30 of 1983  by this Act any duty of excise levied under any of the said Acts immediately before the commencement of this Act but has not been collected before such commencement shall be liable to be collected after such commencement in accordance with the provisions of the said Acts for being paid into the Consolidated Fund of India as if this Act had not been enacted The Statement of Objects and Reasons appended to the Bill
56 which became the Repeal Act stated inter alia that the abolition of the said cess was with a view to reduce the number of cesses and multiplicity of taxes
The petitioners do not dispute the validity of the levy of the said cessduty of excise till the 28th February 1986
Their submission is confined as stated hereinbefore to the period commencing on
March 1 1986 and ending with March 31 1987
As noticed here in before the Cess Act was repealed on and with effect from March 31 1987 by section 12 of the Repeal Act
Section 13 of the Repeal Act expressly provides notwithstanding the said repeal the duty of excise levied under the said Act immediately before the commencement of the Repeal Act but which has not been collected before such commencement shall be liable to be collected even after the repeal in accordance with the Cess Act as if the said Cess Act has not been repealed
In the face of this provision it would appear that the petitioners  dispute as to their liability to pay the said cess for the period March 1 1986 to March 31 1987 is of little avail
The petitioners however rely upon certain circumstancesgrounds in support of their contention which we may now deal with
The petitioners are manufacturers of vegetable oil which was subject to the cessduty of excise under section 3 of the Cess Act
They rely upon the following circumstances and ground in supports of their plea 1 In his Budget Speech delivered on 2821986 presenting the Budget 1986 87 the Union Minister of Finance stated the long term Fiscal Policy recognises that cesses levied as excise duties contribute to the multiplicity of taxes
As an endeavour to reduce the number of the cesses it has been decided to dispense with the cess on cotton copra and vegetable oils
The Ministry of Agriculture will take appropriate action in the matter
The loss to the exchequer on this account will be Rs590 crores
 The Budget proposals also specify the loss of revenue on account of the decision to dispense with the cess on vegetable oils among others
This Speech made on the floor of the Lok Sabha speaks of a decision already taken by the Government and is enforceable and effective from the said date
57 2 In pursuance of the said decision of the Government of India the Directorate of Vanaspati Vegetable Oils and Fats addressed the letter dated August 11 1986 to the Commissioner Tax Research Department of Revenue
New Delhi asking him to issue instructions to all concerned indicating that the cess on vegetable oils has been dispensed with and as such the cess shall not be collected
It was further directed that the cess collected if any since April 1 1986 shall be refunded
A copy of this letter was sent to the President Central Organisation for Oil Industries and Trade Bombay
Counsel for the petitioners Shri ML Verma and GL Sanghi urged the following contentions a The Budget Speech of the Finance Minister delivered on the floor of the Lok Sabha constitutes a enforceable and effective decision upon which the petitioners were entitled to act
The said decision was exemplified and implemented by way of a communication from the Directorate of Vanaspati Vegetable Oils and Fats referred to above
In view of the said communication the petitioners did not pass on the burden of the said cess to their purchasers on and from March 1 1986
It is not open to the Government to go back upon the said decision and demand cess for the period subsequent to March 1 1986
b By virtue of sub section 4 of section 3 of the Cess Act Rule 8 of the Central Excise Rules is attracted among other provisions of the Central Excise Act and Rules
Rule 8 empowers the Central Government to grant exemption on any excisable goods from the whole or any part of duty leviable on such goods
Sub rule 1 of Rule 8 empowers the Central Government to grant exemption while Sub rule 2 em powers the Central Board of Excise and Customs to grant exemption
Inasmuch as section 3 4 of the Cess Act applies the provisions of the Central Excise Act and the Rules subject to the rider so far as may be the provisions in Rule 8 should be read with the necessary modification
In other words while sub rule 1 of rule 8 must be read as empowering the Central Government to grant exemption sub rule 2 must be read as conferring a similar power upon the Central Government andor the Directorate of Vanaspati Vegetable Oils and Fats
Unlike sub rule 1 sub rule 2 does not require the order of exemption to be published in the Official Gazette nor does it require that such 58 exemption should be through a notification
The budget proposals of the Finance Minister and the letter of the Directorate of the Vanaspati and Vegetable Oils aforesaid are relatable to sub rule 2 or Rule 8 of Central Excise Rule read with sub section 4 of section 3 of the Cess Act
Reading them together it must be held that the Government and the Directorate have exempted the vegetable oils from the levy under section 1 of section 3
We find it difficult to agree
It is not brought to our notice that the budget proposals contained in the Finance Minister s speech were accepted by the Parliament
The cess having been imposed by a Parliamentary enactment could be rendered inoperative only by a Parliamentary enactment
Such repealing enactment came only in the year 1987 with effect from April 1 1987
Not only that
The repealing Act expressly provided in section 13 that the cess due before the date of said repeal
but not collected shall be collected according to law as if the Cess Act is not repealed
This provision amounts to a positive affirmation of the intention of the Parliament to keep the said imposi tion alive and effective till the date of the repeal of the Cess Act
In the face of the said statutory provisions no rights can be founded nor can the levy of the cess be said to have been dispensed with by virtue of the alleged decision referred to in the Finance Minister s speech or on account of the letter dated August 11 1986
The Finance Minister s speech is not law
The Parliament may or may not accept his proposal
Indeed in this case it did not accept the said proposal immediately but only a year later
It is only from the date of the repeal that the said levy becomes inoperative
Now coming to the argument based upon Rule 8 of the Central Excise Rules read with section 34 of the Cess Act we find it totally unacceptable
No notification has been issued under rule 8 1 by the Central Government much less was any such notification published in the Gazette
No special order has also been made by the Central Board of Excise and Customs in this behalf under rule 8 2
The cess imposed under section 3 1 of the Cess Act it may be remembered is a duty or Excise as stated in section 3 itself
Therefore the Central Board of Excise and Customs was perhaps competent to grant exemption even in the case of said cess though we do not wish to express any definite opinion on this question since it was not debated at the Bar
Suffice it to say that the Central Government cannot again be brought 59 in under sub rule 2 of rule 8 in the place of Central Board nor can the Directorate of Vanaspati and Vegetable Oils be equated to Central Board of Excise and Customs
The words so far as may be occurring in section 3 4 of the Cess Act can not be stretched to that extent
Above all it is extremely doubtful whether the power of exemption conferred by rule 8 can be carried to the extent of nullifying the very Act itself
It would be difficult to agree that by virtue of the power of exemption the very levy created by section 31 can be dispensed with
Doing so would amount to nullifying the Cess Act itself
Nothing remains thereafter to be done under the Cess Act
Even the language of rule 8 does not warrant such extensive power
Rule 8 contemplates merely exempting of certain excisable goods from the whole or any part of the duty leviable on such goods
The principle of the decision of this Court in Kesavananda Bharti Sripadagalvaru and others vs State of Kerala and another AIR 1973 SC 1461 applies here perfectly
It was held therein that the power of amendment conferred by Article 368 cannot extend to scrapping of the Constitution or to altering the basic structure of the constitution
Applying the principle of the decision it must he held that the power of exemption cannot be utilised for nor can it extend to the scrapping of the very Act itself
To repeat the power of exemption cannot be utilised to dispense with the very levy created under section 3 of the Cess Act or for that matter under section 3 of the Central Excise Act
Mr Sanghi submitted that the Board contemplated under the Board Act never did actually start functioning and therefore the levy of cess is impermissible
It is difficult to agree with this contention either
As the Preamble to the Cess Act indicates the levy of the said cess was not for the purpose of the Board but for the purpose of the development of the Oilseeds Industry and Vegetable Oils Industry
The Board was merely a medium in that effort
It must be noticed that the cess was to be credited to the Consolidated Fund of India out of which requisite sums of money to be utilised for the purpose of the Board Act
In any event there is nothing to show that the Board did not become operational except the bare assertion to that effect
A vague allegation cannot merit any credence
In Writ Petition 963 of 1987 Mr Sanghi raised an additional contention that the goods concerned therein cannot be called Veg 60 eatable Oil within the meaning of section 3 1 of the Cess Act and therefore the levy of the cess thereon is incompetent
We cannot however allow this contention to be raised in a petition under Article 32 of the Constitution
It is open to the petitioner to raise the said contention before the appropriate authority at the appropriate stage
For the above reasons the writ petitions fail and are dismissed but in the circumstances without costs
N V K Petitons dismissed


Summary:
The Second Respondent Ferro Alloys Corporation manufac turer exporter of ferro maganese and chrome concentrates entered into a number of agreement 
with foreign buyers for sale of the said commodity
The export was routed through the appellant to bring it within the system of private barter introduced by the Government of India with a view to encourage exports
The main objective of barter system was to provide a mechanism which would result in increased export of particular commodities which were ordinarily difficult to sell abroad where the selling countries were not able to get a foot hold
This objective was sought to he achieved by linking them to exports of an equivalent or lesser value of essential commodities which in any event had to he imported
As for as purchase and sale contracts were concerned MMTC insisted that there should be one contract of sale between the local supplier and the MMTC and another contract of sale by the MMTC to the foreign buyer on principal to principal basis
It was agreed that Ferro Alloys should intimate the foreign buyer to enter into a direct contract with MMTC treating it as the seller
 Also the GRI form prescribed by the Reserve Bank of India under the Rules framed under FERA was to be signed by MMTC showing it as the exporter and seller
Letters of credit was opened in the name of MMTC which was to be assigned to Ferro Alloys so that Ferro Alloys could receive the payment directly
for the goods supplied to 13 MMTC
The shipping documents also showed MMTC as the exporter
The transactions were gone through
Dispute arose between the parties when the question of issuance of Tax Credit Certificate uS 280ZC of the Income tax arose as to who could be said to have exported the goods and received the sale proceeds in the shape of foreign exchange
The matter was taken in appeal before the Government of India
It held that MMTC was the exporter for the purpose of S280ZC
Ferro Alloys challenged the said order before the High Court by way of a Writ Petition
The High Court allowed the Writ Petition and held that the real exporter was Ferro Alloys which earned and received the foreign exchange and MMTC got only its commission of 2 and nothing more
Aggrieved by the judgment of the High Court MMTC preferred the present appeal
Allowing the appeal
this Court HELD 1
The entire export was done through MMTC in accordance with the system of barter
There is no half way house either it is not barter system or it is in accordance with the system of barter
This is an undisputed fact as  are the several statutory documents made out in the name of MMTC
Thus MMTC is the exporter for the purpose of Section 280ZC of the Income tax Act 1961
The entire system of barter and the several documents executed in that behalf including those required by statutory provisions cannot be explained away as mere external appearances
Ferro alloys cannot come to MMTC when it is profitable to it and disavow it when it is not profitable to it
It cannot have it both ways
The title to goods passed to MMTC by virtue of the several documents executed between the parties
Indeedthat was the fulcrum of the entire scheme of Barter
19 E F
This Court is not convinced with the alternative reasoning of the High Court that even if it is viewed that the title to the goods passed to MMTC even so Ferro alloys must be held to be the real exporter in view of the objective underlying Section 280ZC
If MMTC has acquired the title to the goods and is the exporter for all other purposes it is equally the exporter for the purpose of Section 14 280ZC
There can be no dichotomy of the nature propounded by the High Court
19 H 20 A