the applicability is underfined but the statute is clearly enforceable as long as it is in the statute book side by side with the normal excise duties
The clear intention is that the same provisions shall govern both the levies except that the duty under the later Act is confined to certain goods only und its distributability among the States may perhaps follow a different pattern from the principal duty
825B C 3v The Finance Acts which levied special or regular or additional excise duties contained in themselves all the elements of charge or duty
T he 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 the 1944 Act
All that was further needed was the applicability of the procedural provisions of the 1944 Act
However the 1957 Act is 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
825D F  ORIGINAL JURISDICTION Writ Petition No 12183 of 1985 etc
etc Under Article 32 of the Constitution of India K Parasaran
Attorney General Soli i Sorabjee AJ Rana AK Sen SK Dholakia Hari Swarup VCMahajan A K Ganguli Mrs Shashi Rana Mrs J Wad Ms Aruna Mathur Subhash Parekh Dushyant Dave PH Parekh E K Jose Ms Rashmi Chandrachud Sanjay Bharthri Sarve Mitter CL Beri SK Beri RC Bhatia
Ravi P Wadhwani
P C Kapur Sukumaran DN Mishra BV Desai MB Lal
Mukul Mudgal B Kanta Rao Mrs H Wahi Mrs V D Khanna Aruneshwar Gupta Mrs Anil Katiyar RKKapur BR Kapur
Anis Ahmed Khan
Ms Abha Jain R Karanjawala Mrs Karanjawala Ms Meenakshi
Vishnu Mathur Kailash Vasudev PDShah Shri Narain Sandeep Narain MN Shroff
Mrs P section Shroff R Sasprahbu SAShroff SS Shroff Praveen Kumar MN Chowdhary MD Chowdhary N Das Gupta Rajesh Chibber KK Bhaduri Rajiv Dutta
EC Agarwala Harjinder Singh RK Nambiar P Paremeswaran Ms Bina Gupta KSwami and VN Ganpule for the appearing parties
The following Judgments of the Court were delivered PG NO
783 VENKATACHALIAH J
These 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 are heard together and disposed of by this common judgment as they all involve questions common to them 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 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 belonging to their customers The Amending Act which became effective from 24121979 sought to render the processes of Bleaching Dyeing Printing Sizing Mercerising etc Manufacture within the meaning of the Section 2f of the Central Excise Act The amendment was necessitated by the Judgment of the High Court of Gujarat which has declared the levy on such processing as illegal as according to the High Court the processing 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
The processors who carry out these operations on cotton fabrics or 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 Act on the ground first
that if the processes carried on by them do not amount to manufacture under Section 2f as it originally stood then consistent with the impermissibility of main impost
the levy of additional duties also fails and that at all cvents even after the amendment the concept of manufacture under the said Additionl Duties Act had not been correspondingly widened by an appropriate amendment
The present hatch of appeals and writ petitions comprise of a large number of cases It is not having regard to the questions requiring to be decided in these matters necessary to go into in any particular detail the fact situation of each individual case
The processors in these PG NO 784 cases who may conveniently be referred to as the processors 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 from these processing houses on payment of processing charges
The Grey fabric after processing is returned by the processing house to the customers
The facts of W P No 12 183 of 1985 Ms Ujagar Prints vs Union of India and Ors in which the petitioner has challenged the levy by a petition under Article 32 of the Constitution are typical and representative of all other similar cases The petitioner is a firm of partners with its Head Office 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 not capable of manufacturing Grey fabric The man made grey fabric such as Art Silk Grey fabric it is stated is manufactured in mills and on power looms and that letter is exempt from excise duty on its manufacture Petitioners further over that the Art Silk Grey fabrics which are processed in the petitioner  factory 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 made is that the processing of the grey fabric is not a part a 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
It is also averred that the firm Ms 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 amount to manufacture as the petitioners do not carry out any spinning or weaving operations that what they receive from their customers for processing is PG NO 785 therwise fully manufactured man made fabric 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 for in conceivable cases the duty itself might far exceed the processing charges that the processors stipulate and get
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 In some cases the manufacturers of the grey fabric subject it to captive consumption and process them in their own compositeestablishments 
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 corollary if the contention of the processing houses which do not processing work for 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 the kind concerned in these cases amounts 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 l whether at all events the imposition of a tax on such 1processing is referable to Entry 97 List l and if the import on the processors is justified under tariff items 19 and 22 according as whether the Grey fabric is cotton or man made what should be the assessable value for purposes of levy of duty so far as processors are concerned
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 2411979 in the cases of Vijaya Textiles Mills vs Union of India and Real Honest Textiles vs Union of India held that the processes that the processing houses imparted to the Grey fabric did not amount to manufacture  and did not attract ad valorem duty under tariff items 19 and 22 and that processors were liable to pay duty under tariff entry 68 only on the value added by the processing
PG NO
786 Following this judgment a large number of similar claims of processing houses were allowed by the High Court by its judgment dated 1331979
Civil Appeals 1685 to 1766 of 1979 are preferred by the Union of India challenging this view of the High Court
The Bombay High Court on the contrary by its judgmentdated 16th June 1983 in writ petition 1623 of 1979 New Shakti Dye Works Pvt Ltd vs Union of India and Anr
took a view different from the one that commended itself to the Gujarat High Court
Bombay High Court held that even under the concept of manufacture  envisaged in Section 2f 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 mending Act ie Act of 1980
The aggrieved processors have come up in appeal by Special Leave in Civil Appeal No 6396 of 1983
Some of the processors have as stated earlier filed writ petitions under Article 32 directly in this court challenging the impost on grounds that commended themselves for acceptance to the Gujarat High Court
Before its amendment by the Amending Act Central Act VI of 1980 Section 2f of the Central Excise ACt defined manufacture  in its well accepted legal sense nomen juris and not with reference to an artificial and statutorily expanded import 2f manufacture  includes any process incidental or ancillary to the completion of a manufactured product and i  ii  Omitted as unnecessary The reasoning of the Gujarat High Court was on these lines In the instant case the excise duty claimed on the basis of the market value of the processed cotton fabrics or manmade fabrics cannot be levied because assuming that process amounts to manufacture all that they have done is to manufacture processed cloth processed fabric either cotton or man made and that not being a taxable event in the light of Section 3 read with section 2d of the Act and PG NO 787 Items 19 and 22 levy of excise duty on this basis was ultra vires and contrary to law   This view according to the Revenue was incorrect and caused serious prejudice to the legitimate financial interests of the State
Accordingly the President of India promulgated an Ordinance called the Central Excise and Salt and Additional Duties of Excise Amendment Ordinance  1979 Central Ordinance No 12 of 1979 sub sequently replaced by Central Act VI of 1980 of the same name with retrospective effect from 2421979 amending Section 2f of the Central Excise Act and tariff items 191 and 221
The relevant entries in the Schedule to the Additional Duties Act  were also amended
So far as amendment to Section 2f was concerned Section of the Amending Act introduced three sub items in the definition of manufacture 
Two of them are material for the present purpose v in relation to goods comprised in Item No 191 of the First schedule includes bleaching mercerising dyeing printing water proofing rubberising
shrink prcofing organdie processing or any other process or any one or more of these processes  vii in relation to goods comprised in Item No 221 of the First Schedule includes bleaching
dyeing printing shrink proofing tentering heat setting crease resistant processing or any other process or any one or more of these processes
 Similarly amendments were affected by Section 3 of the Amendment Act which amended the original tariff items 19 and 22 by sub stituting the following provisions in their respective places  1 Cotton fabrics other than i embroidery in the piece
strips or in motifs and ii fabrics impregnated coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials a cotton fabrics
not subjected to any process Twenty per cent ad valorem b cotton fabrics subjected to the process of bleaching mercerising dyeing printing water proofing rubberising shrink proofing organdie processing or any other process or any two or more of these processes
Twenty per cent ad valorem PG NO 788 XXX XXX XXX 221 Man made fabrics other than i embroidery in the piece in strips or in motifs ii fabrics impregnated coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials a man made fabrics not subjected to any process Twenty per cent ad valorem plus rupees five per square metre
b man made fabrics subjected to the process of bleaching dyeing printing shrink proofing tentering heat setting crease resistant processing or any other process or any two or more of these processes Twenty per cent ad valorem plus rupees five per square metre
 Section 4 of the Amending Act amended the relevant entries in the Schedule to the Additional Duties Act
Section 52 of the Amending Act provided 5 Special provisions as to duties of excise on cotton fabrics woollen fabrics man made fabrics etc during a certain past period and validation 1    2 Any rule or notification or any action or thing made issued taken or done or purporting to have been made
issued taken or done under a Central Act referred to in sub section I before the date of commencement of this Act with respect to or in relation to the levy of duties of excise on a cloth cotton cloth or as the case may be
cotton fabrics b woollen fabrics c rayon or artificial silk fabrics or as the case may be man made fabrics shall for all purposes be PG NO 789 deemed to be and to have always been as validly and effectively made issued taken or done as if the provisions of this section had been in force at all material times and accordingly notwithstanding any judgment decree or order of any court tribunal or other authority a all duties of excise levied assessed or collected or purported to have been levied assessed or collected before the date of commencement of this Act on i cloth cotton cloth and cotton fabrics subjected to any process ii woollen fabrics subjected to any process iii rayon or artificial silk fabrics and man made fabrics subjected to any process under any such Central Act shall be deemed to be and shall be deemed always to have been as validly levied assessed or collected as if the provisions of this section had been in force on and from the appointed day b no suit or other proceeding shall be maintained or continued in any court for the refund of and no enforcement shall be made by any court of any decree or order directing the refund of any such duties of excise which have been collected and which would have been validly collected if the provisions of this section had been in force on and from the appointed day c     d      8
Indeed the correctness of the judgment of the Gujarat High Court in the cases of Vijaya Textiles and Real Honest Textiles were considered by a Bench consisting of three judges of this court in Empire Industries vs Union of India 1985SUPP
I SCR 292 by the judgment dated 651985 one of us Sabyasachi Mukharji J  speaking for the Court upheld the validity of the impost Vijaya Textiles Mills vs Union of India 1979 4 ELTJ 181 was held not to have been PG NO 790 decided correctly
The view taken by the Bombay High Court in New Shakti Dye Works Pvt
vs Union of India  Anr was approved
The pronouncement of this court in Empire Industries case otherwise covers and is a full answer to the contentions raised in this batch of cases
However the correctness of the view taken in the Empire Industries  case on certain aspects was doubted by another Bench of this court and the matter was accordingly referred to a Bench of five judges
It is perhaps necessary to refer to the order dated 9121986 made by the Division Bench referring the cases to a larger bench
What came before the Division Bench were WP 121831985 Ms Ujagar Prints vs Union of India  Ors and CA Nos
1685 17661979 Union of India  Ors
vs Narendra Processing Industries  Ors
Two questions arose before and were examined by the Referring Bench
The first was whether the processing of Grey fabric amounted to manufacture  within the meaning of Section 2f as it stood prior to its amendment
The second question was whether even if such processing did amount to manufacture  what should he the proper basis for determining the assessable value of the processed fabrics
Both these questions had earlier been examined and answered in the Empire Industries case
It is necessary to ascertain as to the precise points on which the Empire Industries  decision was required to be reconsidered
The Referring Bench did not disagree with the decision in Empire Industries  case on the question whether processing  did amount to manufacture 
Indeed the Referring Bench appears to have proceeded on the premise that the view taken in Empire Industries case on the point was the correct one
Referring Bench said this on the point 
So far as the first question is concerned it was agitated before this Court in Empire Industries Ltd v Union of India and this Court held that the processes of bleaching mercerising dyeing printing
water proofing
carried out by the processors on job work basis amount to manufacture both under the Act as it stood prior to the amendment as also under the Act subsequent to the amendment and the processed fabrics are liable to be assessed to excise duty in the hands of what may be called jobbers 
Since this was a decision given by a Bench of three Judges the petitioners and appellants who are carrying on business of processing on job work basis could not contend that these PG NO 791 processes do not amount to manufacture and that the processed fabrics are not liable to be assessed to excise duty in the hands of the jobbers
But it was the second question which provoked serious controversy before us 
It is only on the second question touching valuation that it expressed some doubts
Nevertheless in par
6 of the order the Referring Bench made a further observation to this effect 
Of course when
n se writ petitions and appeals are referred to the larger Bench it will be open to the larger Bench to consider not only the question of determination of the assessable value but also the other question namely whether processing of grey fabric by a processor on job work basis constitutes manufacture because the judgment in Empire Industries case which has decided this question in favor of the revenue and against the processor is a judgment of a Bench of only three Judges and now the present writ petitions and appeals will be heard by a Bench of five Judges 
This is how the first question which is otherwise concluded by the pronouncement in Empire Industries case is sought to be reagitated before us Out of deference to the learned counsel who vigorously argued this aspect at great length and we though we should examine the submission on this point also though the matter could by no means be considered to have been referred to a larger bench
On the second question also the matter is within a short compass
The Referring Bench clearly excluded any possibility of the assessable value being limited to the mere processing charges
It contemplated the alternative possibilities of valuation thus It was common ground between the parties that the procedure followed by the Excise authorities was that the trader who entrusted cotton or man made fabrics to the processor for processing on job work basis would give a declaration to the processor as to what would be the price at which he would be selling the processed goods in the market and that would be taken by the Excise authorities as the assessable value of the processed fabrics and excise duty would be charged to the processor on that basis
This may be illustrated by giving the following example PG NO 792 i Value of grey cloth in the hands of the processor Rs 2000 2 Value of job work done Rs500 Value of finished cloth returned to the trader  12 Rs2500 3 Trader s selling price inclusive of his selling profits etc Rs3000 The assessable value in the case given in this example would be taken by the Excise authorities at Rs30 which was the sale price of the trader    The view of the Referring Bench on the point was this We cannot accept the contention of the learned counsel on behalf of the petitioners and the appellants that the value of the grey cloth which is processed by the processor should not be included in the assessable value of the processed fabric since the grey cloth is one of the raw materials which goes into the manufacture of the processed fabric and the value of the processed fabric cannot be computed without including the value of the raw material That goes into its manufacture
The assessable value of the processes fabric cannot therefore be limited merely to the value of the job work done but it must be determined by reference to the wholesale cash price of the processed fabric gate of the factory of the processor 
The Referring Bench was of the view that the correct assessable value should be  
Thus in the example given above the assessable value of the processed fabric must be taken to be Rs 20  5 that is Rs 25 and the profit of Rs5 which the trader may make by selling the processed fabric cannot be included in the assessable value
The element of selling profit of the trader would be entirely an extraneous element and it cannot be taken into account for the purpose of determining the assessable value of the processee fabric which would comprise the value of the grey cloth and the PG NO 793 job work charges but exclude the profit at which the trader may sub sequently sell the processed fabric
We have heard Sri AK Sen Sri Soli J Sorabjee Dr Chitale and Sri Dholakia learned Senior Advocates in the appeals and writ petitions preferred by the processors and Sri K Parasaran learned Attorney General and Sri AK Ganguli learned Senior Advocate for the Union of India and its authorities
On the contentions urged the points that fall for determination are a i Whether the processes 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 Section 2f of the prior to the amendment of the said Section 2f by Section 2 of the Amending Act VI of 1980
a ii Whether the decision in Empire Industries Limited  Ors
vs Union of India 1985 Suppl
1 SCR 282 holding that these operations amount to a manufacture is wrongly decided and requires reconsideration
b Whether the amendment brought about by the Amending Act of 1980 of Section 2f and to tariff items 19 and 22 of the Central Excise Act is ultra vires Entry 84 List I and therefore beyond the competence of the Union Parliament
Whether at all events even if the expanded concept of manufacture introduced by the Amendment is beyond the scope of Entry 84 List l 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 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
PG NO 794 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
Re Contention a The essential condition to be satisfied to justify the levies contend counsel is that there should be manufacture  of goods and in order that the concept of manufacture  in Entry 84 List I is satisfied there should come into existence a new article with a distinctive character and use as a result of the processing
It is contended that nothing of the kind happens when Grey fabric  is processed it remains grey fabric  no new article with any distinctive character emerges
A number of authorities of this Court and of the High Courts were cited
Particular reference was made to Union of India vs Delhi Cloth  General Mills 1963 Supp
 I SCR 586 at 597 Tungabhadra Industries Ltd vs Commercial Officer Kurnool L 1961  SCR 14 Deputy Commissioner of Sales Tax vs Pio Food Packers  at 1275 Sterling Foods vs State of Karnataka  at 475  476 Kailash Nath vs State of UP 8 STC 358 Deputy Commissioner Sales Tax vs Sadasivan 42 STC 201 Kerala Swastic Products Baroda vs Superintendent of Central Excise Swan Bangle Stores v Assistant Sales Tax Officer 25 STC 122 Allahabad Stale of Andhra Pradesh vs Sri Durga Hardware Stores 32 STC 322 Andhra Pradesh and Extrusion Process Pvt Ltd vs NR Jadhav Superintendent of Central Excise 19791 ELT 380 Gujarat  13
The following observations of this Court in Union of India vs Delhi Cloth and General Mills AIR 1963 SC p 791 at 794 were emphasised According to the learned counsel manufacture is complete as soon as by the application of one or more processes
the raw material undergoes some change
To say this is to equate processing to manufacture and for this we can find no warrant in law
The word manufacture used as a verb is generally understood to mean as bringing into existence a new substance  and does not mean merely to produce some change in a substance
however minor in consequence the change may be  PG NO 795 These observations in Health  Milligan Manufacturing Company the Sherwin Williams Company etc
vs JH Worst Director of the North Dakofa Government Agricultural Experiment Station which were referred to with approval by this Court in the case of Pio Food Packers  supra was relied upon At some point processing and manufacturing will merge
But where the commodity retains a continuing substantial identity through the processing stage we cannot say that it has been manufactured
Emphasis Supplied The following observations of Bhagwati J in Pio Food Packers case were cited    manufacture is the end result of one or more processes through which the original commodity is made to pass 
Where there is no essential difference in identity between the original commodity and the processed article it is not possible to say that in one commodity has been consumed in the manufacture of another
Although it has undergone a degree of processing it MUSt be regarded as still retaining its original identity Emphasis Supplied The observations of this  court in Kailash Nath vs State of U P 3 STC 358 made while repelling the contention of the revenue urged in that case that when cloth is printed and coloured it gets transformed to sorne other material and that therefore when such printed and coloured cloth is exported what was exported was not the same cloth and that by such printing and dyeing the original cloth got transformed into different material were relied on The cloth exported is the same as the cloth sold with this variation or difference that the colour has change by printing and processing
In view which we take the cloth exported is the same as the cloth sold by the petitioners there can be no question above the exemption clause not applying to it 
Emphasis Supplied The following passage in the permanent Edition of Words and Phrases  referred to with approval in Delhi Cloth and General Mills  AIR 1963 SCp
791 at 795 case was referred to PG NO 796 Manufacture implies a change but every change is not manufacture and yet every change of an article is the result of treatment labour and manipulation
But something more is necessary and there must be transformation a new and different article must emerge having a distinctive name character or use
 Further learned counsel placed reliance upon Tungabhadra Industries  case where it was held that ground nut oil after the process of hydrogenation which improved its keeping qualities and shelf life yet remained basically ground nut oil and that the quality of the oil had been improved by the processes it was subjected to did not detract from its continuing identity as ground nut oil
The change brought about in the oil it was observed by this Court rendered it more acceptable to the customers by improving its quality but did not render the oil a commodity other than ground oil which still continued to be groundnut oil notwithstanding the processing which was merely for the purpose of rendering the oil more stable thus improving its keeping qualities for those who desire to consume ground nut oil
Likewise the processing such as bleaching dyeing
printing finishing etc
 it was urged merely improved the quality of Grey fabric and rendered it more acceptable to the customers while not shedding its basic character as cotton fabric  or man made fabric 
It was also urged that the affidavits filed by person engaged in and familiar with the textile trade indicated that the finished fabric was not a commercially different commodity
We have carefully considered these submissions
In the Empire Industries case this court considered similar submissions in an almost identical context and situation
Learned judges referred to the observations of this Court in Commissioner of Sales Tax UP Lucknow vs Harbilas Rai 21 STC 17 in which the view expressed by the Division Bench of the Madhya Pradesh High Court in Hiralal Jitmal vs Commissioner of Income tax 8 STC 325 at 326 was held supportable on the reasoning that  
The decsion of the Madhya Pradesh High Court might perhaps be justified on the ground that a printed or dyed cloth is commercially different article from the cloth which is purchased and printed or dyed PG NO 797 The Division Bench also referred to with approval the decision of the Bombay High Court in Kores India Limited vs Union of India and Ors The Division Bench noticed the question arising for decision Fabric itself means woven materials
It was contended that processing the manufactured fabric does not bring into existence any new woven material but the question is does new and different goods emerge having distinctive name use and character Answering the Bench said It appears in the light of the several decisions and on the construction of the expression that the process of bleaching dyeing and printing etymologically also means manufacturing processes   15
It is strenuously urged for the processors that the view taken by the Division Bench in the Empire Industries case suffers from fallacies both of reasoning and conclusion and requires to be reconsidered
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
The principles are clear
But difficulties arise in their application in individual cases
There might be border line case where either conclusion with equal justification be reached
Insistence on any sharp or intrinsic distinction between processing  and manufacture we are afraid results in an over simplification of both and tends to blur their interdependence in cases such as the present one
The correctness of the view in the Empire Industries case cannot be tested in the light of material in the form of affidavit expressing the opinion of persons said to be engaged in or connected with the textile trade as to the commercial identity of the commodities before and after the processing placed before the court in a sub sequent case
These opinions are of course relevant and would be amongst the various factors to be taken into account in deciding the question
PG NO798 16
On a consideration of the matter we are persuaded to think that the view taken in the Empire Industries case that Grey fabric  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
Indeed on this point the Referring bench did not disagree or have any reservations either
It is to be noticed that if the amending law is valid this aspect becomes academic
We think we should reject Contention a
Re Contention b The concept of manufacture  embodied in Entry 84 of List I it is urged should be construed not in an artificial sense but in its recognised legal sense and so construed artificial dimensions sought to be imparted to it by the amendment would be impermissible
Learned counsel drew attention to the following observations of this Court in Diamond Sugar Mills vs State of UP  at 248   we have on the one hand to bear in mind the salutary rule that words conferring the right of legislation should be interpreted liberally and the powers conferred should be given the widest amplitude on the other hand we have to guard ourselves against extending the meaning of the words beyond their reasonable connotation in an anxiety to preserve the power of the legislature
Emphasis supplied Though entries in the legislative lists are to be construed liberally and the widest possible amplitude given to them however no artificial or arbitrary extensions of the meaning of the words in the entry
it is urged are permissible
It is submitted the concept manufacture in Entry 84 List I has a well accepted legal connotation and in construing the entry the precise connotation which it possesses and conveys in law must be kept in mind
There is in law no manufacture  unless as a result of the process a new and commercially distinct product with distinct use emerges
The idea of manufacture might imply change but every change is not necessarily manufacture
It is
accordingly contended that the amendment which seeks to equate processing with manufacture is beyond the scope of Entry 84 List I PG NO
799 18
In the Empire Industries  case a similar argument was urged but without success
Learned Judges were persuaded to the view that such processes which were referred to by the amendment were not so alien or foreign to the concept of manufacture  that they could not come within that concept
Entries to the legislative lists it must be recalled 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
In Empire Industries case it was held As has been noted processes of the type which have been incorporated by the impugned Act were not so alien or foreign to the concept of manufacture  that these could not come within that concept
At all events even il the impost on process is not one under Entry 84 list l but is an impost on processing  distinct from manufacture the levy could yet be supported by Entry 97
List l even without the aid of the wider principle recognised and adopted in Dhillon s case AIR 1972 SC l061
It was however contended that the levy of tax on an activity which cannot reasonably be regarded as an activity of manufacture  cannot be described as a levy of duties of excise under Entry 84 List I
If it is a non descript tax under Entry 97 the Parliament it is urged has not chosen1 to enact any such law in this case
The charging section does not it is urged
bring such a taxable event to charge
This argument was noticed in Empire Industries case thus  
It was then argued that if the legislation was sought to be defended on the ground that it is a tax on activity like processing and would be covered by the powers enumerated under Entry 97 of List I of the Seventh Schedule PG NO 800 then it was submitted that there was no charging section for such an activity and as such the charge must fail and there cannot be any levy   The contention was rejected holding 
This argument proceeds on an entire misconception
The charging section is the charging section 3 of the 
It stipulates the levy and charge of duty of excise on all excisable goods produced or manufactured
Manufactured under the Act after the amendment would be the manufacture  as amended in section 2f and Tariff item 19 I and 22 and the charge would be on that basis
Therefore it is difficult to appreciate the argument that the levy would fail as there will be no appropriate charging section or machinery for effectuating the levy on the activity like the method of processing even if such an activity can be justified under Entry 97 of List l of Seventh Schedule
We are therefore of the opinion that there is no substance in this contention We respectfully agree
If a legislation purporting to be under a particular legislative entry is assailed for lack of legislative competence the State can seek to support it on the basis of any other entry within the legislative competence of the legislature
It is not necessary for the State to show that the legislature in enacting the law consciously applied its mind to the source of its own competence
Competence to legislate flows from Article 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 othe 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
Bennion in his Statutory Interpretation at page 644 refers such a composite legislation though the observations must be under stood in the context of the supremacy of the British Parliament and one of unlimited powers and which is under no inhibitions unlike a federal polity of PG NO 801 distribution of legislative powers
Learned author refers to  Ragbag  Acts Some Acts are rag bag  Acts covering many areas
The annual Finance Act is an extreme example
It is divided into Parts dealing respectively with customs and excise duty value added tax income tax capital gains tax stamp duty capital transfer tax and so on
Even within a Part of a Finance Act the various provisions havnuite different aims  In Hari Krishna Bhargav vs Union of India and Anr   this Court said  
There is no prohibition against the Parliament enacting in a single statute matters which call for the exercise of power under two or more entries in List I of the Seventh Schedule
Illustrations of such legislation are not wanting in our statute book and the fact that one of such entries is the residuary entry does not also attract any disability   21
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 II or List III
If it is not it is not necessary to go any further or search for the field in List I 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 III
Contention b is therefore insubstantial
Re Contention c This pertains to the validity of levy of additional duties
The contention proceeds on the pre supposition that processing does not amount to manufacture  under Section 31 of the Additional Duties Act
If it does as has been held on point a this argument does not survive at all
The point however sought to be put across is that even if the concept of manufacture  for purposes of levy of excise duty under the Central Excise Act  is validly expanded or that a tax on processing is otherwise PG NO 802 supportable under Entry 971 the position under the Additional Duties Act  s quite different
The Additional Duties Act  does not expressly invoke or attract the definition of Manufacture  in Section 2f of the Central Excise Act  nor does the Additional Duties Act  itself contain a definition of manufacture  in the broad terms in which Section 2f as amended contains
The result is it is urged that the ordinary legal connotation of manufacture  contained in the charging Section 31 of the Additional Duties Act  can alone support the levy
It is not it is urged permissible to import the artificial and expanded definition of manufacture  containing in Section 2f as amended into Section 31 of the Additional Duties Act
The following observations of this court in Pandit Ram Narain vs The State of Uttar Pradesh and Ors
 l1956 SCR 664 at 673 are pressed into service  It was rightly pointed out that it is no sound principle of construction to interpret expressions used in one Act with reference to their use in another Act   Again the observations in Macbeth  Co vs Chisten at 224 referred to with approval by this court in Commissioner of Sales Tax Madhya Pradesh vs Jaswant Singh Charan Singh  at 725 26 were relied upon  It would be a new terror in the construction Acts of Parliament if we were required to limit a word to an unnatural sense because in some Act which is not incorporated or referred to such an interpretation is given to it for the purposes of that Act alone   It is further contended that a mere amendment of the schedules to the Additional Duties Act  purported by Section 4 of the Amending Act VI of 1980 would be inadequate to serve the purpose of a valid levy on the activity of processing
It was also urged that Section 33 of the Additional Duties Act  which provides that the provisions of Central Excise Act  and the rules made thereunder shall so far as may be apply in relation to the levy and collection of the Additional Duties would not also enable the wider definition of manufacture  in Section 2f to be imported into Section 31 of the Additional Duties Act to justify levy of Additional Duties on processing 
The contention was neatly and attractively presented and appeared at first blush to merit a serious PG NO 803 consideration of the validity of the levy of additional duties
But on a closer examination of the concept of and the scheme for levy and collection of the additional duties and the specific statutory provisions the tensile strength of the argument breaks down
There are at least two circumstances which render the definition of manufacture  under Section 2f attracted to the additional levies
Section 33 of the Additional Duties Act provides  Ievy and collection of the additional duties as they apply in relation to the levy and collection of the duties of excise on the goods specified in sub section l 
 It is plain that the statute expressly makes the provision in the Central Excise Act apply in relation to levy and collection  of the additional duties
The question is whether this provision is sufficient to attract Section 2f of the main Act as amended
This in turn depends upon what the expression levy connotes and carries with it
The term levy  it is held is an expression of wide import
It includes both imposition of a tax as well as its quantification and assessment
In Assistant Collector of Central Excise Calcutta Division vs National Tobacco Co of India Ltd  1973 I SCR 822 this Court held The term levy appears to us to be wider in its import than the term assessment
It may include both of a tax as well as assessment
The term imposition is generally used for the levy of a tax or duty by legislative provision indicating the subject matter of the tax and the rates at which it has to he taxed   24
That apart Section 4 of 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
In Att
Gen vs Lamplough  229 it is observed A schedule in an Act is a mere question of drafting a mere question of words
The schedule is as much a part of the statute and is as much an enactment as any other part
804 Maxwell says in Interpretation of Statutes 11th ed
p 156   if an enactment in a schedule contradicts an earlier clause it pevails against it
 Bennion in Bennion s Statutory Interpretation p 568 569 referring to the place of schedules in statutes observes The Schedule is an extension of the section which induces it
Material is put into a Schedule because it is too lengthy or detailed to be conveniently accommodation in a section   A Schedule must be attached to the body of the Act by words in one of the sections known as inducing words
It was formerly the practice for the inducing words to say that the Schedule was to be construed and have effect as part of the Act
See eg Ballot Act 1872 section 28 This is no longer done being regarded as unnecessary
If by mischance the inducing words were omitted the Schedule would still form part of the Act if that was the apparent intention   
The schedule is as much a part of the statute and is as much an enactment as any other par
See also
to the like effect Flower Freight C o Ltd vs Hammond 19633 1 QB 275 R vs Legal Aid Committee No I London Legal Aid Area
ex p Rondel and metropolitan Police Commr
vs Curran
 What appears
therefore clear is that what applies to the main levy applies to the additional duties as well we find no substance in Contention c either
Re Contention d There is really no substance in the grievance that the retroactivity imparted to the amendments is violative of Article 19 l g
A Competent legislature can always validate a law which has been declared by courts to be invalid provided the infirmities and vitiating infactors 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 PG NO 805 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
See Sri Prithvi Cotton Mills Ltd  Anr
vs Broach Borough Municipality  Ors 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 vested right from a defect in a statute and seek a windfall from the legislature s mistakes
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
In Empire Industries Limited  Ors
vs Union of India  Ors
Etc  19851 l Supp 292 at 327 this court observed   not only because of the paramount governmental interest in obtaining adequate revenues but also because taxes are not in the nature of a penalty or a contractual obligation but rather a means of apportioning the costs of government amongst those who benefit from it
In testing whether a retrospective imposition of a tax operates so harshly as to violate fundamental rights under Article l91g 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 degree and extent of any unforeseen or unforseable financial burden imposed for the past period etc
Having regard to all the circumstances of the present case this court in Empire Industries  case held that the retroactivity of the Amending provisions was not such as to incur any infirmity under Article 19 lg
We arc in respectful agreement with that view
There is no merit in contention d either
Re Contention e This concerns the question of the correctness of the determination of the assessable value
The processors say that they have filed classification lists under rule 173 B PG NO 806 of the Central Excises and Salt Rules 1944 as they had no other choice and that if the proper principles of determination of the assessable value do not legally justify the consequences flowing from the classification it is open to them to contend against the validity of the determination and they are not estopped from doing so
Duties of excise are imposed on the production or manufacture of goods and are levied upon the manufacturer or the producer in respect of the commodity taxed
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 conceptual 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 covenient to impose as long as a rational relationship with the nature of the tax is maintained
The processors contend that the assessable value could only be the job work charges received by them for the processing of Grey fabric  and cannot be the selling price at which the customer who entrusts the Grey fabric for processing ultimately sells it in the market
Such a sale price it is said would quite painly
include the value of the Grey fabric the processing charges and also the selling profit of the customer
Even in regard to the price of the Grey fabric itself which comes to the processing houses in fully manufactured condition would again depend upon how many hands it has changed before reaching the particular customer who brings them for processing
The determination of assessable value at the actual or hypothetical selling price of goods of like nature and quality in the wholesale market would include the post manufacturing profits of the trader which cannot legitimately be regarded as part of the assessable value
This contention was considered in detail in Empire Industries case  1985 1 Supp
SCR 293 at 327 wherein it was held When the textile fabrics are subjected to the processes like bleaching dyeing and printing etc
by independent processes whether on their own account or on job charges basis the value of the purposes of assessment under section 4 of the Central Excise Act will not be the processing charges alone but the intrinsic value of the processed fabrics which is the price at which such fabrics are sold PG NO 807 for the first time in the wholesale market
That is the effect of section 4 of the Act
The value would naturally include the value of grey fabrics supplied to the independent processors for the processing
However excise duty if any paid on the grey fabrics will be given pro forma credit to the independent processors to be utilised for the payment on the processed fabrics in accordance with the Rules 56A or 96D of the Central Excise Rules as the case may be Even the Referring Bench did not doubt the correctness of the inclusion in the assessable value the cost of the Grey fabric and the processing charges
The Referring Bench held We cannot accept the contention of the learned counsel on behalf of the petitioners and the appellants that the value of the grey cloth which is processed by the processor should not be included in the assessable value of the processed fabric   29
In the argument as presented that the assessable value would include what is referred to as the post manufacture profits there is an obvious fallacy
In Atic Industries Ltd vs HH Dave Asstt
Collector of Central Excise and Ors  1975 3 SCR p 563 Bhagwati J speaking for the Court said The value of the goods for the purpose of excise must take into account only the manufacturing cost and the manufacturing profit and it must not be loaded with post manufacturing cost or profit arising from post manufacturing operation     
It may be noted that wholesale market in a particular type of goods may be in several tiers and the goods may reach the consumer after a series of wholesale transactions
In fact the more common and less expensive the goods there would be greater possibility of more than one tier of wholesale transactions   
If excise were levied on the basis of second or subsequent wholesale price it would load the price with a post manufacturing element namely selling cost and selling profit of the wholesale dealer
That would be plainly contrary to the true nature of excise as explained in the PG NO 808 Voltas  case supra
Secondly this would also violate the concept of the factory gate sale which is the basis of determination of value of the goods for the purpose of excise  There can therefore be no doubt that where a manufacturer sells the goods manufactured by him in wholesale to a wholesale dealer at 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   Explaining what really is the idea of post manufacturing profit referred to in Atic s case this court in Union of India  Ors
v Bombay Tyre International Ltd etc
  1984 l SCR p 347 at 375 aid  When it refers to post manufacturing expenses and post manufacturing profit arising from post manufacturing operations it clearly intends to refer not to the expenses and profits pertaining to the sale transactions effected by the manufacturer but to those pertaining to the subsequent sale transactions effected by the wholesale buyers in favour of other dealers Emphasis Supplied The principles for the determination of assessable value are laid down under section 4 of the Act
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 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
The nature of the excise duty is not to he 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 PG NO 809 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
In the case of processing houses they become liable to pay excise duty not because they are the owners of the goods but because they cause the manufacture  of the goods
The dimensions of the Section 41a and b are fully explored in number of decisions of this Court
Reference may be made to the case of Bombay Tyres International
Consistent with the provisions of Section 4 and the Central Excise Valuation Rules 1975 framed under Section 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 method of determination of the assessable value suggested by the processors would lead to the untenable position that while in one class of Grey fabric processed by the same processor on bailment the assessable value would have to be determined differently dependent upon the consideration that the processing house had carried out the processing operations on job work basis in the other class of cases as it not unoften happens the goods would have to be valued differently only for the reason the same processing house has itself purchased the Grey fabric and carried out the processing operations on its own
It is to solve the problem arising out of the circumstances that goods owned by one person are manufacture  by another that at a certain stage under rule 174A a notification was issued by the Central Government exempting from the operation of the rule 174A  every manufacturer who gets his goods manufactured on his account from any other person subject to the conditions that the said manufacturer authorises the person who actually manufactures or fabricates the said goods to comply with all procedural formalities under  l of 1944 and the rules made thereunder in respect of the goods manufactured on behalf PG NO 810 of the said manufacturer and in order to enable the determination of value of the said goods under section 4 of the said Act to furnish information relating to the price at which the said manufacturer is selling the said goods and the person so authorised agrees to discharge all liabilities under the said Act and the rules made thereunder
On a consideration of the matter the view taken in the matter in the Empire Industries case does not call for reconsideration
Contention e is also held and answered against the petitioner
In the result the appeals preferred by the Union of India are allowed and the 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 petitions filed by the processors directly in this court are dismissed
There will however be no orders as to costs in the appeals and the writ petitions
The Union of India and its authorities shall be entitled to recover the amounts due by way of arrears of excise duty and shall be entitled to take necessary steps to seek the enforcement of the bank guarantees if any for the recovery of the arrears
SABYASACHI MUKHARJI J
I have had the advantage of reading in draft the judgment proposed to be delivered by my learned brother Venkatachaliah J I respectfully agree with him
There is however one aspect of the matter in respect of which I would like to say a few words
Contention e as noted by my learned brother in his judgment deals with the determination of the assessable value
The processors in the cases before us say that they have filed classification lists under rule 173B of the Central Excises and Salt Rules 1944 as they had no other choice and that if the proper principles of determination of the assessable value do not legally justify the consequences flowing from the classification it is open to them to contend against the validity of the determination and they are nOt estopped from doing so
The processors are right in contending that the true principle should be followed in determining the assessable value
Then what is the true principle Section 4 of the Act deals with the valuation of excisable goods for purposes of charging of duty of excise
Section 4 l a of the Act stipulates that the value should be subject to other provisions of the Section the normal price thereof that is to say the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal where the buyer PG NO 811 is not a related person and the price is the sole consideration for the sale
For the present purpose we are not concerned with the provisos nor the situation where the normal price of goods is not ascertainable for any reason
In Empire Industries Limited  Others etc
vs Union of India and Others etc
 L  it was held that where for the purpose of calculating assessable value a notional sum is laid down by the legislature to be arrived at one a certain basis it is not permissible for the courts to engraft into it any other deduction or allowance or addition or read it down on the score that unless the said deduction or allowance or addition is authorised elsewhere in the Act or in the Rules
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
It was emphasised that the taxation under the Act is the rule and the benefit and exemption the exception
And it was held that there was no hardship in these cases
It was further reiterated that when the textile fabrics are subjected to the processes like bleaching dyeing and printing etc
by independent processes whether on their own account or on job charges basis the value for the purposes of assessment under section 4 of the Central Excise Act will not be the processing charge alone but the intrinsic value of the processed fabrics which is the price at which such fabrics are sold for the first time in the wholesale market
That is the effect of section 4 of the Act
The value would naturally include the value of grey fabrics supplied to the independent processors for the processing
However excise duty if any paid on the grey fabrics will be given proforma credit to the independent processors to be utilised for the payment on the processed fabrics in accordance with the relevant rules
In Ms Ujagar Prints vs Union of India 1986 Suppl
SCC 652 Bhagwati CJ held that the processes of bleaching dyeing printing mercerising etc
carried on by a processor on job work basis in respect of grey cotton fabrics and manmade fabrics belonging to the customer and entrusted by him for processing amount to manufacture with the meaning of the Act prior to its amendment so as to attract levy of excise duty on the processed fabrics and in any event after the Amendment Act these processes amount to manufacture and excise duty is leviable on the processed fabrics
The learned Chief Justice also dealt with the other PG NO 812 question namely what is the value of the processed fabrics liable to be assessed
Referring to the aforesaid decision of the Empire Industries supra he illustrated the problem by reference to the example set out in the judgment Page 654 of the report at para 2
In that example illustrated by him the value of the grey cloth in the hands of the processor was Rs20
The value of the job work was Rs5
B Trader s selling price inclusive of his selling profits etc
was put at Rs30
Bhagwati CJ at page 655 of the report observed that the assessable value of the processed fabric must obviously be taken to he the wholesale cash price of the processed fabric at the factory gate that is when the processed fabric leaves the factory of the processor and it cannot possibly include the selling profit of the trader who subsequently sells the processed fabrics
The learned Chief Justice reiterated that it is at the point when the processed fabric leaves the factory of the processor that its assessable value has to be determined and that assessable value cannot include the selling profit of the trader
Empire Industries supra did not say that the post manufacturing profits or post manufacturing costs could be included in the assessable value of the processed fabric
If the trader who entrusted cotton or man made fabrics to the processor for processing on job work basis would give a declaration to the processor as to what would be the price at which he would be selling the processed goods in the market that would be taken by the Excise authorities as the assessable value of the processed fabrics and excise duty would be charged to the processor on that basis
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 not be charged on that basis
This has been explained in Atic Industries Ltd vs HH Dave
Asstt
Collector of Central Excise and Ors  1975 3 SCR 
This has also been explained in Union of India  Ors
vs Bombay Tyre International Ltd etc
1984 l SCR 347 at 375
It has to he reiterated that the valuation must be on the basis of wholesale cash price at the time when the manufactured goods enter into the open market
See in this connection the ratio of this Court in Union of India and Ors
vs Cibatul Ltd  1985 Suppl 3 SCR 95 and the Joint Secy
to the Govt of India  Ors
vs Food Specialities Ltd 11985 Suppl 3 SCR 165
It was emphasised in Union of India  Ors
vs Cibatul supra that the value of the trade marks was not be taken into account PG NO 813 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 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 the wholesale market would be independent of the value of the trade marks
So that cannot be taken into the computation of the assessable value
Similarly in the case of Joint Secretary to the Govt
of India and others vs Food Specialities Ltd supra it was held that the value of Nestle s trade marks could not be to the wholesale price charged by the dealer to Nestle s for the purpose of computing the value of the goods manufactured
The goods in both these cases were manufactured independently of the addition of the trade marks
The price thereof at the factory gate was not after taking into account the value of the trade marks
If that was the position the value of the trade marks cannot be added to the wholesale cash price charged by the dealer
Affixation of trade marks for enhancement of the value thereof is extraneous to and independent of the process of manufacture
The charges for the same are not part of the assessable value and cannot enter into computation of the whole sail cash price on the basis of which excise duties ale to be levied
In the aforesaid view of the law and tor the reasons mentioned by my learned brother l agree with his answer to this contention
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 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 manufactured goods leave the factory and enter the main stream
One more aspect will have to be reiterated
Computation of the assessable value is one question and as to who would be liable for the same is another
Duties of excise are imposed on production or the 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 therefore
necessary to reiterate that the value for the assessment under section of the Act will not be the processing charge alone but the intrinsic value of the processed fabrics 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
If the valuation is made according to the rules as adumbrated in Empire Industries supra and as clarified by my learned brother in this judgment no difficulty should arise
PG NO 814 RANGANATHAN J I agree but I should like to add a few words on two of the points argued before us
First I should like to clarify the nature of the decision in Hindustan Milkfood Manufacturers Ltd vs Union the HMM case to which I was a party since learned counsel for the petitioners sought to rely on my judgment in that case as supporting his contention that the Union cannot seek to uphold the amendment presently in question by reference to Entry 97 of List I in the Seventh Schedule to the Constitution
In that case the Delhi High Court was concerned with the interpretation of the amendment to section 4 of the by Act 22 of 1975
The pre amendment section postulated the determination of excise duty on the basis of the wholesale cash price of the excisable goods at the factory gate and an explanation provided that in determining this price no abatement or deduction shall be allowed in respect of trade discount and the amount of duty payable at the time of the removal of the goods from the factory
The post amendment section made certain changes in the concept of sale at the factory gate by excluding therefrom sales effected in favour of a category of persons defined as related persons with which we are not concerned here
The amendment also defined the assessable value so as to include packing charges but to exclude the amount of excise duty sales tax and other taxes as well as trade discount
The question was whether this amendment precluded the deduction from the wholesale factory gate price of post manufacturing expenses and profits
The question had been answered by several High Courts in the negative principally on the ground that the duty sought to be levied under the Act was an excise duty the very nature of which required a proximate connection with production or manufacture and that what had passed beyond this region and entered the domain of sale could not pass as excise duty
Counsel for the Union of lndia
with a view to overcome these decisions had contended that since Entry 97 of List I in the Seventh Schedule to the Constitution enabled Parliament to enact a legislation even beyond the purview of an excise duty covered by Entry 84 of that list the Court should not read into the amended section the limitations that had been considered inherent in the section before its amendment
It was in repelling this contention that certain observations were made by me in paras 30 to 32 of the judgment to which Sri Soli Sorabjee drew our attention
It will however be clear from the discussion in the paragraphs referred to that the contention was repelled not on the ground that the legislature could not make a wider levy by reference to Entry 97 but only on the ground that the history context and language of the amendment did not warrant the wider interpretation
This will be clear from the following two sentences in para 31 where I said PG NO 815 Mr Chandrasekharan s contention  that the language of the new section should be given an enlarged scope and interpretation by relating it to Entry 97 of List I of Seventh Schedule cannot in our opinion be accepted
We do not think in considering this amendment that it is necessary for us to discuss whether if Parliament were to enact a law imposing on goods manufactured or produced a duty based not only on the manufacturing costprofits but also including in the dutiable value the whole or some part post manufacturing costprofits such a law would be intra vires or not because it appears to us that no such law has been enacted in this case
We shall assume with Mr Chandrasekharan that in view of Entry 97 in the Union List under the Constitution it is open to and competent for the legislature to expand or even modify the nature of the levy
The question however will be whether it has done so
 It was concluded after referring to the previous position as well as the statement of objects and reasons for the amendment that there was nothing to show that the legislature had intended to make ally change and that the rule against a presumption of implicit alteration of the law should be invoked in the context
In other words the HMM decision was based not on the scope of legislative Entry 97 in List 1 but on the language and scope of 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 radical change in the nature of the levy
The position considered in the HMM case may be illustrated by an analogy
Entry 82 in List I of the Seventh Schedule to the Constitution permits the enactment by the Union Legislature of a law relating to taxation of income
The entry does not restrict such laws only to the income of a previous year  though this was the pattern of the prevelent Income Tax Acts activated by annual Finance Acts
Between 1948 and 1955 however the Finance Acts purported to impost a tax on excess dividends which in brief was a tax on dividends declared out of profits of past years
The effect of these enactments was considered by the Bombay High Court as well as this Court
In CIT vs Elphinstone Spinning  Weaving Mills Co Ltd  this Court held that the language of the relevant provision in the Finance Acts was so framed that it could not be read as an independent charging section
It will be appreciated that the Finance Acts were also enactments of the Union Legislature and a taxation of profits even of past years by an independent and specific enactment could certainly have been brought within the scope of Entry 97 if not Entry 82 itself
Nevertheless the enactments were held ineffective not because they could not but because they did not contain the words necessary to effectuate the result
The position in the HMM case was somewhat similar
The legislature retained the levy on the basis of the wholesale cash price at the factory gate as before and only introduced a definition of the expression value  in terms a little more elaborate but basically not very different from what had been contained in the earlier section
The Court saw no reason to read into the language of the amended provision a meaning much wider that had been attributed to the provision before its amendment
The amendment gave no indication that contrary to what had been decided earlier it was the intention of the legislature to bring into the assessable value even an element of post manufacturing costprofit
PG NO 816 But here the position is entirely different
The amendment has specifically enlarged the meaning and concept of the word manufacture
If such extended concept is within the range of duties of excise as envisaged under Entry 84 and I agree that with my learned brothers that is  there is no difficulty
But if as contended for by Sri Sri Soli Sorabjee that legislative entry permits a duty levied with on the process of manufacture stricto sensu and the processing in this case cannot be brought within that definition then this expended definition cannot be fitted into that entry
Nevertheless the specific statutory definition cannot be ignored and it it cannot be held valid by reference to Entry 84 its validity has to be considered with reference to the residuary Entry 97
The definition of manufacture in a limited sense
It explictly enlarges the scope of the levy of excise duty and if it is not permissible to bring it within the scope of Entry 84 a resort to Entry 97 cannot be ruled out
In my view therefore there is nothing in the decision in the HMM case that supports the contention of the petitioners have that the amendment of the definition of manufacture cannot be PG NO 817 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
The second point on which I feel inclined to add a few words is in regard to the contention on behalf of the petitioners that the definition of the term manufacture enacted in the Central Excises  Salt Act 1944 as enlarged by Amendment Act 680 cannot be read into the provisions of the Additional Duties of Excise Act No 58 1957
The argument is in three phases and runs thus i section 3 of the 1957 Act which is the charging section fastens the charge of duty at the state of manufacture out this e expression is deliberately left undefined though the statute takes special care in section 2 to adopt for its purposes the definition of the specified goods as contained in the 1944 Act
This excludes the definition of manufacture  enacted in section 2f of the 1944 and enlarged from time to time 
ii section 33 cannot help the Revenue in this regard as its only purpose and effect is to avoid a repetition
in this Act of the procedural provisions of the 1944 Act
The charge or imposition of the tax having been said under section 3 1 the purpose of S 33 is only to say that this charge shall be qualified demanded of the 1944 Act
This sub section cannot be read as having the effect of incorporating the substantive definition of manufacture in the 1944 Act particularly when section 2 chose to incorporate only the definition of the specified goods as contained in the 1944 Act
iii Even if the language of section 3 3  is construed more liberaly it will be effective with only to incorporate the definitions contained in the 1944 Act as on the date of commencement of the 1957 Act but not its subsequent legislative expansions
In my opinion
there is no warrant or justification for giving such a narrow interpretation to the wide language of section 33 of the 1957 Act
Learned counsel for the petitioner in advancing this argument apparently has in mind the famous dictum of Lord Dunedin in Whitney vs Inland Revenue Commissioners 1927 AC 7 echoed in several decisions of this Court and of the various High Courts in India PG NO 818 Now there are three stages in the imposition of a tax there is the declaration of liability that is the part of the statute which determines what persons in respect of what property are liable
Next there is the assessment
Liability does not depend on assessment
That ex hypothesi has already been fixed
But assessment particularizes the exact sum which a person liable has to pay
Lastly come the methods of recovery if the person taxed does not voluntarily pay The argument founded on the above figurative analysis seeks to equate the expressions levy and collection used in section 33 with the stages of assessment and collection concerned with the procedure for quantification and recovery of a duty that has already been imposed
The first stage of charge according to counsel has already been dealt with in the first sub section of section 3 which has fastened a charge on the production of manufacture of specified goods
The third sub section it is said only relates to the quantification or recovery of the charge imposed under section 31 
I do not see any force in this argument
In the first place even section 31 which according to the counsel is the charging section uses the same words levied and collected
These are the same as the words used in Article 265 of the Constitution which have been interpreted as comprehending the entire process of taxation commencing from the imposition of the tax by enacting a statute to the actual taking away of money from the pocket of a citizen
They take in every stage in the entire process of taxation
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 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 1 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 3 1 and cannot be construed as becoming operative at a somewhat later stage
Its operation cannot be excluded in determining the scope of the charge
PG NO 819 In this context reference has to be made to a decision of this Court which had to consider a provision almost identical with section 33 of the 1957 Act appearing in the Finance Act 1965 in a somewhat indirect manner as the decision contains some observations which at first sight appear to support the line of argument of the petitioner herein
Such a provision has been annually repeated in all Finance Acts vide the Finance Act from 1963 to 1983 and imposes what has been described as special regular or auxiliary duties of excise and customs
The decision I am referring to is that of this Court in Associated Cement Co Ltd vs Director of Inspection 19
This decision was really concerned with section 280 ZD of the Income Tax Act 1961 which in turn called for a reference to section 80 of the Finance Act 1965 which is in the following terms I When goods of the description mentioned in this section chargeable with a duty of excise under the Central Excises Act  are assessed to duty there shall be levied and collected a as respects certain goods    a special duty of excise equal to 10 per cent of the total amount so chargeable on such goods b as respects certain other goods    a special duty of excise equal to 20 per cent 
 and c as respects certain other goods    a special duty of excise equal to 33 13 per cent 
2 xxx xxx 3 The duties of excise referred to in sub section  l chargeable on such goods under the Central Excise Act or any other law for the time being in force  4 The provisions of the Central Excises Act and the rules 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 duty of excise leviable under this section in respect of any goods as they apply in relation to the levy and collection of the duties of excise on such goods under that Act or rules
 PG NO 820 Section 280 ZD of the Income Tax Act 1961 enabled an assessee in certain circumstances to obtain a tax credit certificate in respect of a percentage of the amount of duty of excise payable by him Duty of excise was defined by the section to mean the duty of excise leviable under the Central Excises  Salt Act
The question was whether the tax credit could also be given in respect of the amount of the special duty of excise levied and collected under the Finance Act
This Court held that obviously the special duty levied under section 80 could not be regarded as having been levied under the Central Excise Act
It said It is true that the expression leviable  is an expression of wide import and includes stages of quantification and recovery of the duty but in the context in which that expression has been used in clause b of sub section 6 of section 280 ZD it is clear that it has been used in the sense of chargeability to duty
In other words the duty of excise in respect whereof tax credit is available would be in respect of such duty of excise as is chargeable under the Excise Act and clearly the Special excise duty in respect whereof additional tax credit is sought by the appellant company is not chargeable under the Excise Act but chargeable under the Excise Act
 Having said this the Court added  Sub clauses 3 and 4 of section 8 of the Finance Act on which reliance has been placed by counsel for the appellant company in terms refers to the procedural aspect such as the qualification and collection of the special duty and simply because the qualification and collection of the special duty under the Finance Act is to he done in accordance with the provisions of the Excise Act such duty does not become leviable that is to say chargeable under the Excise Act
 The above observations no doubt lend some support to the contention of the petitioner as the wording of section 804 of the 1965 Finance Act is identical with that of section 33 and has been interpreted as attracting only the procedural aspect of the Central Excise Act
But in my opinion while that may have been true of section 804 of the Finance Act 1965 it will not be correct to draw the same conclusion about the 1957 Act
For section 801 of the Finance Act 1965 fully exhausted the aspect of charge of the special duty
It PG NO 821 specified the goods to be taxed and also laid down that the special duty was to be a percentage of the normal excise duty chargeable on those goods
Nothing else remained except the quantification and the collection
But here the position is different
There are three ingredients of the charging provision viz section 31
The additional duties are charged a on manufacture storage of production b of certain named goods c at the rates specified in the first schedule
Of these only aspect b finds mention in the t957 Act but in relation to the definitions contained in the 1944 Act
Aspect c clearly is not complete without a reference to the main Act
For turning to the First Schedule of the Act originally it specified rates on the basis of length weight or number on all items except cigarettes where the duty was to be ad valorem
The Amendment Act No 6 of 1980 substituted the rate per metre specified under the original schedule in respect of the items with which we are concerned to ad valorem rates
Now the assessable value is to be determined on the basis of which the special duty will have to be worked out cannot be found out from the 1957 Act which contains no definition or indication in this regard
The statute cannot be worked atleast in respect of goods where an ad valorem rate is prescribed unless section 3l is read with section 33  and the definition of assessable value in section 14 of the 1944 Act is read with the Finance Act
In like manner I think
the content of aspect a cannot be understood differently from or independently of the definition in the main enanctment
Having regard to the nature and content of the levy indicated in s 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 11957 Act in contrast to the Finance Act of 1965 As covering the entire ambit of the charge imposed
In short the language of section 3 has to he given a wider meaning than under the Finance Act 1985
I have referred to the fact that 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 in my view is a very important reason why the observations in the Associated Cement Co s case supra cannot be of application in the context of the 1957 Act
A question has been raised as to why if it were the intention of the Legislature to take in all the provisions PG NO 822 including definitions from the 1944 Act it was considered necessary to make a specific reference to the definitions of the various goods on which additional duty was being imposed as contained in the schedule to the 1944 Act
Counsel says that this enactment of specific definitions drawn from the 1944 Act should lead to an inference that no other definitions from that Act were intended to be incorporated in the 1957 Act
A careful examination will however
show that this is not the effect
Actually section 2 is not much of a definition  section
a is not strictly necessary and cl
b is only intended to clarify that the proceeds of the duties are not be distributed to Union Territories
So far as clause c is concerned it is necessary to make a reference to section 7 of the Act which reads thus 7
It is hereby declared that the following goods namely subject tobacco cotton fabrics rayon or artificial fabrics and woolen fabrics are of special importance in inter state trade of commerce and every sales tax law of a State shall in so far as it imposes or authorises the imposition of a tax on the sale or purchase of the declared goods he subject as from the 1st day of April 1958 to the restrictions and conditions specified in section 15 of the 
 The effect of this provision as held in Ms Mahendra Pratap Rama Chandra vs Commercial Tax Officer  Others is that the contents of section 15 became a part of section 7 from the moment when section  was enacted   section 15 of the Central Sales Act applies to declared goods as defined in section 2c and enumerated in section 14 of that Act as being of special importance in inter state trade and commerce
section 14 of the 
enumerates various items of goods among which arc the six items specified in section 31 of the 1957 Act and this list further specifies that they shall have the same meaning as is attached to the respective items in the First Schedule to the Central Excises  Salt Act 1944 vide items ii a vii viii ix
x and xi
Thus it was always clear that the specified goods have to be understood in the way they were defined in the Central Excises  Salt Act 1944
The idea in 1956 was to restrict the powers of the States to levy sales tax in respect of such goods and other goods
In 1958 the idea was conceived of the Centre levying an additional excise duty on these goods and distributing the same to the States subject to the condition specified in Schedule II that such States did not impose any sale or purchase tax on these commodities
Subsequently perhaps
it was realised that section 7 served no specific purpose under the Act except that of the definitions which was an aspect PG NO 823 already covered by section 2c
In these circumstances not much significance need be attached to section 2c much less can it be construed as negativing the import of other definitions from the 1944 Act
The next question that arises for considerion is whether even assuming that the terms of section 33 are applicable its terms are wide enough to take in not merely the provisions of the Central Excises and  Salt Act 1944 and in particular its definition clauses as they stood in 1957 on the date when the 1957 Act came into force but also the amendments effected therein from time to time
The answer to this question depends upon the general principles applicable to what is described as referential legislation  of which this is an instance
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 legislation then one on the same or allied topics render such a course useful and desirable the attempt to legislate by reference is sometimes everdone and previty is achieved at the expense of lucidity
However this legislative device is quite well known and the principles applicable to it fairly well settled
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 thc 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
Examples of this can be seen in Secretary of State vs Hindustan Cooperative Insurance Society AIR 1931 PC 149 Solani Ores Ltd vs State  and Mahindra and Mahindra Ltd vs Union AIR 1979 SC798
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 thc law on a subject generally as in Bhajiyu vs Gopikabai   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 latter Act also
Examples of PG NO 824 this type of legislation are to be seen in Collector of Customs vs Nathella Sampathu Chetty   New Central Jute Mills Co Ltd vs Assistant Collector  and Special Land Acquisition Officer vs City Improvement Trust Whether a particular statute falls into the first or second category is always a question of construction
In the present case in my view the legislation falls into the second category
section 33 of the l957 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
That apart it has been held even when a specific provision is incorporated and the case apparently falls in the first of the above categories that the rule that repeals modifications or amendments of the earlier Act will have to be ignored is not adhered to incertain situations
These have been set out in State of Madhya Pradesh vs Narasimhan
  In that case
the Supreme Court was considering the question whether the amendment of section 21 of the Penal Code by the Criminal Law Amendment Act
195X was also applicable for purposes of the Prevention of Corruption Act 1947 which by section 2 incorporates for the purposes of that Act the definition of public servant  in s 2l of the Penal Code
Answering thc question in the affirmative the Court outlined the following proposition Where a subsequent Act incorporates provisions of a previous Act
then the borrowed provisions become an integral and independent part of the subsequent Act and are totally uneffected by any repeal or amendment in the previous Act This principle
however will not apply in the following cases a where the subsequent Act and the previous Act are supplemental to each other b where the two Acts are in pari materia c where the amendment in the previous Act if not imported into the subsequent Act also would render the subsequent Act wholly unworkable and uneffectual and d where the amendment of the previous Act either PG NO 825 expressly or by necessary intendment applies the said provisions to the subsequent Act
 The present case falls within the scope of these exceptions even if section 33 is construed as incorporating certain specific provisions of the 1944 into itself
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
The duration of the applicability is undefined but the statute is clearly enforceable as long as it is in the statute book side by side with the normal excise duties
The clear intention is that the same provisions shall govern both the levies except that the duty under the later Act is confined to certain goods only and its distributability among the States may perhaps follow a different pattern from the principal duty
There is no reason or logic why all the incidents attaching under the earlier legislation in so r as they are not clearly inconsistent with the later one should not be extended to the later legislation as well
As has been pointed out earlier the Finance Acts which levied special or regular or additional excise duties contained in themselves all the elements of charge of duty
The goods were mentioned and the duty as 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 the 1944 Act
All that was further needed was the applicability of the procedural provisions of the 1944 Act Here however the 1957 Act is 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
In the circumstances I agree that we should give full and literal effect to the language of section 33 and hold that it has the effect not only of attracting the procedural provisions of the 1944 Act but also all its other provisions including those Containing the definition


Summary:
Rule 109 of the Uttar Pradesh Police Regulations dealing with the investigation of crimes enjoins upon the police officer when an investigation is closed for the day to note the time and place at which it closed and also lays down that throughout the investigation the diary must be sent daily to the Superintendent of Police on all days on which any proceedings are taken
The question that had to be decided by the court was as to whether the appellants took part in the dacoity and the case of the prosecution depended mainly on the identification of the appellants
It was found that the investigating officer did not send the case diary daily to the Superintendent of Police but only all together at the end of the period of investigation
It was contended for the appellants that the case diary could not be relied upon as it enabled the officer to make alterations during the course of the period of investigation and that as there had been an infraction of r 109 of 1   735 the Uttar Pradesh Police Regulations which had resulted in prejudice the whole trial was vitiated thereby
Held1 Rule 109 of the Uttar Pradesh Police Regulations has no statutory foundation but is only an injunction by the executive Government to the police officers as to how they must regulate their work and conduct themselves during the course of investigation and a failure to comply with the rule relating to the submission of the police diary cannot vitiate the trial
Hafiz Mohammad Sanii and others vs Emperor AIR 1931 Patna 15O approved
Observations in Tilkeshwar Singh and others vs The State of Bihar 1955 2 SCR 1043 followed
2 It could not be said in the absence of compelling reasons that because the investigating officer did not send the case diary to the superior officers every day the same is unworthy of credit particularly in view of the fact that the courts below have cast no doubt upon its genuineness