Law:

Section:

Section 280ZD of the income-tax act, 1961 read with sections 31 and 39 of the finance acts, 1968 and 1969, respectively-Tax credit certificates-In relation to increased production of certain goods-Assessee manufactured different types of paper-There was excess clearance in two varieties but deficit in a third-Whether tax Credit should be determined item-wise and not with reference to aggregate quantity of all varieties of paper-Held, yes-Whether tax credit would cover special excise duty leviable under the finance acts, 1968 and 1969-Held, no Facts The petitioner-appellant manufactured certain types of paper falling under items 17(2), (3) and (4) of the First Schedule to the Central Excises and Salt Act, 1944 ('the Excise Act'). In the relevant financial years, there was excess clearance of paper categorised under items 17(2) and (4) and deficit clearance of paper under item 17(3). The petitioner applied for grant of tax credit certificates of amounts computed with reference to the excise duty and the special excise duty leviable under the Finance Acts, 1968 and 1969, on the excess clearance. The Deputy Director of Inspections granted tax credit certificates at a much lower value, worked out by setting off the deficit under item 17(3) against the excess clearance under items 17(2) and (4) and by excluding the special excise duty in computing the credit. The petitioner's appeal to the Director of Inspection was dismissed. A writ petition to the High Court was also dismissed by the Single Judge. On writ appeal: Held 1. A combined reading of the definition of 'excisable goods' under section 2(d) of the Excise Act, 'goods' as defined in paragraph 2(h ) of the Tax Credit Scheme and 'paper' as categorised under item 17 of the First Schedule of the Excise Act, particularly setting out the different rates of excise against each variety of paper as described under items 17(2), (3) and (4), leads to the conclusion that the quantum of goods cleared by the manufacturers is in respect of each variety of paper. To hold otherwise would make the scheme unworkable besides doing violence to the language. The mere fact that in column (2) of the First Schedule to the Scheme 'paper…

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