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Judgment
Dilip B. Bhosale, J.—These writ appeals are directed against the common order dated 7.12.2005 passed by learned Single Judge in a group of writ petitions bearing W.P. Nos. 6682-84/2002 and connected writ petitions, whereby all the petitions were dismissed. The present appeals are filed by the petitioners in W.P. No. 6682/2002. It is not clear whether the petitioners in other writ petitions filed any appeal challenging the order dismissing their petitions vide order dated 7.12.2005.
The appellants in their writ petition under Articles 226 & 227 of the Constitution of India sought declaration that Rule 5 of the Hot Re-rolling Mills Annual Capacity Determination Rules, 1997 (for short the "Rules") is illegal, ultra vires and unenforceable. The appellants, in the writ petition, also prayed for a direction to the respondents not to give effect to Rule 5 of the Rules and to determine the annual production capacity of the appellants-Company under the provisions of the Rule 3(3) without reference to Rule 5 of the Rules and collect excise duty based on such determination for the period between 1.9.1997 and 31.3.2000. They also sought direction to the respondents to refund with interest the excess amount of excise duty paid by them.
The question that falls for our consideration in these appeals is "Whether Rule 5 of the Rules is liable to be declared unconstitutional, violative of Article 14 and/or ultra vires Section 3A of the Central Excise Act, 1944 (for short the "Act").
It would be necessary to state the facts to the extent that are necessary to address the question raised in the appeals. The first appellant, hereinafter called as company, is a Company incorporated under the provisions of Companies Act, 1956. The second appellant, at the relevant time, was Chairman and Managing Director of the company. The relevant assessment years for our purpose are 1996-97 to 1999-2000. The Company was engaged in the business of manufacturing steel products including steel rolled products.
Annual capacity of the Company, contemplated by Section 3A of the Act, was determined by three orders dated 23.12.97, 23.12.97 and 8.3.2000. The excise authorities accordingly initiated proceedings to enforce the orders and recover differential duty from the Company for the period between 1.9.1997 and 31.3.2000. Two different orders dated 23.3.2000 and 30.11.2000 were passed demanding differential duty of Rs. 1,86,15,840/- and Rs. 28,98,779 in respect of Old Madras Road Unit of the Company. On appeal, the order dated 23.3.2000 was set-aside and the matter was remanded by the Commissioner (Appeals) (for short the "Appellate Authority or AA''"). The appeals against the order dated 30.11.2000, however, remained pending. The order dated 15.1.2001 in respect of Whitefield Unit of the Company was also passed demanding a differential duty. That order was also carried in appeal and the appeal was pending when the writ petition was disposed of. In respect of Yeshwantpur Unit of the Company, three orders dated 13.10.1998, 21.9.2000 and 22.9.2000 were passed confirming the demand of excise duty. The appeals preferred against those orders are also pending before the AA.
The appellants, in the meanwhile, had challenged the validity of Rule 5 of the Rules in W.P. No. 8691/1999 before this Court. The said writ petition had been disposed of by a learned Single Judge vide order dated 1.7.1999, stating that the judgment of the Supreme Court in Commissioner of Central Excise, Chandigarh Vs. Doaba Steel Rolling Mills, , would apply. Since the learned Single Judge did not notice that vires/validity of Rule 5 was not considered by the Supreme Court in the said judgment and it was kept open, the Company filed the present writ petition bearing No. 6682/2002 challenging inter alia the validity of Rule 5 of the Rules. The challenge to the Rule, as stated earlier, is two fold, one, Rule 5 is ultra vires Section 3A, and two, Rule 5 is violative of Article 14 of the Constitution of India.
Section 3A, as was in force at the relevant time, to the extent it is necessary reads thus:
Section 3A. Power of Central Government to charge Excise duty on the basis of capacity of production in respect of notified goods.--(1) Notwithstanding anything contained in section 3, where the Central Government, having regard to the nature of the process of manufacture or production of excisable goods of any specified description, the extent of evasion of duty in regard to such goods or such other factors as may be relevant, is of the opinion that it is necessary to safeguard the interest of revenue, specify, by notification in the Official Gazette, such goods as notified goods and there shall be levied and collected duty of excise on such goods in accordance with the provisions of this section.
(2) Where a notification is issued under sub-section (1), the Central Government may, by rules, provide for determination of the annual capacity of production, or such factor or factors relevant to the annual capacity of production of the factory in which such goods are produced, by the Commissioner of Central Excise and such annual capacity of production shall be deemed to be the annual production of such goods by such factory:
Provided that where a factory producing notified goods is in operation only during a part of the year, the production thereof shall be calculated on proportionate basis of the annual capacity of production.
(3) The duty of excise on notified goods shall be levied, at such rate as the Central Government may by notification in the Official Gazette specify, and collected in such manner as may be prescribed:
Provided that, where a factory producing notified goods did not produce the notified goods during any continuous period of not less than seven days, duty calculated on a proportionate basis shall be abated in respect of such period if the manufacturer of such goods fulfils such conditions as may be prescribed.
(4) Where an assessee claims that the actual production of notified goods in his factory is lower than the production determined under sub-section (2), the Commissioner of Central Excise shall, after giving an opportunity to the assessee to produce evidence in support of his claim, determine the actual production and redetermine the amount of duty payable by the assessee with reference to such actual production at the rate specified in sub-section (3).
(5) Where the Commissioner of Central Excise determines the actual production under sub-section (4), the amount of duty already paid, if any, shall be adjusted against the duty so redetermined and if the duty already paid falls short of, or is in excess of, the duty so redetermined, the assessee shall pay the deficiency or be entitled to a refund, as the case may be.
(6) The provisions of this section shall not apply to goods produced or manufactured,-
(i) in a free trade zone and brought to any other place in India; or
(ii) by a hundred percent export-oriented undertaking and allowed to be sold in India.
Explanation 1.--For the removal of doubts, it is hereby clarified that for the purposes of section 3 of the Customs Tariff Act, 1975 (51 of 1975), the duty of excise leviable on the notified goods shall be deemed to be the duty of excise leviable on such goods under the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), read with any notification for the time being in force.
Explanation 2.--For the purposes of this section the expressions "free trade zone" and "hundred percent export-oriented undertaking" shall have the meanings assigned to them in section 3.
Section 3A of the Act was introduced as an alternative method of taxation for certain notified goods keeping in view the likelihood of evasion by manufacturers of such goods. Section 3A enables the Central Government to charge excise duty on the basis of capacity of production in respect of notified goods. This Section was introduced/inserted in the Act by Section 81 of the Finance Act, 1997 (Act 26 of 1997) with effect from 14-5-1997 and was deleted in the Act by Section 121 of the Finance Act, 2001 (Act 14 of 2001) with effect from 11-5-2001. The intention to introduce this provision is clear from the language of the said provision. In certain sectors like induction furnaces, steel re-rolling mills, etc., evasion of excise duty in regard to such goods was rampant, and therefore, to safeguard the interests of revenue it was decided to levy and collect duty of excise on notified goods on the basis of annual capacity of production. Under the scheme evolved in this provision, the annual capacity of production of mills and their furnaces was to be determined by the Commissioner of Central Excise in terms of the Rules. Thereafter, the assessee was liable to pay duty based on such determination. The Commissioner was obliged to redetermine the annual capacity, in the event the assessee for any reason claimed lower production than the production determined as per the provisions contained in this Section read with the Rules.
It is well settled that in holding whether a relevant section/rule to be ultra vires it becomes necessary to take into consideration the purpose of enactment as a whole, starting from preamble to the last provision thereto, in the light of the object behind introducing any particular provision. If the relevant rule/provision is read as a whole, it would indicate the purpose and whether that purpose is carried out by the Rules. If the Rule is consistent with the provisions in the Act and if it is found to be introduced to achieve the object of the Act, the same cannot be stated to be ultra vires of the provisions of the enactment. We would examine the vires of Rule 5 in the light of these principles.
Insofar as constitutional validity of Rule 5 of the Rules is concerned, it would be necessary to keep in view that the prohibition contained in Article 14 of the Constitution is directed against the State as widely defined by Article 12, for the purpose of Part III of the Constitution, which deals with fundamental rights. In other words, the prohibition at Article 14 is addressed not only to the legislature but also to the executive, and not only to the Government but also to local and other authorities. The State shall not deny to any person equality before the law or equal protection of the laws provided that nothing therein contained shall prevent the State from making a law based on or involving a classification founded on and unintelligible differentia having a rational relation to the object sought to be achieved by the law.
Keeping these broad principles in view, we would like to have a close look at the provisions contained in Section 3A and so also the Rules to examine whether Rule 5 of the Rules is either ultra vires Section 3A or violative of Article 14 of the Constitution.
Section 3A not only empowers the Central Government to levy and collect duty of excise on notified goods in accordance with the provisions of this Section but it also empowers the State Government to frame rules providing for determination of annual capacity of production. Sub-section (1) thereof empowers the Central Government to specify by notification in the official gazette, such goods, as notified goods, and there shall be levied and collected duty of excise on such goods in accordance with the provisions of this Section.
12.1 Sub-section (2) of Section 3A states that where a notification is issued under Sub-section (1), the Central Government may, by Rules, provide for determination of the annual capacity of production, or such factor or factors relevant to the annual capacity of production of the factory in which such goods are produced, by the Commissioner of Central Excise and such annual capacity of production shall be deemed to be annual production of such goods by such factory, provided that where a factory producing notified goods is in operation only during a part of the year, the production thereof, shall be calculated on proportionate basis of the annual capacity of production.
12.2. The Central Government in exercise of the powers conferred by sub-section (2) of Section 3A of the Act made the Rules, called, "Hot Re-rolling Mills Annual Capacity Determination Rules, 1997" and brought into force on 1st August 1997. The Rules applied to non-alloy steel hot re-rolled products falling under sub-heading Nos. 7211.11, 7211.19, 7211.30, 7211.52, 7211.59, 7211.60, 7211.92, 7211.99, 7213.90, 7214.90, 7215.90, 7216.10 and 7216.90 of the Schedule to the Central Excise Tariff Act, 1985 for determining the annual capacity of production of a factory if such goods are manufactured or produced with the aid of hot re-rolling mill.
12.3. Proviso to sub-section (2) takes care of a situation where factory producing notified goods is in operation only during a part of the year in which case, the production thereof shall be calculated on proportionate basis of the annual capacity of production. In short, if for any reason a factory is not in operation, the care has been taken to give benefit to the assessee of the period during which factory was not working. It also means that if the production of the notified goods is less in view of closure of factory during a part of the year the excise duty shall be calculated on proportionate basis which could be less than the annual capacity of production.
12.4. Sub-section (3) of Section 3A provides that the duty of excise shall be levied at such rate as the Central Government may by notification in the official gazette specify, and collect in the manner as may be prescribed provided that, where a factory producing notified goods did not produce the notified goods during any continuous period of not less than 7 days, duty calculated on a proportionate basis shall be computed in respect of such period if the manufacturer of such goods fulfils such conditions as may be prescribed.
12.5. From perusal of the proviso to Sub-section (3), it is clear that this sub-section also takes care of the situation where production of notified goods during any continuous period of not less than 7 days, for whatever reasons, and in that case, duty calculated on a proportionate basis shall be computed in respect of such period if the manufacturer of such goods fulfils such condition as may be prescribed.
12.6. Sub-section (4) of Section 3A gives further protection to the assessee irrespective of the fact whether or not factory producing notified goods was in operation for the whole year, can claim that the actual production of notified goods in his factory is lower than the annual production determined under Sub-section (2) of Section 3A and if such claim is made, a duty is cast on the Commissioner of Central Excise to determine the actual production and re-determine the amount of duty payable by the assessee with reference to such actual production at the rate specified in Sub-rule (3), after giving an opportunity to the assessee to produce evidence in support of his claim. Sub-section (5) states, where the Commissioner of Central Excise determines the actual production as in sub-section (4), the amount of duty already paid, if any, shall be adjusted against the duty so determined and if the duty already paid falls short of, or is in excess, the duty so determined, the assessee shall pay the differential or is entitled to refund as the case may be.
Thus the scheme contained in Section 3A is clear which takes care of all situations as reflected in the proviso to Sub-section (2) and (3) and so also in sub-section (4) of Section 3A of the Act.
That takes us to look into the provisions contained in Rule-5 of the Rules which is under attack in these appeals. Rule-5 of the Rules reads thus:
In case, the annual capacity determined by the formula in sub-rule (3) of rule 3 in respect of a mill is less than the actual production of the mill during the financial year 1996-97, then the annual capacity so determined shall be deemed to be equal to the actual production of the mill during the financial year 1996-97.
14.1. The Rules contain hardly five rules. Rule-5, as a matter of fact, was inserted by M.F.(DR) Notification No. 45/97-C.E.(NT), dated 30-8-1997, i.e. exactly after 30 days from the date on which the rules were brought into force. Rule-5, provides that in case the annual capacity determined by the formula in Sub-rule (3) of Rule-3 in respect of a mill is less than the actual production of the mill during the financial year 1996-97, then the annual capacity so determined shall be deemed to be equal to the annual production of the mill during the financial year 1996-97.
14.2. Rule-2 of the Rules provides that the rules shall apply to non-alloy steel, hot re-rolled products for determining the annual capacity of production of a factory if such goods are manufactured or produced with the aid of hot rolling mill. Rule-3 provides that the annual capacity of production referred to in Rule 2 shall be determined in the manner prescribed in sub-rules (1) to (4). Sub-rule (3) prescribes the formula for determination of the annual capacity of production of hot re-rolled products of non-alloy steel in respect of hot re-rolling mills.
14.3. Sub-rule (4) of Rule 3 provides that the Commissioner of Central Excise after determining the total capacity of the hot re-rolling mill installed in the factory as also the annual capacity of production, by an order, intimate to the manufacturer. The proviso to sub-rule (4) provides for determining the annual capacity on provisional basis pending verification of the declaration furnished by the hot re-rolling mills and pass an order accordingly. Thereafter, the Commissioner may determine the annual capacity, as soon as may be, and pass an order accordingly.
14.4. Sub-rule (1) of Rule 4 provides that if the annual capacity of production for any part of the year, or any change in the total hot re-rolling mill capacity, shall be calculated pro-rata on the basis of the annual capacity of production determined in the manner provided for in Rule-3. Sub-rule (2) of Rule 4 provides for an mechanism where a manufacturer propose to make any change in installation of machinery or any part thereof which tends to change the value of either of the parameters provided for in Sub-rule (3) of Rule-3, such manufacturer shall intimate about the proposed change to the Commissioner of Central Excise in writing with a copy to the Assistant Commissioner of Central Excise, atleast one month in advance of such proposed change and shall obtain the written approval of the Commissioner before making such change. Thereafter, the Commissioner shall determine duty from the date from which the change in the installed capacity shall be deemed to be effective. Thus Sub-rule (2) of Rule 4 also takes care of the situation where there shall be change in the machinery having its effect on the production, empowering the Commissioner to determine the date from which date the change in the installed capacity shall be deemed to be effective.
The combined reading of Section 3A and the Rules would show that the legislature while drafting Section 3A and the Rules was conscious of all odd situations so as to avoid any injustice being done to the manufacturers.
At this stage, we would like to consider the example discussed in the Court, in the course of arguments, by the learned counsel for the appellants in support of his contention that Rule 5 is violative of Article 14 of the Constitution.
16.1. A and B are two classes of manufacturers of bars/rods. The quantum of production of bars/rolls by class "A'' manufacture for the year 1996-97 was 150, for the year 1997-98 the annual production determined as contemplated by the Rules was 120 and if the actual production in 1997-98 was 115, still, as provided for, under Rule 5 the annual capacity of A shall be taken as 150. On the other hand, if the annual production of bars/rods by Class ''B'' manufacturer in 1996-97 was 110 and the annual production determined as per the formula for the year 1997-98 was 120 and the actual production in 1997-98 was 130, still the annual capacity of ''B'' shall be taken as 120. Thus, though class ''A'' manufacturer''s production in 1997-98 was less than the production determined as per formula, he was required to pay the tax as contemplated by Rule 5 on the basis of annual production in 1996-97, i.e., 150 bars/rods. As against class ''B'' manufacturer, even if their production in 1997-98 was more than the annual production determined as per formula would be liable to pay tax on the annual production as per the formula i.e. 120 and not on the actual production i.e. 130.
16.2. On the basis of this example it was submitted that class ''A'' manufacturer has to pay more duty than class ''B'' manufacturer and the discrimination which is apparent is unconstitutional since it does not have any rational in relation to the object to be achieved. Mr. Sridharan, learned Senior counsel submitted that there was no basis to assume that class ''A'' manufacturer was involved in evasion based on the fact that production in the year 1996-97 was more than the production in 1997-98 than the actual production in 1997-98 based on the formula. Similarly, he submitted that there was no basis to assume that class ''B'' manufacturer was not involved in evasion based on the fact that production in the year 1996-97 was less than the production as per the formula in the year 1997-98.
Thus, challenge to Rule 5 is based on the scheme contained in Section 3A of the Act and Rules 1 to 4 of the Rules. This rule according to the appellant, not only runs counter to Section 3A but is also violative of Article 14 of the Constitution.
The intendment of the legislature to introduce Section 3A was to check evasion of duty in regard to notified goods. The Government introduced Section 3A since it formed the opinion that evasion of excise duty on certain goods (notified goods) was rampant and to safeguard the interest of revenue a new method was introduced, as reflected in Section 3A read with the Rules, to charge excise duty. Under this Section, the Central Government can charge excise duty on the basis of annual capacity of production in respect of the notified goods. This provision changed the method of levy from the quantity of goods actually manufactured to a method based on the annual capacity of production of a factory determined by the Commissioner of Excise in the manner prescribed by the Rules. The classification for the purpose of Section 3A was that all manufacturers of notified goods such as steel re-rollers, would pay duty based on annual capacity of production. For determination of annual production, the Central Government provided a formula, by the Rules, for its determination and the factors relevant to the annual capacity of production of the factory in which such goods are produced. Once the annual capacity of production is determined on the basis of the statutory formula, the manufacturer is required to pay duty on the quantity as determined. It is in this backdrop, it was vehemently contended, Rule 5 is an exception to the general scheme of Section 3A. This Rule treat the equals as unequal. In other words, it was contended that Rule 5 is not only violative of Article 14 of the Constitution but also runs counter to Section 3A of the Act.
It is well settled that taxation laws are also subject to fundamental rights guaranteed under the Constitution. It is also settled that tax law cannot be challenged merely on the ground that the rate of tax is very high unless the tax is a colorable devise to confiscate the property. The principle that a tax which is discriminatory is void as violating Article 14 is also indisputable. Though the principle is not in dispute, its application is open to judicial review.
It is not in dispute that taxation laws must also pass the test of Article 14. But in deciding whether a taxation law is discriminatory or not, it is necessary to bear in mind that the State has a wide discretion in selecting the persons or objects it will tax and that a statute is not open to attack on the ground that it taxes some persons or objects and not others. It is only when within the range of its selection, the law operates unequally, and that cannot be justified on the basis of any valid classification, that it would be violative of Article 14. (See East India Tobacco Co. Vs. State of Andhra Pradesh, ).
In tax law, the Supreme Court has been practical and has permitted a very wide latitude in classification for taxation. The State can validly pick and choose one commodity for taxation and that is kept open to attack under Article 14. The State is also allowed to pick and choose district, objects, persons, methods and even rates for taxation if it does so reasonably. If it does so reasonably and as long as the differentia has reasonable relation to the object of the legislation, it cannot be stated to be violative of Article 14. In this connection, it should be remembered that under the law it is for the person who assail a legislation as a discriminatory to establish that it is not based on a valid classification and it is well settled that this burden is all the heavier when the legislation under attack is a taxing status. In taxation even more than in any other fields the legislature possesses greatest freedom in classification. The burden is on the one attacking the legislative arrangement to negative every conceivable basis which might support it. (See East India Tobacco Company (supra).
Article 14 does not forbid reasonable classification of persons, objects and transactions by the legislature for the purpose of attaining specific ends. What is necessary in order to pass the test of permissible classification under Article 14 is that the classification must not be "arbitrary, artificial or evasive" but must be based on some "real and substantial distinction" sought to be achieved by the legislature. (See R.K. Garg and others v. Union of India and others, AIR 1991 SC 2138).
The question that falls for our consideration in the present case is whether the classification made by the Rule in the present case satisfy the aforesaid tests and that it is violative of equal protection clause in Article 14. In this connection the following observations made by the Supreme Court in R.K. Garg (supra) are relevant:
Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc. It has been said by no less a person that Holmes, J. that the legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrine or straight jacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature. The court should feel more inclined to give judicial deference to legislature judgment in the field of economic regulation than in other areas where fundamental human rights are involved.
The Supreme Court in Federation of Hotel and Restaurant Association of India, etc., Vs. Union of India (UOI) and Others, , while considering the challenge to the constitutional validity of Expenditure Tax Act 1983 observed "it is not well settled that taxing laws are not outside Article 14, however, having regard to wide variety of diverse economic criteria that go into the formulation of fiscal policy, legislature enjoys a wide latitude in the matter of selection of persons, subject matter, events, etc. for taxation. The test of the vice of discrimination in a taxing law, are accordingly, less rigorous. In examining the allegations of a hostile, discriminatory treatment what is looked into is not its phraseology but the real effect of these provisions. A legislature does not, as a old saying goes, have to tax everything in order to be able to tax something. If there is equality and uniformity within each group, the law would not be discriminatory." The Supreme Court in the report then proceeded to make the following observations in paragraphs-20 and 21 which read thus:
...The classification must be rational and based on some qualities and characteristics which are to be found in all the persons grouped together and absent in the others left out of the class. But this alone is not sufficient. Differentia must have a rational nexus with the object sought to be achieved by the law. The State, in the exercise of its Governmental power, has, of necessity, to make laws operating differently in relation to different groups or class of persons to attain certain ends and must, therefore, possess the power to distinguish and classify person or things. It is also recognized that no precise or set formulas or doctrinaire tests or precise scientific principles of exclusion or inclusion are to be applied. The test could only be one of palpable arbitrariness applied in the context of the felt needs of the times and societal exigencies informed by experience.
Classifications based on differences in the value of articles or the economic superiority of the persons of incidence are well recognized. A reasonable classification is on which includes all who are similarly situated and none who are not. In order to ascertain whether persons are similarly placed, one must look beyond the classification and to the purposes of the law.
(emphasis supplied)
In view of the law laid down by the Supreme Court and having regard to the object of Section 3A, we are of the opinion, that Rule 5 cannot be stated to be violative of Article 14 or ultra vires Section 3A. In other words, the differentia or classification, as alleged, have a rational nexus with the object to be achieved by the law. To test this view, we would like to once again refer to the example given by the learned senior counsel for the appellants to emphasis that Rule 5 is discriminatory. Class A manufacturer to whom, according to the appellants, a gross injustice is likely to be done, in our opinion, is also without any substance. Even if it is assumed that provisions contained in Rule 5 make distinction between Class A manufacturer and Class B manufacturer, such distinction cannot be stated to be unconstitutional since we are of the firm view that it has a rational relation to the object sought to be achieved by the Act. If the scheme contained in Section 3A, as we have observed earlier, provides solution to every situation which seems odd such as the one brought to our notice on the basis of the example. Class A manufacturer irrespective of the figures of production for the year 1996-97, 1997-98 and for subsequent years can approach the Commissioner under Sub-section (4) of Section 3A and produce evidence in support of his claim in respect of the actual production if it was lower than the production determined under sub-section (2) of Section 3A. In other words, apart from the mechanism provided in the proviso to Sub-section (2) and proviso to sub-section (3) under Sub-section (4), the assessee who claims that the actual production of his notified goods was lower than the production determined in Sub-section (2), the Commissioner is empowered to determine the actual production, after giving an opportunity to the assessee to produce evidence in support of his claim and re-determine the amount of duty payable to the assessee with reference to such actual production at the rates specified in Sub-section (3). Further, Sub-section (5) provides refund of duty paid in excess if the Commissioner finds on the basis of the evidence produced by the assessee in support of his claim taking that actual production was lower than the production determined under Sub-section (2) of the Act.
If we look at Rule 5 from another angle, we are further satisfied about the view taken by us. Rule provides that if the production during the year 1996-97 was more than the production determined by the formula in Sub-rule (3) of Rule 3 of the Rules, then that has to be taken as the annual capacity for the financial year 1997-98 and the subsequent years. This rule, it seems, was introduced keeping in view the fact that without there being any change in the plant and machinery, including man power, there should not be any reason why factory should have more production in 1996-97 than 1997-98. In other words, without there being any change in the plant and machinery and the other infrastructure including man power, if class ''A'' manufacturer in 1996-97 could produce 150 bars/rods there was no reason for him to produce less number of bars/rods in 1997-98 unless there is a reason and the evidence in support thereof and if there is any such reason or evidence the manufacturer can take recourse to sub-section (4) of Section 3A of the Act. It was also to check mischief, if any, on the part of manufacturer to show or go for lower/less production to gain an advantage of the scheme. We find that the classification have a rational nexus with the object sought to be achieved by the law. The State, in the exercise of its governmental power, has, of necessity, to make laws operating differently in relation to different groups or class of persons to attain certain ends. In the result, we are of the opinion, that Rule 5 is neither violative of Article 14 of the Constitution nor ultra vires the provisions contained in Section 3A of the Act. The appeals are accordingly dismissed.