Judgment :- These Writ Petitions coming on for hearing on 18-2-1964, 19-2-1964, and 25-2-1964 upon perusing the petitions and the affidavits filed in support of each petition the orders of the High Court, dated 4-1-1962 and made in each petition and the common Counter affidavit filed in both petitions and the records pertaining to the order bearing reference No. C. No. VI/a/21/1/1961-25439 and 25440 dated 12-12-1961 on the file of the Assistant Collector of Central Excise, Madurai Division, Madurai the Respondent herein and comprised in the return of the Respondent herein to the Writ made by the High Court, and upon hearing the arguments of Mr. S.K.L. Ratan, Advocate for the Petitioner in each of the petition and of the Additional Government Pleader on behalf of the Respondent in both the petitions and having stood over for consideration till this day, the Court made the following order :- These are two petitions for the issue of writs of Certiorari to quash the orders of the Assistant Collector of Central Excise demanding payment of excise duty in respect of the powerlooms owned by the petitioners and upon which they produce cotton fabrics. 2.The two petitioners are brothers who were previously carrying on a partnership business under the name and style of 'K.R. Ramier and Sons.' They had installed 20 powerlooms. On account of differences between them, the partnership was terminated on the 27th July, 1960. Thereafter, they made an application to the Textile Commissioner seeking his permission to divide the looms to enable each of them to operate 10 looms separately. Permission was granted on the 27th March, 1961. Each of the petitioners obtained a L-4 licence with effect from 1-5-1961. 3.During the period when the two brothers were operating the 20 looms as a partnership, they were paying duty of Rs. 1080/- and an additional duty of Rs. 648. When each of the brothers started operating on his own, the Department assessed the excise duty payable by each at Rs. 900 together with an additional excise duty of Rs. 600. The authorities purported to make this demand on the basis of a notification issued by the Government in G.S.R. No. 373, dated 18th March, 1961, as amended by Notification No. 81/1961, Central Excise, dated 1st April, 1961. 900 together with an additional excise duty of Rs. 600. The authorities purported to make this demand on the basis of a notification issued by the Government in G.S.R. No. 373, dated 18th March, 1961, as amended by Notification No. 81/1961, Central Excise, dated 1st April, 1961. By this notification, in the case of excise duty levied in accordance with the special procedure in respect of production of cotton fabrics in power loom factories, a graded rate of excise duty is provided. The proviso to this notification states : "Where a person commences manufacture of the said fabrics for the first time after the 1st April, 1961, by acquiring power looms from any other person who is or has been a licensee of a power loom factory, the rate per shift per month per power loom shall be the next higher rate if any." * While the graded rate of duty specifies a lower rate where not more than 24 power looms are employed, by reason of the proviso, inasmuch as the petitioners commenced production from the 1st May, 1961 and had, according to the Department, acquired looms from another person, who had been a licensee, a higher rate of duty became payable. The petitioners protested against the levy, but the demand made by the Superintendent of Central Excise was confirmed by the Assistant Collector of Central Excise. 4.The petitioners attack the levy so made on the ground that persons, who started the business after the 1st April, 1961, are being unlawfully discriminated against by having to pay a higher rate of excise duty. Excise duty is leviable under the Central Excises and Salt Act, 1944. Excise duty by its very nature is a duty levied on the manufacture of certain specified goods. There is no warrant for making the excise duty dependent upon the date of the commencement of the manufacture and providing for a higher levy for those who commence a business after a particular date. It is also contended that by imposing a higher rate on a person who happens to buy power looms from the previous licensee, a restraint upon the fundamental right of a person to hold and dispose of property is created. It is also contended that by imposing a higher rate on a person who happens to buy power looms from the previous licensee, a restraint upon the fundamental right of a person to hold and dispose of property is created. It is again the contention of the petitioners that the special procedures evolved by Rules 96(I) and (J) of the Central Excise Rules are only intended to avoid unnecessary clerical work both for the manufacturer and the Department in the matter of collection of excise duty. There is no warrant for levying a higher duty in the circumstances indicated by the proviso to the notification extracted above. 5.On facts also, it is contended that though the petitioners were operating as partners, they cannot be regarded as persons who commenced manufacture of cotton fabrics for the first time on or after 1st April, 1961, nor can it be said that they acquired the 20 looms from any other person, for the 20 looms in question had always been owned by them jointly. It is claimed that the Department's inference that the proviso applies to the instant case is erroneous in law. 6.The counter-affidavit filed on behalf of the Assistant Collector, Central Excise, does not deny the facts that led to the creation of two separate mills having 10 looms each. The Department however contends that the power-looms were previously owned by the partnership concern and that the petitioners acquired 10 looms each from that partnership concern. It is further contended that there can be no denial of the fact that these petitioners commenced their manufacture in their individual capacity only after 1-4-1961. It is accordingly claimed by the Department that the conditions, laid down in the notification are fulfilled and that the higher rate of duty is payable by the petitioners by reason of the proviso. It is stated that the purpose of the notification is to prohibit further fragmentation of existing mills and that the imposition of a higher rate of duty which seeks to restrain such fragmentation of existing mills is connected with the object of the Act and cannot be attacked an illegal or invalid. 7.The Central Excise Rules provide for a special procedure with regard to the levy and collection of excise duty in the case of manufacture of cotton fabrics, rayon or artificial silk fabrics and silk fabrics produced on power looms. 7.The Central Excise Rules provide for a special procedure with regard to the levy and collection of excise duty in the case of manufacture of cotton fabrics, rayon or artificial silk fabrics and silk fabrics produced on power looms. Rule 96(I) provides for an application to be made by the manufacturer in this regard and if that application is granted by the Collector, the special mode of computation of the excise duty can be applied for such period not less than six consecutive calendar months as may be fixed in the discretion of the Collector. The normal mode of levy is on the basis of actual production at certain specified rates per square metre. This would obviously involve the maintenance of accounts and periodical checks by the departmental officials. The special procedure obviates these difficulties. The department has apparently made a survey of the average production in India per day per shift per power loom and on the basis of the estimated average production of any mill, computed on the number of looms owned, number of shifts worked and other features, certain rates per shift per power loom have been fixed irrespective of the quantity that might be actually produced. There have been such notifications issued from 1958 onwards. In all of these notifications, the impugned proviso in some form or other was inserted by a notification dated 26-11-1960. Originally this proviso stated : "Where any person commences manufacture of the said fabrics for the first time on or after the 1st December, 1960, by acquiring power looms from any other person who is or who has been a licensee of a power loom factory, the rate per shift per month shall be the next higher rate, if any..." * When in 1961, a revised notification was issued altering the rates applicable a similar proviso was inserted with suitable modifications insofar as the date of commencement of the manufacture is concerned. 8.It certainly does appear somewhat strange that a person who starts his manufacture after the 1st April, 1961, should suffer a higher rate of excise duty as against a person who started the manufacture prior to that date. Equally, there is no reason why a manufacturer, who acquires, power looms from another person, who is or had been a licensee, should suffer a similar disadvantage. Equally, there is no reason why a manufacturer, who acquires, power looms from another person, who is or had been a licensee, should suffer a similar disadvantage. While a person who purchases new power looms for the first time and starts manufacture after 1-4-1961 is liable to pay excise duty under the special procedure only on the basis of the number of looms which he operates, a person who acquires power looms from another who had been a licensee has to pay at a higher rate. 9.The same result follows even when he buys the looms from other manufacturer who has closed down his business. What reasonable connection it has with the object of the excise law, I for one am unable to see. The solitary sentence that is found in the counter-affidavit of the Department is that the purpose of the notification is the prohibitation of "further fragmentation". In what manner fragmentation is opposed to any of the principles underlying the Act has not been explained. If I may speculate, fragmentation is probably considered uneconomic. That may perhaps be grounded against his insisting on a minimum number of looms under a single licence. But whether a mill is run on economic or uneconomic lines appears hardly to be a matter which the taxing enactment is entitled to take note of. I must however mention that though in the grounds accompanying the petition, an attack has been made upon the discriminatory nature of the operation of the proviso to the notification, learned counsel for the petitioners did not argue the matter, nor were there any arguments advanced on behalf of the Department seeking to establish that the discrimination, which certainly exists, is on the basis of a reasonable classification. Beyond expressing my doubts as to the validity of the proviso, I do not propose to express any decided conclusion. 10.The next question is whether the case of these petitioners really comes within the scope of the proviso and whether the Department is correct in its interpretation of the proviso. Mr. S.K.L. Ratan, learned Counsel for the petitioners, argues that though the two brothers ran the business in partnership, a dissolution had been effected and the property belonged to them jointly. Mr. S.K.L. Ratan, learned Counsel for the petitioners, argues that though the two brothers ran the business in partnership, a dissolution had been effected and the property belonged to them jointly. The previous licence that they had taken for the manufacture of the cotton fabrics had been issued not in the name of the partnership firm but jointly in the names of the two brothers. It is accordingly the contention that when the partnership was dissolved, there was no transfer of the assets from one entity to another but only a division of the assets jointly owned by the two brothers, and if that is so, it is contended, the proviso cannot in terms apply. 11.The learned Additional Government Pleader argues on the other hand that there was undoubtedly a partnership. The partnership firm was a distinct legal entity. An agreement was entered into between the two partners discontinuing the partnership and embodying the terms of the dissolution. According to this agreement, out of the 20 power looms owned by the partnership, 10 looms were to be taken over by one brother and 10 by the other brother. The parties were also entitled under the agreement to take such other raw materials as may be required in mutual consultation with each other. The agreement further provided that the petitioner in W.P. 11 of 1962 could continue to manufacture the cotton cloth under the old name and style of 'Kaveti Weaving Mills' and the other partner should carry on his business under another name. It was stipulated that the agreement was to come into operation only on and from the date of grant of separate permission by the Textile Commissioner and that until then the business was to continue in partnership. It is the contention of the learned Government Pleader that in the light of these features, there was an acquisition of 10 looms each from the partnership which previously owned the assets. I am not very much impressed by this argument. Clearly, according to the terms of the agreement, the business of manufacture was carried on by the two brothers in partnership till 1-5-1961 when they obtained, the requisite permission from the Textile Commissioner. The previous licensee was not the firm. I am not very much impressed by this argument. Clearly, according to the terms of the agreement, the business of manufacture was carried on by the two brothers in partnership till 1-5-1961 when they obtained, the requisite permission from the Textile Commissioner. The previous licensee was not the firm. A copy of the form of L-4 licence that had been granted previously has been filed and it shows that it was granted to the two individuals, no doubt, as partners of Kaveti Weaving Mills. It was not expressed on its face to be a licence in favour of the firm. Whether that would be the proper inference to draw from this licence or not, the more important question is whether, even assuming that it was the firm that owned the power looms in question, there has been an acquisition by each of the petitioners in the manner which brings them within the scope of the proviso. The proviso requires that they should have acquired the power looms from another "person" who is or has been a licensee of a power loom factory. The Central Excise Act and the rules do not define the expression 'person'. Can the expression 'any other person' in the context include a firm?12.Reference may be made to Lakshminarayan v. C.I.T., Nagpur (1956 I.S.C.J. 164). In that case, S. 26A of the Income-tax Act had to be considered in relation to a partnership which was composed of firms. The question was whether 'firms' can be regarded as persons who can enter into partnerships. Their Lordships pointed out that the word 'persons' occurring in S. 4 of the Partnership Act contemplates only natural or artificial persons, that is, legal persons. They observe that though mercantile usage had given a status to a firm and even the Income-tax Law treated a firm as an assessable entity and some systems of law gave a formal recognition to the separate personality of a firm apart from its members, that was not the true legal position. The general concept of a partnership established in both English Common Law and the Indian Law was held to be that a firm is not an entity or a person in law, but merely an association of individuals; a firm name is only the collective name of those individuals who constitute the firm. The general concept of a partnership established in both English Common Law and the Indian Law was held to be that a firm is not an entity or a person in law, but merely an association of individuals; a firm name is only the collective name of those individuals who constitute the firm. They refused, therefore, to import the definition of the word 'person' occurring in the General Clauses Act, 1987, into S. 4 of the Indian Partnership Act. To do so would in the opinion of their Lordships be repugnant to the subject of the Partnership Law as it has been understood in this country. The conclusion was that a "firm" is not a person. 13In . Haji Abdul Shakoor and Co. v. State of Madras it was decided that a transfer of property in goods by a member of a firm to the firm is a sale within the meaning of the General Sales Tax Act. This decision cannot however be treated as an authority for saying that a firm is a person. It only indicates that for certain purposes a firm could enter into contractual obligations.14If the firm is not a person and if the demand . made by the Department is founded on the contention that there was a transfer of 10 looms from the partnership to each of the petitioners, then the proviso cannot in terms apply. There should be an acquisition of the power looms from any other person who is or has been a licensee. The firm not being a person in the sense indicated, the above condition is not satisfied. On the other hand, as has been urged by the learned counsel or the petitioners, it was not the firm that was the licensee but the individual partners themselves. The two brothers were no doubt described as partners of Kaveti Weaving Mills. But the previous licence was not in the name of Kaveti Weaving Mills. That licence reads thus : "Messers, K.R. Sankarachari and K.R. Sundarachari, Partners of Kaveti Weaving Mills, Madurai, having undertaken to comply with the conditions prescribed in the Central Excise Rules.....are hereby authorised to manufacture power loom cotton fabrics during the year.." * 15This to my mind is undoubtedly a licence only in . favour of the two individuals. That licence reads thus : "Messers, K.R. Sankarachari and K.R. Sundarachari, Partners of Kaveti Weaving Mills, Madurai, having undertaken to comply with the conditions prescribed in the Central Excise Rules.....are hereby authorised to manufacture power loom cotton fabrics during the year.." * 15This to my mind is undoubtedly a licence only in . favour of the two individuals. If, therefore, there was a division of the looms as between the two persons who operated all the looms under a single licence, it cannot be regarded, notwithstanding the intrusion of a partnership, as an acquisition by these persons from another entity. It should follow therefore that the application of the provisio to the instant case is not justified by the facts. The orders disclose an error of law and are liable to be and are hereby quashed. There will however be no order as to costs.