MODI RUBBER LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner company is carrying on the business of manufacturing tyres and tubes for motor vehicles. The case of the petitioner is that till the end of the year 1974, there was an acute shortage of tyres in India. New investment for setting up a tyre plant was difficult to get as huge investment of about Rs. 30 crores was required for an installed capacity of about 5 lakhs tyres per annum. By the time the petitioner's plant was completed and ready for production in October, 1974, the total investment of the company went up to even over Rs. 30 crores. It is averred that during the time the petitioner was setting up its project, it explained the difficulties of new units to the Government of India for considering fiscal measures to be adopted for the tyre industry to enable new units to achieve a reasonable return on their investments and to be able to compete with the existing old established tyre companies.

(2.) It is claimed that the Government of India, after fully investigating the relevant facts pertaining to the tyre industry found that the cost of investment in putting up a new tyre industry had gone up by four times to that of the old established units and keeping that in view, recommended fiscal relief by way of rebate in Excise Duty.

(3.) Thus keeping in view the objective of giving incentive to various industries to increase their production as compared to the past production, a composite scheme was evolved by the Government of India. This scheme was given effect to, it is urged, by promulgating Notification No. 198/76 dated the 16th June, 1976 (Annexure A' to the writ petition). This notification was issued in exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 . This scheme was to remain in operation till March 31, 1979 and it applied to 43 items given in the Table annexed to the Notification. Tyres and tubes falling within the purview of Item No. 16 of the First Schedule to the Central Excises and Salt Act, 1944 have been shown in the said Table at Sl. Nos. 18 and 19.