ANDHRA CEMENT COMPANY LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) In view of the importance of cement as a basic building commodity, it has been subjected to various regulations with a view to increase production and to attain self-sufficiency. On 3.5. 79 the Government of India. Ministry of Industry passed an order fixing retention prices. It laid down inter-alia that new cement undertakings and undertakings with substantial expansions would receive a retention price @ Rs. 296.00 per tonne. By notification dated 1.3.87 (No. 36-CE) the Government gave excise duty relief of Rs. 50.00 per M.T. to cement manufactured in a factory which commenced production after 1.4.86. There was a condition imposed for getting the benefit of the said relief, viz. that cement of clinker should be produced in the same factory. Subsequently, on 29.4.87 another notification (No. 124/87-CE) was issued by the Ministry of Industry giving excise duty relief of Rs. 20 f- per M.T. to cement manufactured in a factory which commenced production between 1.1.82 and 31.3.86. It also imposed the same condition of the cemein and clinker being produced in the same factory. However, in regard to the notification dated 29.4.87 (which is in fact for a prior period) the condition of the cement and clinker being produced in the same factory was withdrawn by notification dated 16.9.87 (No. 221/87-CE). The removal of the restriction thus, meant that a cement company would be entitled to excise relief if the cement is manufactured out of clinker which is produced in any other factory of the same manufacturer, provided the production of clinker commenced during the said specific period. The grievance of the petitioners is that they are denied the relief of both the notification, i.e. notification dated 1.3.87 and 29.4.87 illegally. The other grievance of the petitioners is that M/s. Shree Digvijay Cement Company Ltd., Jamnagar, Gujarat, and M/s Rassi Cement Limited at Vishnupuram, Andhra Pradesh, who are similarly situated have been given the said relief and the petitioner is, thus, discriminated. It is alleged that the actions of the respondents in denying the said relief are violative of Article 14. 19(l)(g) and300-A of the Constitution of India. They have claimed relief of excise duty under the said two notifications as the principal relief in the writ petition.

(2.) Broadly speaking the stand of the respon.dents is that the relief of excise duty under the said notifications is permissible only if the unit is a new unit. There were some doubts as to whether the relief if available to altogether new units in the green-field or is it available for existing units who have undertaken substantial expansion or modernisation. The concept of new industrial undertaking was known to the Industrial Development and Regulation Act as a part of the concept of substantial expansion under Section 13 of the Act. Therefore, when the said two notifications for excise duty relief were issued it has to be presumed that the respondents were aware of the said definition of substantial expansion under Section 14 of the Act and the meaning of the term 'new industrial undertaking' as envisaged by the said sections. The said Section 13 reads :

(3.) The stand taken by the respondents in their counter afiidavits appears to be as to restrict the excise duty relief only to new industrial undertakings (which is mentioned in the second part of Section 13). This aspect of the notification dated 1.3.87 was strived to be clarified by two subsequent notifications dated 14.2.89 and 17.4.89. In the first clarificatory notification it was stated, "The benefit is limited only to new units that have started production of cement on or after 1.4.86. It does not cover substantial expansion or modernisation. That means that if a totally independent unit has come into production on or after 1.4.86, it can avail the benefit of this notification." By the second clarificatory notification the Central Board of Excise & Customs laid down, "That the benefits of the said notifications could be extended to any factory set up as a substantial expansion or otherwise, as the case may be, provided the same is independent of the existing factory in all respects. If the substantial expansion is merely an expansion or modernisation of the already existing factory then the benefits of the said notifications would not be available in view of the fact that no new factory has come into existence." It may be noted that the notification dated 17.4.89 issued by the Central Board of Excise & Customs applies .not only to the notification dated 1.3.87, but also to the notification dated 29.4.87. Even after these clarifications the question still remains as to what is meant by 'new factory'.