LAWS(BOM)-1996-1-59

BOMBAY MILL OWNERS ASSOCIATION Vs. UNION OF INDIA

Decided On January 23, 1996
BOMBAY MILL OWNERS ASSOCIATION Appellant
V/S
UNION OF INDIA Respondents

JUDGEMENT

(1.) HEARD Mr. Bhatt for the petitioners and Mr. Sethna for the respondents.

(2.) THE petitioners have challenged the validity of the proviso in the amending Notification - at Exh. "c" added to the Notification at Exh. "b", being Notification No. 35/1995. Central Excises, New Delhi, dated 16th March 1995. By the amending Notification at Exh. "c", the following proviso has been added -

(3.) THE petitioners are the Bombay Mill Owners Association. Though some of their members have a unit producing single yarn, most of the members have "integrated Units" which, apart from the production of single yarn, also carry on the processing of yarn such as doubling and/or mercerising. We are, in this case, concerned with the doubling process. While a person carrying on only doubling process is exempt from the levy of excise duty, if an "integrated units" carries on both, the production of single yarn as also the process of doubling, it initially enjoined the exemption under Notification at Exh. "b" dated 16th March 1995. It is pointed out that the said exemption was really meant only for small independent processors, who had spread over a large area and it was administratively inconvenient and was not practicable to bring all such small units and independent processors under the Excise control. Therefore, the interests of administrative convenience required to exempt this postspinning activity of doubling when it was carried out by independent processes. It was not the intention of the Government to exempt the value addition relating to these post-spinning activities undertaken by "integrated units" which carry on both the activities viz. manufacture of single yarn, as also the processing thereof, including doubling. In the case of an "integrated unit", it was administratively convenient and desirable to charge duty at the final stage. This is clear from the letter dated 26th December 1995, which is at Exhibit 4 to the affidavit of Shri Biswajit Datta, Addl. Commissioner of Center Excise, made on 12th January 1996. It is stated therein that the decision to charge duty on the post-spinning activities undertaken by an "integrated unit" was a conscious policy decision and it cannot be compared with independent processors of yarn who are generally small job workers and powerloom weavers. It was this class of independent processors of yarn, who are generally small job workers and powerloom weavers, who were entitled to exemption. In view of this, what has been done by adding the impugned proviso is that the exemption contained in the said notification at Exh. "b" would not apply to clearances of yarn from a factory having facilities (including plant and equipment) for producing single yarn. If, therefore, the "integrated units" like most of the members of the petitioner association, who carry on the post-spinning processes, such as doubling, also have facilities (including plant and equipment) for producing single yarn, they would cease to enjoy the benefit of the exemption notification at Exh. "b" by virtue of the added proviso which is challenged before us.