J K INDUSTRIES LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner by this writ petition has challenged the Notification No. 150/85 -CE dated 15th July, 1935 (Annexure -P).' It has further been prayed that the respondents may be directed not to modify or alter the excise duty relief as postulated under Notification No. 107/81 -CE and No. 88/84 -CE.

(2.) THE petitioner No. 1 is an existing company and it has its registered office at 7, Council House Street, Calcutta. The petitioner established two factories at Kankroli in the district of Udaipur for manufacturing tyres. By this writ petition the principal grievance is the withdrawal of the excise relief scheme which was issued for a specified period by the Central Government in order to encourage 'the new investment in tyre industry and to partially off -set the high cost of such new investment. Mr. Desai, learned counsel for the petitioner made two principal submissions that once the excise relief is given by the Central Government and on that basis the petitioner Company acted and made an investment then the Government cannot be allowed to revoke this excise exemption because they are estopped from doing so because of promissory estoppal. Secondly it has been submitted that once a Notification has been issued then same cannot be retrospectively withdrawn so as to divest the vested right created under the Notification.

(3.) IN the end of year 1974 there was an acute shortage of tyres in India. This was on account of the fact that the production of tyres was controlled and confined to only seven old established tyre companies. Out of these old established tyre companies, four of the bigger and major tyre companies belong to Multi National Groups, namely, Dunlop, Fireston, Ceat and Goodyear India Limited. The remaining three companies namely, Madras Rubber Factory (MRF), Prirnier tyres limited and Incheck Tyres Limited had collaboration with well established companies namely, Mansfield Tyre and Rubber Company, Uni Royal and Foreign Export Corporation of Czechoslovakia. On account of the limited production of tyre the price of tyres had considerably increased. In order to establish new investment for setting up tyre company huge investment of over 40 crores was required with a capacity of about 5 lakh tyres per annum. This investment was many a times more than the investment initially made by the existing and established companies. In 1976, an excise relief scheme was introduced in order to give incentive to new units and also in order to encourage investment in tyre industries. This incentive scheme was given statutory effect by an exemption notification being No. 198/76 dated 16th June, 1976. As a result of the incentive of the Government, four new companies came into tyre industries, namely, Modi Rubber Limited, Apollo Tyres Limited, Vikrant Tyres Limited and the petitioner Company. The 1976 scheme was modified in 1978 and the said scheme came to an end in February, 1980. With the, end of the scheme, the new tyre companies, who had set up factories at a substantially high investments of over Rs. 30 crores per plant, approached the Central Government for providing relief in order to off -set the high cost of investment incurred by these companies.