UNION OF INDIA Vs. J K INDUSTRIES LTD

JUDGEMENT

(1.) This special appeal under S.18 of the Rajasthan High Court Ordinance, 1949 is directed against the Judgment of the learned single Judge of this Court dated 7/08/1989 (in M/s. J.K. industries Ltd. v. Union of India, S.B. Civil Writ Petition No. 2012 of 1985, published in 1986 RLR , whereby the learned single Judge has held that the Government is bound by the principles of promissory estoppel and, therefore, he has quashed the notification No. 159/85.CE (Annexure-P) dated 15/07/1986 issued by the Government of India.

(2.) The facts necessary to be noticed for the disposal of this appeal briefly stated are : that the Country felt great shortage of tyres between the years 1974-76. On account of this acute shortage, the tyres were sold in the market at a premium of 140% to 150%. The tyre-production was controlled and confined to only seven old established tyres Companies. Four companies belonged to multinational group viz., Dunlop, Firestone, CEAT, and Goodyear India Ltd. the remaining three Companies viz., Madras Rubber Factory (MRF), Premier Tyres Ltd. and In heck Tyres Ltd. had colloboration with well established Companies viz., Mansfield Tyres and Rubber Company, Uni Royal and Foreign Export Corporation of Czechoslovakia. In order to attract new investment for setting up new tyre industries as also to encourage investment in the existing tyre industries, the Govt. of India introduced an integrated excise relief scheme to give incentive to the new industries as also the existing tyre industries. This scheme was given statutory effect vide notification No. 198/76 dated 16/06/1976. As a result of this incentive scheme, four new Companies came into existence Modi Rubber Limited, Appolo Tyres Ltd., Vikrant Tyre Ltd. and M/s. J.K. Tyres Ltd. This scheme was later modified in the year 1978 and that came to an end in the year 1980.

(3.) However, on the representation made by the newly established Companies, which were set up at a substantially high investment of over Rs. 30 crores per plant, the Central Govt. was approached for providing relief in order to off-set the high cost of investment incurred by them. Keeping in view the representation made by these industries, the Minister of State for Industries made a statement in the Parliament on 24/04/1981 declaring that the Govt. has decided to frame a scheme for excise duty relief to tyres and tubes manufacturing Industries for achieving higher level of production. This new scheme came to be notified vide Notification No. 102/81-CE dated 24/04/1981 which provided that the Excise relief will be available not only to the new Industries which are established under S.11 of the Industries (Development and Regulation) Act, 1951 (hereinafter referred to as 'the Act') but to those industries also which undertake substantial expansion under S.13 of the Act. This excise relief was made available to these industrial units if they make their first clearance between 1-4-1960 to 31-3-1984. The exemption was to the tune of 25% of the excise duty already payable on tyres and it was made available for five years and was subject to a maximum of 30% of the investment made on plant and machinery by the said Unit.