1989 (5) TMI 77 - HC - Central Excise

Summary

Issues:
Interpretation of the term "production" in a notification for excise duty exemption.
Determining the commencement of commercial production by a cement manufacturing company.

Analysis:
The judgment pertains to a petition filed by a cement manufacturing company seeking excise duty exemption based on the commencement of production. The central issue revolves around the interpretation of the term "production" in a notification issued by the Central Government. The notification exempted cement manufactured in a factory that commenced production within a specified period. The petitioner argued that "production" should be construed as commercial production, not including trial runs. The court analyzed the purpose of the notification, emphasizing relief to newly established factories, and concluded that "production" indeed refers to commercial production to achieve the notification's intended effect.

Another crucial aspect of the case was determining the commencement of commercial production by the petitioner. The excise authorities had concluded that the company started production before the specified date, rendering them ineligible for the exemption. The court delved into the factual timeline of production activities, including the quantity of cement produced and sold. Despite the petitioner's claim that the initial production was part of trial runs, the court found no substantial evidence to support this assertion. Notably, the comparison of production figures between different periods reinforced the conclusion that commercial production had indeed commenced before the critical date.

Furthermore, the court referenced a decision by the Bombay High Court regarding the definition of "production" in a tax context, emphasizing that commercial production distinguishes trial runs. While acknowledging the relevance of this precedent, the court found it inapplicable to the present case due to the clear evidence indicating the commencement of commercial production by the petitioner before the specified date. Ultimately, no other significant contentions were raised, leading to the dismissal of the writ petition without costs.

In summary, the judgment clarifies the interpretation of "production" in the context of excise duty exemption notifications and meticulously examines the factual evidence to determine the commencement of commercial production by the petitioner, ultimately dismissing the petition based on the established timeline of production activities.