1996 (1) TMI 132 - HC - Central Excise

Summary

Issues: Validity of proviso in amending Notification affecting exemption from Excise duty for integrated units.

The judgment concerns a challenge to the validity of a proviso added to an amending Notification that affects the exemption enjoyed by "Integrated Units" in the payment of Excise duty for certain products. The petitioners, members of the Bombay Mill Owners Association, operate integrated units involved in both the production of single yarn and post-spinning processes like doubling. The proviso in question withdraws the exemption for integrated units that have facilities for producing single yarn. The court examined the rationale behind the proviso, emphasizing that the initial exemption was intended for small independent processors, not large integrated units. The court reviewed affidavits from the Additional Commissioner of Central Excise, concluding that the withdrawal of exemption for integrated units was not arbitrary. The court found that the administrative policy was valid and not subject to challenge in writ jurisdiction. The judgment clarified that only processors engaged in processing activities alone would be entitled to the exemption, while integrated units with facilities for producing single yarn would not qualify for the exemption under the amended Notification. Consequently, the court rejected the Writ Petition, upholding the validity of the proviso and the withdrawal of exemption for integrated units.