1999 (9) TMI 107 - HC - Central Excise

Issues Involved:
1. Eligibility for exemption under Notification No. 36-C.E., dated 1st March 1987.
2. Eligibility for exemption under Notification dated 29th April 1987.
3. Interpretation of "new unit" and "substantial expansion" in the context of the exemptions.
4. Alleged discrimination between the respondent and other cement manufacturers.

Detailed Analysis:

1. Eligibility for exemption under Notification No. 36-C.E., dated 1st March 1987:
The court examined whether the respondent's factories qualified for the exemption provided under Notification No. 36-C.E., dated 1st March 1987. The notification granted exemption to cement manufactured in a factory that commenced production on or after 1st April 1986. The court emphasized that the factory must not have produced cement prior to this date. Additionally, the clinker used must be produced within the same factory or another factory of the same manufacturer, provided the production of clinker commenced during the specified period. The court concluded that the respondent's factories did not meet these criteria as the clinker was produced in a kiln that had been operational since 1983.

2. Eligibility for exemption under Notification dated 29th April 1987:
This notification provided similar exemptions for the period from 1st January 1982 to 31st March 1986. The court noted that the respondent's factory at Nadikude was entitled to the exemption under this notification as it commenced production between 1983 and 1985. However, the factories at Vijayawada and Visakhapatnam did not qualify for the exemption as they did not commence production of cement or clinker during the specified period.

3. Interpretation of "new unit" and "substantial expansion":
The court analyzed the respondent's claim that substantial expansion or modernization of their factories amounted to virtually new factories, thus qualifying for exemptions. The court referred to explanatory circulars dated 14th February 1989 and 17th April 1989, which clarified that exemptions were limited to new units or substantial expansions independent of existing factories. The court found that the respondent's factories did not meet this criterion as the clinker was produced using the same kiln, and therefore, the factories could not be considered independent or new.

4. Alleged discrimination between the respondent and other cement manufacturers:
The respondent claimed discrimination, arguing that other manufacturers, namely Digvijaya Cement Company Limited and Raasi Cement Limited, received exemptions under similar circumstances. The court distinguished the respondent's case from these manufacturers, noting that both Digvijaya and Raasi had entirely new and independent clinker production lines and kilns. The court held that the respondent's factories were not comparable, and thus, there was no discrimination.

Conclusion:
The court concluded that the respondent's factories did not qualify for exemptions under either notification. The court set aside the judgment of the learned Single Judge, which had granted relief to the respondent, and dismissed the respondent's petition. The court directed the respondent to repay the amounts wrongly adjusted under the exemptions. The appeal was allowed, and the respondent's petition was dismissed without any order as to costs.

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