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TMI Blog2005 (7) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... fect from 10-9-2004, as the petitioner was of the view that though Condition No. 14A(l), which was required to be complied with for claiming that exemption sought to deny such benefit to the petitioner, the condition was not a just or reasonable condition; that the petitioner is entitled for the benefit with the condition either excluded or amended in an appropriate manner, under which it claimed the benefit etc., which in terms of the communication received by the petitioners from the excise authorities, having indicated that the petitioner- factory is not eligible, the petitioners are before this court for the purpose of claiming such benefit by way of challenging that part of the notification, which imposes the condition viz., condition No 14A, corresponding to entry 86A of the various entries listing the exempted items and the extent of exemption etc. 3. In fact, the notification granting exemption as at Sl. No. 86A in terms of the Central Excise Notification No. 48/2004, dated 10-9-2004 was in addition to an existing notification granting exemption to such manufacturing units, in the sense the rate of duty was at 8% as against the normal 16% subject to fulfilling what is know ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereto for making bamboo or wood pulp. (2) The exemption shall not be applicable to a manufacturer of the said goods who avails of the exemption under notification of the Government of India in the erstwhile Ministry of Finance and Company Affairs (Department of Revenue) Nos. 8/2003 - Central Excise, dated the 1st March, 2003 or 9/2003 - Central Excise, dated 1st March, 2003. 4. It is precisely that the condition No 14-A, which seeks to extend the benefit of concessional rate of duty only to such of those paper and paperboard manufacturers who do not have a wood based or bamboo based pulp unit attached to their manufacturing unit that has come in the way of the petitioner claiming or not being eligible for the exemption in terms of the subsequent notification and it is such a condition, with which the petitioner is really aggrieved. It is questioning the legality of the imposition of such condition, the present writ petition is filed, raising several grounds. The prayer sought for is for quashing of the Condition No. 14-A to the notification figuring at Sl. No 86-A as imposed in notification No. 6/2002, dated 1-3-2002, by notification No. 48/2004, dated 10-9- 2004. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to bring about two classes of persons - one to have the benefit of the notification is extended and the other the benefit is denied; that this classification is the result of imposing condition No. 86A, corresponding to the exemption extended in terms of the notification inserted at Sl. No. 86A to the General Exemption No. 52 in respect of the specified goods of Chapter 48. Learned Senior Counsel submits that the benefit of the exemption viz., concessional rates of excise duty at 12% ad volorem to paper and paperboards or articles made therefrom manufactured, starting from the stage of pulp in a factory and such a pulp made from materials other than bamboo, hard woods, soft woods, reeds [other than sarkanda] or rags, is confined to such of those factories who do not have a unit manufacturing the pulp based on wood or bamboo is not attached to the factory and if a factory manufacturing paper and paperboards, though satisfied the main requirement of consuming not less than 75% of the raw materials source from conventional pulp manufactured from out of non-conventional materials, still the moment factory has a pulp unit wherein such a pulp is manufactured using bamboo or wood is att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure that the benefit of the notification is available to the petitioner-company also in terms of the very notification itself. Learned Counsel also placed reliance on the decision of the Supreme Court in the case of Dai-Ichi Karkaria Ltd. v. Union of India, 2000 (119) E.L.T. 516 (S.C.) wherein the Supreme Court had occasion to examine the validity of a subsequent notification where under exemption granted under an earlier notification was sought to be reduced or curtailed and on examination, found that the subsequent notification; though purporting to be in modification of the earlier notification, being not one issued in the public interest, as the respondents were not able to support the argument that the subsequent notification was is sued in public interest; that while the subsequent notification deserves to be quashed, it brings back to operation the earlier notification under which full exemption had been granted in respect of items exempted therein. 12. Sri Habibulla Badsha, learned Senior Counsel, also placed reliance on the decision of the Supreme Court in Extrusion Process Pvt. Ltd. v. Asst. Collector of Central Excise, Bombay, 1987 (31) E.L.T. 916 (Bom.), wherein the Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not recite or the statement of objections filed on behalf of the respondent also does not reveal the public interest motivated by which the notification is issued is not a circumstance for quashing the very notification itself. Submission is that the Government enjoys a wide discretion in the matter of policy and it is for the Government to extend or deny the benefit to any particular item depending upon the exigencies, and in support of this submission, the learned Standing Counsel draws sustenance from the decision of the Supreme Court in the case of Subhash Photographics v. Union of India, 1993 (66) E.L.T. 3 (S.C.). 15. Learned Standing Counsel further submits that the distinction sought to be made between a factory having the pulp unit manufacturing pulp based on conventional raw materials such as wood, bamboo etc., attached to it, and a factory without such unit attached to it, is a valid classification; that it has nexus to the object of granting exemption to encourage more use of non- conventional raw materials for manufacture of paper and paperboards; that the notification is not only reasonable but also makes an intelligible differentia, having nexus to the object of iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gether without any rationale or a common thread running through them. While the classification is permitted, the golden Rule is that the classification should be reasonable based on an intelligible differentia and having a nexus to the main object of the legislation If these tests are answered, the action of the Legislature or the subordinate legislation by the Executive still is sustainable notwithstanding a classification 19. The impugned notification, no doubt, makes a classification between paper and paperboard-manufacturing factories with pulp units based on wood or bamboo pulp unit attached to them or without them. While the units without them get further concession of 12% on duty over and above the initial exemption granted under the Entry 86 of the exemption notification of the year 2002, right up to the initial production of 3500 MT at the rate of 8%, for concession thereafter, the condition No. 14A in respect of the notification of the year 2004 has to be complied with. 20. Though Sri Habibulla Badsha, learned Senior Counsel appearing for the petitioners, has sought to draw a parallel between the notification of the year 2002 and the notification of the year 2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification of the year 2004 the petitioners have a quarrel. The condition No. 14A seeks to make a distinction, as noticed above, between factories having conventional based pulp units attached to them and those factories not attached with such units to them. While further concession is extended to factories not having such conventional pulp producing units attached to them, it is denied to factories, which have attached .to them conventional pulp- manufacturing unit. The question is not so much as to whether the petitioner- factory procures the balance 25% pulp from outside, whether it is again based on the conventional raw materials or otherwise. In fact, even as averred in the writ petition, the petitioners have three other paper and paperboard manufacturing units in the very factory, for which, conventional raw material is exclusively used and in respect of which the petitioners do not claim the benefit of either notification. It is claimed that it is only in respect of 4th and 5th units of the factory manufacturing paper and paperboards the petitioners seek to avail the benefit of the notification. While the petitioner-factory availed the concession under the 2002 notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is definitely laudable and is in furtherance of the main object and that is how the second notification being is also issued in public interest. 25. The present case does not involve a situation wherein by the issue of a subsequent invalid notification, an existing concession is sought to be cur tailed, as in the case of Dai-Ichi Karkaria Ltd. v. Union of India, 2000 (119) E.L.T. 516 (S.C.), but on the other hand by issue of a subsequent notification, a further concession is provided. 26. The ratio of the case reported in Extrusion Process Pvt. Ltd. v. Assistant Collector of Central Excise, Bombay, 1987 (31) E.L.T. 916 (Born.) of the Bombay High Court is also not applicable, as it is on an examination found that condition No 14-A by itself does not bring about any class legislation which can be termed as discriminatory. 27. Accordingly, I hold that the notification of the year 2004, challenged in this writ petition, containing the condition No. 14A, is a valid notification and it makes a reasonable classification of two types of paper and paper board manufacturers, as discussed above, and that the condition for availing the further concession in terms of this notification has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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