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TMI Blog2017 (5) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... ower conferred by Section 3(3) of Bombay Electricity Act, 1958.The claim raised by the appellant under the above said notification was specifically dealt by the High Court and the Government. The condition which was found lacking for applicability of the notification was that generating sets were not purchased or installed or commissioned during the period from 01.01.1991 to 31.12.1992. The High Court has recorded categorical finding that the generating sets have been commissioned in the month of August 1995. Another reason given by the High Court was that no application was made within 180 days of application of the notification dated 27.02.1992 or even from the date of installation of generating sets i.e. August 1995. Even if the second reason given by the High Court is ignored, nonfulfillment of condition no.(a) of notification dated 27.02.1992 clearly entailed rejection of claim under notification dated 27.02.1992. There is no foundation or basis laid down even in this appeal to assail the finding recorded by the High Court that generating set was not purchased from 01.01.1991 to 31.12.1992. We thus do not find any error in rejection of claim of appellant under the notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 300 MW. There was, however, a change in the Power Policy of Government of India, in the year 1991-92, which allowed the participation of private sector in power generation. Government of Gujarat also, with a view to give effect to that policy, issued a Notification dated 27.02.1992 under Section 3 of the Bombay Electricity Duty Act, 1958(hereinafter referred to as 1958 Act). The appellant no.1 Company, therefore, abandoned its plan to set up the said Captive Power Plant of 300 MW in Combined Cycle Mode and in place and instead thereof, promoted and incorporated a separate generating company under the name and style of "ESSAR Power Limited", the appellant no.2 is a Special Purpose Vehicle promoted by the appellant no.1 company for supply of power to the appellant no.1 company as well as to the Gujarat Electricity Board. 3. The Government of Gujarat issued an Order dated 16.06.1995 agreeing in principle to the demand of appellant no.2 to set up 510 MW generating station at Hazira. The appellant no.2 started production of electricity w.e.f. 08.08.1995. The appellant no.1 held equity shares of 42% of appellant no.2 company. Out of 515 MW, 300 MW capacity has been allocated to GEB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant no.1 shall further pay from 01.05.2010 a sum of ₹ 15 Crores every month against the outstanding dues of electricity. 5. The Letters Patent Appeal ultimately came to be dismissed by Division Bench on 07.09.2016 against which judgment the present appeal has been filed. 6. We have heard Shri Mihir Joshi, Senior Advocate for the appellants and Shri C.A.Sundram, Senior Advocate appearing for the respondents. 7. Learned Counsel for the appellants contends that the issue is squarely covered in its favour by a decision of this Court in A.P. Gas Power Corporation Ltd. Versus AP State Regulatory Commission and another, (2004) 10 SCC 511, wherein it was held, inter alia, that the electricity generated by a Special Purpose Vehicle and consumed by the participating member to the extent of its equity contribution would amount to captive consumption of electricity. The High Court in the impugned judgment, however, distinguished the aforesaid judgment of this Court on the ground that in that case the parties were governed by a Memorandum of Understanding ("MoU") which was not there in the present case and secondly, on the ground that ESIL was purchasing 215 MW of power from EPL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant has rightly been denied the benefit of exemption as claimed under the notification dated 27.02.1992. The condition of the notification dated 27.02.1992 specifically states that the generating set or sets shall have to be purchased or installed or commissioned during the period beginning from 01.01.1991 and ending on 31.12.1992. This does not cover order placed for the purchase of generating set. Since ESSAR Steel has merely placed the order for generating set but neither purchased nor installed or generated within the period specified in the aforesaid notification, it is not fulfilling this condition and hence not entitled for benefits of the said notification. In case of purchase, property in goods is transferred to the owner, here, in given case, property in goods cannot be considered as transferred when same is simply ordered. 10. Learned Counsel for the parties have placed reliance on various judgments of this Court in support of their respective submission which shall be referred to while considering the submissions in detail. 11. We have considered the submissions of Learned Counsel for the parties and perused the records. 12. From the facts which have come on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsumed......... (vii) for motive power and lighting in respect of premises used by an industrial undertaking for industrial purpose, until the expiry of the following period, that is to say ( a) In the case of an industrial undertaking which generates energy either singly or jointly with any other industrial undertaking for its own use or as the case may be, for the use of industrial undertakings which are jointly generating the energy. (i) Fifteen years from the date of commencement of the Bombay Electricity Duty (Gujarat Amendment) Act, 1983(hereinafter in this subsection and subsections (2A) and (2AA) referred to as "the commencement date") or the date of starting the generation of such energy whichever is later in such generation of energy is by back pressure turbine or if such generation of energy is obtained by cogeneration. (3) The State Government may, by notification in the Official Gazette, and subject to such terms and conditions as may be specified therein, reduce the rate of duty or remit the duty in respect of......" 15. The keywords in the statutory scheme are "generates energy either singly or jointly with any other industrial undertaking for its own u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Open Cycle mode operation prior to commissioning of the Combined Cycle mode operation the Company shall allocate: 138 MW to the ESTL; and 192 MW to GEB (b) During Combined Cycle mode 215 MW to the ESTL; and 300 MW to GEB .......... .................." 17. Even assuming appellant no.1 and appellant no.2 are jointly generating the energy for the use of industrial undertaking which are jointly generating the energy, the Gujarat Electricity Board to whom 300 MW has been allocated cannot be held to be industrial undertaking which is jointly generating the energy with appellant. The Statutory scheme for grant of exemption has to be strictly construed. The appellant no.2 is not jointly generating energy with Gujarat Electricity Board and it is selling the energy to the extent of 300 MW to Gujarat Electricity Board. The conditions of the statutory provisions of Section 3(2)(vii)(a) are not fulfilled. The High Court has further held that both ESL and EPL being distinct separate legal entities merely because ESL might have 42% shares holding in EPL, it cannot be said that ESL is generating electricity jointly with EPL and EPL is generating electricity jointly with ESL fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision. This Court in Commissioner of Central Excise, SuratI versus Favourite Industries, 2012 (7) SCC 153, while considering exemption notification issued under Central Excise Tariff Act, 1985 laid down following in paragraph 35 to 40: " 35. The notification requires to be interpreted in the light of the words employed by it and not on any other basis. There cannot be any addition or subtraction from the notification for the reason the exemption notification requires to be strictly construed by the courts. The wordings of the exemption notification have to be given its natural meaning, when the wordings are simple, clear and unambiguous. 36. In Commr. of Customs v. Rupa & Co. Ltd., this Court has observed that the exemption notification has to be given strict interpretation by giving effect to the clear and unambiguous wordings used in the notification. This Court has held thus: (SCC pp. 41314, para 7) "7. … However, if the interpretation given by the Board and the Ministry is clearly erroneous then this Court cannot endorse that view. An exemption notification has to be construed strictly but that does not mean that the object and purpose of the notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion or by adding words to the notification benefit cannot be conferred. The Tribunal has based its decision on a decision delivered by it in Rukmani Pakkwell Traders v. CCE. We have already overruled the decision in that case. In this case also we hold that the decision of the Tribunal is unsustainable. It is accordingly set aside." (emphasis supplied)" 20. The statutory provisions of Section 3(2)vii(a) thus have to be strictly construed and in event the condition of generating energy jointly with any other industrial undertaking is not fulfilled, the claim has to be rejected. 21. Learned Counsel for the appellant submits appellant is claiming exemption from excise duty only to the extent of its shareholdings i.e. 42%. The object for grant of exemption to the industrial undertaking which generates energy either singly or jointly is for the use of industrial undertaking which are jointly generating the energy. When in the present case, 58% of the energy generated has been allocated to Gujarat Electricity Board with whom appellant No. 2 is not jointly generating the energy, the Statutory provisions has to be strictly construed and when energy being generated is used by industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as A.P.GPCL and rest of the participating industries were to have different percentage of shares and the power so generated by company was to share proportionately among the shareholding participating companies and their sister concerns. The question which fell for consideration before this Court was as to whether A.P.GPCL was required to take a license under the law for utilization/sale and supply of power generated by the participating industries, their sister concerns and the companies to whom shares of APGPCL were transferred by the participating industries. 25. This Court after noticing the contents of various clauses of Memorandum of Understanding and the provisions of Indian Electricity Act, 1910 and Andhra Pradesh Electricity Reform Act, 1998, laid down following in paragraph 36 and 37: "36. From the perusal of para 4 of the Memorandum of Understanding it is clear that a participating industry has been given a right to transfer its share of energy and power to its sister concern. The term "sister concern" has been explained as "a concern under the same group." There is no further clarification or clue as to which are those concerns which may be considered under the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, incorporated from time to time and ultimately a provision was inserted providing that there would be levied and paid to the State Government a duty called electricity duty on the energy sold to a consumer by a licensee/Board/the Central Government. The duty on consumption of electricity was leviable even though it may be from his own source of generation. Renusagar Power Co. Ltd. had also obtained a licence under Section 28 of the Act of 1910. In such circumstances, it was held that even though Renusagar Power Co. Ltd. was a subsidiary company owned by M/s Hindustan Aluminium Co. Ltd., yet it would amount to supply of electricity by a licensee to a consumer in view of the provisions of the U.P. Act of 1952 which levied duty on consumption of electricity. The situation in the case in hand is similar only to the extent that the participating industries and the sister concerns are different entities and separately incorporated. Distinction may be there in view of the statutory provisions intervening under the U.P. Act of 1952 but that is not material for this case." 26. Ultimately, the appeal was partly allowed and judgment of the High Court was modified vide paragraph 57 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d capacity. In the paragraph 22 of the judgment following was held: " 22. The agreement clearly contemplates the proportion of allocation of a capacity. EPL has to fuel and operate the generating station to meet the requirement of electric output that can be generated corresponding to the allocated capacity. The appellant has to pay annual fixed cost as determined in terms of Clause 7.1.1 of Schedule VII of the agreement. The Commission is thus, right in observing that once the entire capacity has been allocated in two parts in a particular proportion, the contention of EPL that it could sell power to ESL beyond the allocated capacity could not be accepted. EPL was under obligation as per Schedule VI to declare weekly schedule of the capacity available and the dispatch instructions were to be issued on the basis of the said declaration. It could not thus be said that EPL had no obligation to declare the capacity and the obligation of GUVNL to issue dispatch instructions was not dependent on declaration of the available capacity by EPL. Contrary view of the Tribunal is clearly erroneous. In para 45 and 46 and elsewhere in its judgment, the Tribunal erred in holding that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng an independent joint company solely for this purpose or on prorata cost sharing basis, for a period of ten years from the date of commissioning of the generating sets subject to the following terms and conditions namely: (a) The generating set or sets shall have been purchased and installed or commissioned during the period beginning from 1st January, 1991 and ending on 31st December, 1992. Providing that such generating act or sets shall not have been previously used in the State. ****** ******" 32. The claim raised by the appellant under the above said notification was specifically dealt by the High Court and the Government. The condition which was found lacking for applicability of the notification was that generating sets were not purchased or installed or commissioned during the period from 01.01.1991 to 31.12.1992. The High Court has recorded categorical finding that the generating sets have been commissioned in the month of August 1995. It is useful to refer to paragraph 12.0 of the judgment of Division Bench which is to the following effect: "12.0. Now, so far as the alternative claim of the appellants to grant the exemption for a period of 10 years under the N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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