9911796707
TMI Blog2003 (1) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... 60 metric tonnes of clinker per day. The respondent added one more kiln in 1965 and increased its production capacity to 1,000 metric tonnes. By August, 1969, the respondent installed further machinery in a new building erected within the same premises to further increase its production capacity. The respondent installed a new kiln along with separate silos, Tepol and modulizers, coal mill and cement mill. This unit started manufacturing cement on June 24, 1971. The unit was using existing idle capacity of crushers, cranes, packing machines, coal mills, and raw mills. According to the case of the respondent, the new kiln set up in 1969 was a new industrial undertaking as contemplated by section 3(2)(vii)(b) of the Act and as such was entitled to exemption from levy of electricity duty. At this stage it will be appropriate to reproduce relevant provisions of the Act. "3. (1) Subject to the provisions of sub-sections (2) and (3) there shall be levied and paid to the State Government on the units of energy consumed (excluding losses of energy sustained in transmission and transformation by a licensee before supply to a consumer), a duty (hereinafter referred to as "electricity duty" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 3(2)(vii)(b) read with rule 11 of the Bombay Electricity Duty (Gujarat) Rules, 1968, for obtaining eligibility certificate for exemption from levy of electricity duty. The Collector of Electricity Duty rejected the said application on September 16, 1971. As per the procedure prescribed under the Act, the respondent sought a reference to the statutory authority. The reference was answered by the Collector of Electricity Duty vide order dated August 29, 1975, rejecting the claim of the respondent. It was held by the Collector that installation of new unit and other machinery could not be considered as a new industrial undertaking, particularly, in view of the fact that the respondent was making use of the existing mills, crushers, belts, cranes, packing plants, etc. The Collector also relied on the statement made by the respondent in its application under rule 11 to the effect that it had made a substantial expansion of the existing undertaking. The respondent filed an appeal against the said order of the Collector. The Joint Secretary to the Industry, Mines and Power Department, Government of Gujarat, disposed of the statutory appeal vide order dated March 22, 1978. The appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on record, the respondent is admittedly using its existing crushers, cranes, raw mills, packing machines and old cement mills to complete the process of manufacture of cement in the new unit. According to learned counsel for the appellant when the existing plant and machinery are used in the process of manufacture of cement in the so-called new industrial unit, it is nothing but a case of expansion of the existing business or undertaking. The expansion may be substantial but that would not make any difference. Once it is a case of expansion of existing unit, it will not be entitled to exemption from duty. Learned counsel appearing for the respondent, however, argued that the use of existing plant and machinery in the new unit was only incidental and actually it is a case of setting up of a new industrial undertaking which entitles the respondent to exemption from duty as envisaged under the Act. In support of his argument, learned counsel for the respondent relied upon Textiles Machinery Corporation Ltd. v. CIT [1977] 107 ITR 195; [1977] 2 SCC 368. This was a case under the Income-tax Act. The assessee sought exemption under section 15C of the Act on the ground that it was a ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking expands his existing business, which he certainly does, would not, on that score, deprive him of the benefit under section 15G. Every new creation in business is some kind of expansion and advancement. The true test is not whether the new industrial undertaking connotes expansion of the existing business of the assessee but whether it is all the same a new and identifiable undertaking separate and distinct from the existing business. No particular decision in one case can lay down an inexorable test to determine whether a given case comes under section 15C or not. In order that the new undertaking can be said to be not formed out of the already existing business, there must be a new emergence of a physically separate industrial unit which may exist on its own as a viable unit. An undertaking is formed out of the existing business if the physical identity with the old unit is preserved. This has not happened here in the case of the two undertakings which are separate and distinct." It will be seen from the facts on record in the present case that the so called new unit/undertaking is not totally independent of the assets of the existing unit. Admittedly certain assets, to whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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