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TMI Blog1995 (3) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 namely, Notification 132/85, dated 19-4-1985 exempting the goods falling under the Heading 84.66 when imported into India for the industrial plants or projects (other than Power Projects including gas turbine Power Projects and fertiliser projects) from so much of the duty of Customs, specified in the schedule to the Act as is in excess of the amount calculated at the rate of 20 per cent ad valorem. The first respondent also issued a Notification No. 133/85 on 19-4-1985 exempting the goods falling under the Heading 84.66 for power projects (including the turbine power project) from the whole of duty of Customs leviable thereon. Under the Project Imports (Registration of Contract) Regulations, 1965, the petitioner applied on 1-10-1985 for the registration of the contract, reiterating that they are eligible for concessional rate of duty under Notification 133/85. On 7-10-1985 the second respondent granted registration under the Heading 84.66. When the policy was changed the project import came to be classified under Heading 98.01. Similarly new Regulations were annexed as Project Import Regulations, 1986. By way of abundant caution, the petitioner applied on 12-5-1986 seeking appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anation cannot alter or take away the benefit granted by the impugned notification. 2.A counter affidavit has been filed by the respondents stating that the subject consignments arrived at the Madras Port only after the said Notification 306/86, dated 5-5-1986 and therefore, the meaning given to the word `Power Project' has to be understood only in accordance with the said explanation. It is pointed out that the petitioner had imported the goods with wide open eyes knowing the contents of Notification 306/86. The allegations that the impugned Notification 306/86 is arbitrary and introduces an invidious discrimination between two classes of Power Projects are denied. According to the respondents, the explanation has reasonable nexus to the object sought to be achieved by Notification 133/85. The power plant installed by the petitioners is only for captive consumption of the electricity and the mere fact that they are selling the excess production cannot alter the situation. It is pointed out that the Government has sufficient power to grant, withdraw and annul or modify the exemption granted under the Act. 3.It is an undisputed fact that the petitioners are only engaged in the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st point out that there is a judgment of the Orissa High Court on the very notification which fully supports the case of the petitioner and if the said judgment is followed the present writ petitions have to be allowed. On the other hand, Mr. C.A. Sundaram, for the respondents says that certain important points were not brought to the notice of the High Court and therefore, this Court should independently consider the issue and hold against the petitioners. I therefore, do not propose to straightway refer to the Orissa High Court Judgment which is reported in Indian Charge Chrome Ltd. v. Union of India, [1994 (72) E.L.T. 538] and I will independently consider the arguments on first principles and then refer to the Orissa High Court Judgment. In support of his arguments, Mr. Habibullah Badsha first refers to the judgment of the Supreme Court in I.E. Newspapers (Bombay) P. Ltd. v. Union of India, [AIR 1986 S.C. 515].That case related to the import of Newsprint involved in the production of Newspapers. By a Notification under Section 25 of the Customs Act certain concessions had been extended, with regard to the duty leviable on the import of Newsprint. The petitioners in that case we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be achieved. The Orissa High Court held that the Government had not placed any material to indicate the nexus for making a classification between Power Projects generating power alone and the projects generating power as well as manufacturing some other products. 6.On the question of propriety of an introducing explanation to deprive class of Power Projects from the benefit of the main notification, it is argued that an explanation cannot be used for such a purpose. Reliance is placed on in S. Sundaram v. V.V.R. Pattabiraman, (AIR 1985 S.C. 582). The Apex Court was considering an explanation added to the proviso to Section 10(2) of the Tamil Nadu Buildings (Lease and Rent Control) Act, the meaning of the word `default' was sought to be explained by an explanation, the majority decision upheld the validity of the explanation. It was observed :- "It is now well settled that an explanation added to a statutory provision is not a substantive provision in any sense of the term but as the plain meaning of the word itself shows it is merely meant to explain or clarify certain ambiguities which may have crept in the statutory provision." Again the Supreme Court observed :- Thus, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken in the interest of the public. The intention of the Government is very clear that the power projects intended for their own use should not get benefit of the exemption. Says Mr. C.A. Sundaram that it does not matter whether the intention is made clear either by way of an explanation or by some other method. In other words, when the intention is clear, the Court cannot nullify the intention by merely pointing out that it cannot be by way of an explanation and that it must be by way of a separate notification. It is no doubt true that the same intention can be achieved by introducing a proviso or by some other method of legislation. It appears to me that the intention of the Government is very clear and they did not want the exemption to be given to captive power plants. Therefore, merely because the intention is expressed in the form of explanation, I do not propose to set aside the Notification 306/86. On the other hand, the more important question is whether the Notification makes an invidious discrimination between two classes who are similarly situated. 8.On this question of discrimination, I would do well to extract the main Notification 133/85. It is as follows :- "I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity. The fact that the electricity thus produced is used in the petitioner's industry itself and because of such captive consumption the petitioner should be denied the benefit of exemption, does not appeal to me. 9.We will now refer to the Notification 306/86 which introduced the explanation. It is as follows :- "In the said notification, the following Explanation shall be inserted at the end, namely :- Explanation. - For the purpose of this notification, the expression "Power Projects (including gas turbine power project" shall mean such projects whose output or end-product is power, but shall not include captive power plants set up by units engaged in activities other than power generation." The explanation seems to give a meaning to the word "Power Projects". There is no difficulty in understanding the meaning and there is no quarrel about the definition portion. It says that Power Projects shall mean projects whose output or end-product is power. So far, there could be no objection and the petitioner is not disqualified on the basis of this definition. I have already pointed out that the subject imports were for a project whose end project was indeed electricity. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rements in many States. Therefore, when Power Project is established, be it, for captive consumption or for distribution to others, the respective State Electricity Boards are saved to that exent because that much of the power is not drawn from the State Electricity Boards. Therefore, in my opinion, on the date of the Notification 133/85, the intention was to exempt all power generation plants. It is only later on, in the year 1986 when the impugned Notification 306/86 was introduced on 1-5-1986 that the respondents have introduced this invidious discrimination excluding captive power plants. The same judgment is used by the respondents for the proposition that Article 14 of the Constitution of India does not forbid reasonable classification of persons, objects and transactions for the purpose of attaining specific ends. He relies on the words in R.K. Garg v. Union of India (A.I.R. 1981 S.C. 2138) :- "What is necessary in order to pass the test of permissible classification under Article 14 is that the classification must not be `arbitrary, artificial or evasive' but must be based on some real and substantial distinction bearing a just and reasonable relation to the object sought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument is that the Orissa High Court having referred to the above aspect of the distribution did not keep in mind that aspect of the case while giving its conclusions. Secondly, it is pointed out that the industry in that case was 100 per cent Export-oriented one. The Orissa High Court has concluded as follows :- "Thus while classification may be founded on different bases, what is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. The case in hand classifies `Power Projects' into two groups, namely, (i) projects generating power alone and (ii) projects generating power as well as engaged in manufacturing some other products. The Union Government has not placed any material to indicate the nexus for such classification and the object sought to be achieved by such classification." In my opinion, the above conclusion has absolutely no relevance to the fact that the industry was 100 per cent Export-oriented. Equally, the question of distribution of electricity had not been referred to because no material had been placed before the court that exemption was granted in Notification 133/85 only to those industries ..... X X X X Extracts X X X X X X X X Extracts X X X X
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