9911796707
TMI Blog1999 (9) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... m so much of the duty of excise leviable thereon under the said Schedule as is in excess of the amount calculated at the rate of Rs. 175/- per tonne. Provided that such cement is manufactured out of clinker produced within the same factory in which such cement is manufactured : Provided further that such cement is manufactured in a factory where production in respect of such cement in any financial year is not less than thirty per cent of the licensed capacity of the factory manufacturing cement as certified by the Development Commissioner for cement Industry in the Ministry of Industry." The 1st proviso to this Notification was amended on 1st August, 1988 to read as follows : "Provided that such Cement is manufactured out of Clinker produced within the same factory in which such Cement is manufactured or within such other factory of the same manufacturer where production of clinker has commenced during the aforesaid period." This Notification will hereafter be called the 1st Notification. 3.There was another Notification dated 29th April, 1987. Even though this Notification was issued later it dealt with an earlier period i.e. from 1st January, 1982 to 31st March, 1986 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion or modernisation. The relevant portion of another Explanatory Circular dated 17th April, 1989 reads as follows : "The matter has been further examined in the Board. The Board took note of the language used in the said Notification along with the definition of "substantial expansion" as given in section 13 of the Industrial Development Regulation Act, 1951 and observed that the said Notifications provided concessional rates of duty to cement manufactured in a factory set up during the periods as envisaged in the said Notifications. The Board accordingly felt that the benefits of the said Notifications could be extended to any factory set up as a substantial expansion or otherwise, as the case may be, provided the same is independent of the existing factory in all respects. If the substantial expansion is merely an expansion or modernization of the already existing factory then the benefits of the said Notifications would not be available in view of the fact that no new factory has come into existence." 7.Thus, it is to be seen that even under this Explanation the benefit of the Notification is to be extended to a factory which had been set up as a substantial expansion pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pansion amounting to a virtually new factory which commenced production of clinker after 1st April, 1986. They claimed that they were entitled to exemption of levy under the 2nd Notification on the basis of manufacture of clinker at Nadikude prior to the fitting of the Pre-calcinator in their factory at Nadikude. Thus, it is to be noted that even though the clinker was being manufactured only at Nadikude and from the same Kiln the 1st Respondent were claiming that production had commenced during the period 1st January, 1982 to 31st March, 1986 and at the same time they were claiming that production had commenced on or after 1st April, 1986. 11.The question before the Court was whether the 1st Respondent could avail of the benefit of these two Notifications. To be seen that the benefit under the 1st Notification was available provided cement was manufactured in a factory which had commenced production on or after 1st day of April, 1986. A plain reading of this Notification would show that the factory must be such that there had been no production of cement in that factory prior to 1st April, 1986. Initially this Notification also provided that cement was to be manufactured out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the old line as well as the new line now went to the Pre-calcinator. From the Pre-Calcinator the material went into the old Kiln. Clinker then came out. 14.Thus it is to be seen that the old Kiln was still being used except that it has been modernised by the addition of a Pre-Calcinator. It is also to be noted that even today material from both the lines comes into the same Kiln. It was fairly admitted that it would be impossible to say as to which piece of clinker, coming out of the Kiln, was part of the old line and which piece of the clinker was part of the new line. Of course mathematically it would be possible to calculate what percentage of clinker was from the material fed in from the old line and what percentage of clinker was from the material fed in from the new line. But the fact remains that there is no method of finding out which piece of clinker is from the new line and which piece of clinker is from the old line. 15.At this stage it would also be appropriate to set out what Digvijaya Cement Company Limited and Raasi Cement Limited did. Both Digvijaya Cement Company Limited and Raasi Cement Limited maintained the same Crushing Unit. However, they set up entirely a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was established in 1983 and had been producing clinker since 1983. To be remembered that for this Unit 1st Respondent are themselves claiming and have been given exemption under the 2nd Notification. This is on the footing that production had commenced between the period 1st January, 1982 and 31st March, 1983. If there is only one Kiln which has been functioning since 1983. One fails to understand how it can be claimed that production of some clinker, coming out of that Kiln, must be deemed to have commenced after 1st April, 1986. 19.Faced with this situation it was submitted that the words "manufactured in factory which has commenced production" does not mean that it must be a completely new factory. It was submitted that it was sufficient if there was a virtually new factory. It was submitted that the phrase virtually new is well known and has already been used by the Legislature in the Industrial Development and Regulation Act, 1951. Reliance is placed upon Section 13 of this Act wherein the Explanation to Section 13 provides that a substantial expansion would mean an expansion of an existing industrial undertaking which substantially increases the productive capacity of the u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed as the mother Clinkerisation Plant for Visakhapatnam Unit. The learned Single Judge holds that to receive benefits of the two Notifications it was not necessary that there should be a new Kiln. The learned Single Judge opines that the two explanatory Circulars dt. l4th February, 1989 and 17th April, 1989 do not talk of a new unit only in terms of a new Kiln. What the learned Single Judge omitted to notice is that benefit of the 1st Notification is limited only to Units that have commenced production of cement/clinker on or after 1st April, 1986. The learned Single Judge failed to notice that the 1st Notification does not cover substantial expansion or modernisation unless a totally independent unit/line has been established and it has commenced production on or after 1st April, 1986. The learned single judge failed to notice that the explanatory Circulars made it clear that the benefit of the Notifications is not available if there is merely an expansion or modernisation of the existing factory. The learned Single Judge failed to notice that the two Notifications and the two Explanatory Circulars clearly set out that there must be a new unit or a substantial expansion which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said that this Kiln, without which clinker cannot be produced, had commenced production on or after 1st April, 1986. To be remembered that the 1st Respondents are themselves claiming exemption under the 2nd Notification on the basis that production had commenced between 1st January 1982 to 31st March, 1986. To get benefit of the Notifications it must not be a mere modernisation or expansion but an independent new Unit in all respects (emphasizes supplied). Both in case of Digvijaya Cement Company Limited as well as Raasi Cement Limited clinker is produced from entirely separate and independent lines which also have separate Kilns. Thus in their case it could be said that production of clinker had commenced after 1st April, 1986. These very vital aspects have completely escaped the notice of the learned Single Judge. Therefore, there is no comparison and therefore no discrimination between 1st Respondent and/or Digvijaya Cement Company Limited or Raasi Cement Limited. 24.Faced with this situation it was submitted that even in the case of Digvijaya Cement Company Limited and Raasi Cement Limited the Crushing Unit, which preceded the Clinkerisation process, were the same. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground of violation of the right of equality under Article 14 of the Constitution. Thus even on this basis the Respondent would not be entitled to the benefit of the 1st Notification. 26.The argument of 1st Respondent that the benefit of the 1st Notification can be claimed for a virtually new factory which had substantial expansion or modernisation cannot be fully accepted. Benefit can only be claimed provided the substantial expansion or modernization is such that the factory is virtually new and independent in all respects. If a major and essential component like the Kiln is the same it cannot be said to be new independent in all respects (emphasis supplied). Also if the Legislature being aware of existence of terms like "virtually new" does not knowingly use these terms, then Courts cannot add terms which the Legislature knowingly omitted to use. What 1st Respondent want Court to do is to add words "a virtually new factory" before the words "commenced production". This cannot be done. 27.Another reason why the impugned judgment cannot be sustained is that the learned Single Judge has not considered the case of each factory of the 1st Respondent separately. The learned S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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