Manglam Cement Co. Ltd. And Anr. vs Assistant Collector And Ors.
1991 Latest Caselaw 334 Del

JUDGMENT

C.M. Nayar, J.

(1) This Letters Patent Appeal is directed against thejudgment of the learned Single Judge dated 3.5.1989 in a writ petition filedunder Article 226 of the Constitution of India. The brief facts are asfollows:

(2) Appellant No. 1 is a company incorporated under the CompaniesAct 1956 and is engaged in the manufacture of cement having a totalcapacity of manufacture of 4 lacs tonnes of cement in a year.The factory of the appellant was established in the year 1980-81 andstarted production of cement thereafter. A Press Note was issued by theGovernment of India on 28.2.1982 announcing certain benefits to newly installed cement units. Under the scheme announced in this Press Note, the existingcement units were required to supply 66.6% of their installed capacity as levycement at a controlled price, however the new units which started commercialproduction after 1.1.1982 and units which were designated as sick units wererequired to give 50 /o of their installed capacity as levy cement. The appellantclaims that under this Press Note they were entitled to the benefit which anyother new unit would get because, according to the appellant, they started theircommercial production after 1. 1.1982. The appellant, therefore, approachedthe government and on 8.12.1983 a letter was issued by the Joint CementController, Ministry of Industry, Government of India communicating to theappellant that the date of commercial production may be adopted as 2.1.1982for fixing the levy quota of cement in the case of the appellant. Further incentive was announced by the then Prime Minister in his capacity as the UnionFinance Minister on 29.4.1987 to new units and a relief in excise duty at Rs.20.00 per metric ton was announced for new units which manufacture portlandcement. This relief in excise duty was available to those units which commencedproduction between 1.1.1982 to 31.3.1986 provided the new units achieve aminimum capacity of 30 tonnes of production. On the same day a notificationwas issued by the Government of India announcing relief in excise duty tocement units which commenced production on the first day of January 1986and ending with 31st day of March 1986. The said notification reads thus :NOTIFICATIONNo. 174/87-Central Excises. "INexercise of the powers conferred by sub-rule (i) of rule 8 ofthe Central Excise Rules 1944, the Central Government therebyexempts cement falling under sub-heading 2502.20 of the schedule tothe Central Excise Tariff Act, 19.83 (3 of 1986) and manufactured IN a factory which has commenced production during the period commencing on the 1st day of January 1982 and ending with the 31stday of March 1986, from so much of the duty of excise leviable thereon under the said Schedule as is in excess of the amount calculatedat rate of Rs. 205.00 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 factorywhere production in respect of such cement in any financial year isnot less than thirty percent of the annual licensed capacity of thefactory manufacturing cement as certified by the Development Commissioner for cement industry in the Ministry of Industry.2. This Notification shall be in force up to and inclusive of the31st day of March 1980."

Thereafter, another notification was issued on 1.3.1988 giving furtherrelief in excise duty at the rate of Rs 20.00 per metric ton with effect from1.3.1988 to the new units which were installed and started production between1.1.1982 and 31.3.1986. The appellant claims excise exemption under these twoabove-mentioned notifications. The Assistant Collector, Central Excise &Customs vide his order dated 16.7.1987 informed the appellant that the concessional rate of duty in terms of notification dated 29.4.1987 was not applicableto the appellant because the appellant had started production from 28.2.1981.

(3) Being aggrieved by this decision of the Assistant Collector, CentralExcise & Customs, the appellant filed an appeal before the Collector (Appeals),Central Excise. The Collector (Appeals) Central Excise vide his order dated3.10.1988 rejected the appeal. He observed that as per the wordings of the notification, cement units commencing production during the period commencingfrom 1/01/1982 and ending with the 31/03/1986 were entitled toexemption, however since the appellant had commenced production for the firsttime on 28.2.1981 and had been maintaining prescribed Central Excise recordsince then and had admitted that they were carrying on production from timeto time during the year 1981 .they were not entitled to the relief sought underthe said notification. Being aggrieved by this decision of the Collector (Appeals),Central Excise, the appellant filed the writ petition in this Court which wasdisposed of by the impugned judgment.

(4) The learned Single Judge held that the word "production" in thenotification dated 20.4.1987 means commercial production and observed that inorder to give full effect to the notification the word "production" has to beregarded as commercial production. In other words, the learned Single Judgeobserved that the trial production has not to be taken into consideration whileconsidering the question of relief under the said notification. The learnedSingle Judge further considered the question whether the appellant commencedcommercial production before or after 1.1.1982 and held that the appellant hadcommenced production before 1.1.1982 and thus was not entitled to relief underthe notification.

(5) It was contended by the learned Counsel for the appellant thatonce having come to the conclusion that the word "production" means "commercial production" it was not open for this Court to further consider when theappellant commenced commercial production. Learned Counsel submitted thatin view of the letter dated 8.12.1983 issued by the Controller of Cement fixingthe date of commencement of commercial production, it was no longer opento the respondents to submit that commercial production commenced priorto 2.1.1982.

(6) On the other hand, it was contended by the learned Counsel forrespondents 1 to 4 that the learned Single Judge ought not to have gone intothe disputed question of fact as to when commercial production was commencedby the appellants. The respondents, however do not challenge the finding of thelearned Single Judge that for giving full effect to the said notification, theword "production" mentioned in the said notification has to be regarded ascommercial production.

(7) We have considered the rival submissions of the learned Counselfor the parties. We are of the view that this Court while exercising jurisdictionunder Article 226 of the Constitution of India was not required to go intodisputed question of fact and appreciate the evidence and fix the date of commercial production on the basis of affidavits filed in the writ petition. We areof the view that once the learned 'Single Judge observed that production hasto be regarded as commercial production, the question of fixing the date ofcommencement of commercial production ought to have been left to the appropriate authorities. The Assistant Collector of Customs as well as the Collectorof Customs (Appeals) had while rejecting the claim of the appellant had notcodsidered the question of commencement of commercial production by theappellant and had refused the relief to the appellant because the productionhad commenced before 1.1982. If the respondents had considered the questionof grant of excise relief on the basis of commencement of commercial production, undoubtedly they would have also taken into consideration the letterissued by the Cement Controller dated 8.12.1983. But that was not done becausethe respondents did not decide the question of applicability of the notificationto the appellant on the basis of commencement of commercial production.

(8) In the circumstances, we allow the appeal partially and set asidethe order of the Assistant Collector of Customs dated 12.6.1987 and part ofjudgment of the learned Single Judge dated 3/05/1989 to the extent thelearned Single Judge has fixed the date of commercial production as 1981 anddirect the Assistant Collector of Customs-respondent No. 1 to decide thequestion of applicability of the notification on the basis of commencement ofcommercial production by the appellants within 3 months from today. Needlessto say that the appellant will be given adequate opportunity to prove that theircommercial production commenced only after 1.1.1982 for which the respondentwill give them a personal hearing. In the circumstances of the case, howeverthe parties are left to bear their own costs.