Uttarakhand High Court

2Nd March vs Secretary on 2 March, 2022

           IN THE HIGH COURT OF UTTARAKHAND
                                AT NAINITAL
                         SRI JUSTICE S.K. MISHRA, A.C.J.

                                        AND

                             SRI JUSTICE R.C. KHULBE, J.

WRIT PETITION (M/B) NO. 266 OF 2005

02ND MARCH, 2022

BETWEEN:

Shiva Power                                                   .....Petitioner.
And

The Secretary & others                                        ....Respondents.

Counsel for the Petitioner               :       Mr. P.R. Mullick, learned
                                                 counsel.

Counsel for Respondent No.1              :       Mr. Mohit Maulekhi, learned Brief
                                                 Holder.

Counsel for Respondent No.2              :       Mr. Shobhit Saharia, learned
                                                 counsel.

Counsel for Respondent No.3              :       Mr. Vipul Sharma, learned
                                                 counsel.

Counsel for Respondent No.4              :       Mr. Hari Mohan Bhatia, learned
                                                 counsel.

Upon hearing the learned Counsel, the Court made the following

JUDGMENT :(per Sri S.K. Mishra, A.C.J.)

By filing this writ petition, the petitioner, which a

partnership firm, has prayed for issuance of a writ of

certiorari quashing the order of the respondent No.2, i.e. the

Deputy Commissioner, Customs & Central Excise, E-Block,

Nehru Colony, Dehradun, i.e. Annexure No.X, dated

16.03.2005, whereby the petitioner was directed to start

paying the Central Excise duty on future clearances and also

imposing the Central Excise Duty on past clearances notified

under Notification 50/2003. The petitioner has also prayed for

issuance of writ of certiorari quashing the opinion of the

respondent No.3 (Annexure No.IX) in expressing to the

respondent No.2, his opinion on extension of benefit of

exemption to new industrial units established in the category

"industrial activities in non-industrial areas". The petitioner

has further prayed for issuance of a writ of mandamus

directing the respondent No.3 to allow the benefit of

exemption on the strength of Central Excise Notification

50/2003.

2. The Government of India, Ministry of Commerce &

Industry (Department of Industrial Policy & Promotion),

issued a new industrial policy dated 07.01.2003, providing

the fiscal incentives to new Industrial Units and to existing

units on their substantial expansion. The policy provided for

new industrial units and existing industrial units on their

substantial expansion which are set up in Growth Centres,

Industrial Infrastructure Development Centres, Industrial

Estates etc., as stipulated in Annexure-I and other areas as

notified from time to time by the Central Government are

entitled to 100% outright excise duty exemption for a period

of ten years from the date of commencement of commercial

production. Annexure-I to the policy provides the location in

the Tehsil in the State of Uttarakhand where a new industrial

unit or an existing industrial unit was required to be

established in order to claim exemption. In the Original List

issued by the notification, "other areas as notified from time

to time" was not included. However, as per the General

Exemption No.51 (i.e. starting from Page No.35 of the brief),

Sl. No.9 at Page No.39 of the brief provides for Turner Road,

Clement-town, Khasra Nos.610 and 625 in Rishikesh, District

Dehradun.

3. It is not disputed at this stage that Khasra Nos.610

and 624 are the relevant Khasra Nos. on which new industrial

units of the petitioner stand. Therefore, it was argued by the

learned counsel for the petitioner that the case of the present

petitioner is covered by a Full Bench Judgment of this Court

in the case of "M/s Om Ispat vs. Secretary, Industrial

Department, Government of Uttarakand, Dehradun and

others, Writ Petition (M/S) No.163 of 2009", dated

04.08.2011. Therefore, it is prayed that since the matter is

covered by a Full Bench Judge of this Court, there is no

impediment in issuing a writ of certiorari and mandamus, as

prayed by the petitioner in the writ petition.

4. Mr. Shobhit Saharia, the learned counsel for the

respondent No.1, Mr. Vipul Sharma, the learned counsel for

the respondent No.3, and Mr. Hari Mohan Bhatia, the learned

counsel for the respondent No.4, would argue that the

petitioner's case does not come under the notification

50/2003, and it cannot also take advantage of the notification

No.49/2003 dated 10.06.2003, as it is not a thrust industry.

5. We have clearly examined the pleadings raised by

the learned counsel for the respondents, and we give much

emphasis on the counter-affidavit of the Deputy

Commissioner, Central Excise, Dehradun.

6. From the pleadings raised, it is appropriate to

record certain pleas taken by them, as we are of the opinion

that the arguments raised by the learned counsel for the

respondent Nos.2 and 4 are going beyond pleadings they

have raised.

7. In Paragraph No.4 of the counter-affidavit, it is

contended that the petitioner is a new unit which has

commenced commercial production after 07.01.2003, but the

Khasra Nos. of the said unit are under the category of

"Industrial Activity in Non-Industrial Area". Hence, the

petitioner is ineligible for exemption under the said

notification, as the area has not been declared as an

Industrial Area for the purpose of a new unit. Clarification

given by the Managing Director, SIDCUL is acceptable

because it being the notified Nodal Agency for routing the

subsidies/incentives of various schemes of New Industrial

Policy.

8. It is further pleaded that Notification No.49/2003

pertains to thrust industries defined in scheduled appended to

the said notification. It is further submitted that the Office

Memorandum No.1(10)/2001-NER dated 07.01.2003, issued

by the Ministry of Commerce & Industry (Department of

Industrial Policy & Promotion), has a provision for Nodal

Agency for routing the subsidies/ incentives under various

schemes of New Industrial Policy. The Ministry of Commerce

& Industry (Department of Industrial Policy & Promotion),

vide their notification dated 06.03.2003 have notified the

State Industrial Development Corporation of Uttarakhand as a

Nodal Agency for the State of Uttarakhand.

9. The Deputy Commissioner further pleaded that to

ascertain the eligibility of exemption, under Notification

No.50/2003-CE dated 10.06.2003, claimed by the Industrial

Units falling under the above-mentioned category 2 and 4, a

clarification was sought vide letter C-No.II

(8)PREV/MISC/4/204 dated 21.02.2005 from the Nodal

Agency. The Managing Director of SIDCUL, vide letter

No.3389/MD/SIDCUL/2005-06 dated 03.03.2005 has clarified

that benefit of concessional industrial package in the category

of Industrial Activity in Non-Industrial Area and Industrial

Activity in Non-Industrial Area (to be notified with extension)

would accrue only to existing industries (established prior to

07.01.2003) who go for substantial expansion, and not to

newly established units.

10. It is further pleaded that in the present case,

though the Khasra Nos. have been notified in the category

"Industrial Activity in Non-Industrial Area", but this has been

done only for existing industries undertaking substantial

expansion and not for new industries.

11. The Deputy Commissioner further plead that the

answering respondents have interpreted the notification

dated 10.06.2003 on the basis of clarification given by the

Nodal Agency, and Khasra Nos. mentioned in Annexure II

appended to the said notification are divided into four

categories, namely (i) Existing Industrial Estate/Region, (ii)

Proposed Industrial Area, (iii) Expansion of Existing Industrial

Area, and (iv) Industrial Activity in Non-Industrial Area (to be

notified alongwith extension), or Industrial Activity in Non-

Industrial Area. It is further pleaded that the MD, SIDCUL in

their aforesaid clarification has clarified that while sending the

Khasra Nos. for notification to Government of India by the

Government of Uttaranchal (now Uttarakhand), in the

category "industrial activity in non-industrial area" (to be

notified alongwith extension), "industrial activity in non-

industrial area", reference was made of existing Industrial

Unit only. The intention of the Government of India was very

clear. Therefore, the Khasra Nos. were divided into four

categories, as mentioned above. Khasra Nos.610 and 624,

Turner Road, Clement-town were in Non-Industrial Area.

Therefore, to extend the benefit of exemption to those

industries (existing prior to 07.01.2003), located in such

area, i.e. Industrial Activities in Non-Industrial Area, the

Government of India notified such Khasra Nos. under the said

category. Therefore, it is pleaded that as also clarified by the

MD, SIDCUL, the existing unit who have undertaken

substantial expansion would be eligible for exemption under

the said notification. But the new units which have

commenced commercial production after 07.01.2003 are not

eligible for exemption under the said notification. Therefore,

the respondents plead that the writ petition should be

dismissed.

12. An examination of these pleadings, therefore,

leaves the following question to be determined:-

"Whether under the Industrial Policy, a new unit setup in a non-industrial area, but notified the Khasra No. in General Exemption No.51, will be eligible to get the benefit of the New Industrial Policy of remission of the Central Excise, or only an existing unit doing 25% of development in a non-industrial area is only entitled to such remission to be exclusion of the new units?

13. In our considered opinion, this matter has already

set at rest by the Full Bench Judgment of this Court in the

case of M/s Om Ispat (supra). After a detailed discussion of

the facts, the Full Bench at Paragraph No.10 has observed as

follows:-

"10. It transpires that the Deputy Commissioner, Central Excise wrote a letter dated 21.02.2005 to the Managing Director of State Industrial Development Corporation of Uttarakhand (SIDCUL), which is the Nodal Agency for routing the subsidies / incentives under the policy, seeking clarification with regard to the exemption being granted under the notification No.50/2003 dated 10.06.2003. In response to the said letter, SIDCUL replied vide letter dated 03.03.2005 indicating that the category 6 "Industrial Activity in Non-Industrial Area" and "Industrial Activity in Non-Industrial Area (to be notified alongwith extension)" refers to existing industrial units only and that the benefit of exemption in the aforesaid two categories would accrue only to an existing industry which goes in for a substantial expansion.

11. The Deputy Commissioner Central Excise on the basis of the clarification given by SIDCUL, informed the petitioner by its letter dated 18/21.03.2005 that exemption from Central Excise is to be given in Khasra No.54 in village Behedeki to existing units only and since the petitioner's unit is a new unit, the benefit of exemption under the notification dated 10.06.2003 cannot be granted".

14. These two paragraphs show that the point of

controversy in the judgment rendered by the Full Bench of

this Court in the case of M/s Om Ispat (supra), and the

point of controversy arising in this writ petition are identical.

15. While deciding the case, the Full Bench has held as

under. We find apt to quote the exact words used by the Full

Bench.

"22. The sole question which is required to be considered is whether the petitioner is entitled for central excise exemption under the notification No.50/2003 dated 10.06.2003.

23. Clause 3.1 of the policy dated 07.01.2003 indicate that new industrial units located in growth centres, etc. as stated in Annexure-I to the policy would be entitled to exemption of central excise duty. Locations were identified in general in Annexure-I to the policy, which included Iqbalpur Tehsil in District Haridwar. Clause 3.1 of the policy dated 07.01.2003 provided that the Central Government, in addition to the areas specified in Annexure-I, could further notify other areas from time to time. The notification No.50/2003 dated 10.06.2003 notified other areas and also provided further details of the industrial estates/areas/regions, the village, khasra nos. and the tehsil where a new unit or an existing unit was required to be located. The notification dated 10.06.2003 clearly indicated that new industrial units which are located in the areas specified in Annexure-II would be entitled for exemption which have commenced their commercial production on or after 07.01.2003. Annexure-II to the notification dated 10.06.2003 indicated Khasra No.54 in Tehsil Roorkee in village Behedeki in District Haridwar.

24. The petitioner's unit is located in Khasra No.54 in village Behedeki in Tehsil Roorkee and has established a new unit and started commercial production after 07.01.2003 and consequently applied for exemption. The respondents contention that the petitioner's unit is not located in the industrial area specified in the notification dated 10.06.2003 is on account of the reasoning that category 'C' under District Haridwar applies only to existing units and not for new units. This reasoning is based on the basis of the heading given in category 'C' namely, "Industrial Activity in Non-Industrial Area (to be notified alongwith extension)" implying that this category refers to existing industrial units.

25. In our opinion, the reasoning adopted by the respondents is patently erroneous and cannot be culled out from the categories mentioned in Annexure-II.

26. The notification dated 10.06.2003 clearly indicates that a new unit would be entitled for exemption if it commences production after 07.01.2003 established in an area specified in Annexure-II. The said categories mentioned under District Haridwar namely, (A) Existing Industrial Estates, (B) Proposed Industrial Area / Estates, (C) Industrial Activity in Non-Industrial Area (to be notified alongwith extension) and, (D) Expansion of Existing Estates does not in any manner indicate that the said categories (A), (B), (C) & (D) relates to an existing unit or to a new unit. Consequently, we are of the opinion that category 'C' does not specify that it relates to an existing unit only. The stand taken by the opposite party is patently erroneous, misconceived and cannot be accepted.

27. SIDCUL itself had clarified that the words "to be notified alongwith extension" under category 'C' was a typographical error, which in our opinion is correct and we further hold that the said words "to be notified alongwith extension" does not in any manner indicate that another notification was required to be issued under Section 5A of the Central Excise Act, 1944 to claim the benefit of exemption. The notification dated 10.06.2003 by itself was sufficient to claim the benefit of exemption.

29. A Division Bench of this Court in Writ Petition No.333 of 2005 (M/B) tilted as M/s S. S. Poles Vs. The Secretary, Industries Department & others decided on 16.05.2005, held that the opinion of the Managing Director of the SIDCUL could not override the notification dated 10.06.2003 and held that the notification dated 10.06.2003 would prevail. We are in agreement with the said decision". (underlined to emphasize)

16. Therefore, in that view of the matter, we come to

the conclusion that the controversy involved in this case has

already set at rest by the Full Bench of this Court, and it has,

vide its aforesaid judgment, categorically come to the

conclusion that remission of Central Excise is also available to

a new industrial unit setup in a non-industrial area, but where

the Khasra No. is specified in General Exemption No.51.

17. We are also in agreement with the judgment of the

Full Bench that the petitioner is entitled to exemption under

Notification No.50/2003, dated 10.06.2003.

18. We are also of the opinion that there is neither

plausible rationale, nor it is an intelligible differentia to uphold