2021 (5) TMI 1077 - HC - Indian Laws

Non-granting of the transport subsidy - claiming benefit of transport subsidy at prescribed rates with interest. Case of the petitioner is that its unit fulfilled all the requirements of grant of transport subsidy and for which all the documents were supplied to the department despite which such subsidy was not granted and on account of which the petitioner was unable to repay its dues to the secured creditors and faced bankruptcy. HELD THAT - A new industrial unit is defined as to mean an industrial unit which has set up its manufacturing capacity and comes into production on or after the date of commencement of the scheme. It may be noted that the scheme was brought into effect from 15.07.1971. The term selected area would mean several regions and States specified therein including the North Eastern region comprising of the State of Assam Meghalaya Manipur Nagaland and Tripura and Union Territories of Arunachal Pradesh and Mizoram. Paragraph-6 of the scheme envisages grant of transport subsidy to the industrial unit located in the selected areas in respect of raw materials which are brought into and finished goods which are taken out of such areas. However industrial units will not be eligible for transport subsidy for internal movement of raw materials and finished goods within such areas. The eligibility period for claiming subsidy may be 5 years the scheme nowhere provides that only if a new industrial unit continues such manufacturing activity for a period of 5 years that it can claim the transport subsidy. Therefore even if as pointed out by the respondents the petitioner at some later point of time after commencing its production got engaged into the same activity as a job worker this would not amount to breach of any of the eligibility conditions of the scheme. Transport subsidy would not be available for movement of raw materials as also finished goods as long as the movement thereof is confined between two locations both of which are situated in the North Eastern region. In the present case even going by the case of the petitioner the raw material was procured from Assam which forms part of the North Eastern region for the purpose of the said scheme. Appeal dismissed.

Summary

Issues Involved:
1. Eligibility for Transport Subsidy under the 1971 Scheme
2. Compliance with Pollution Control Board Clearance
3. Definition of Manufacturing Activity
4. Internal Movement of Raw Materials and Finished Goods

Issue-wise Detailed Analysis:

1. Eligibility for Transport Subsidy under the 1971 Scheme:
The appellant, running a stone crushing unit, claimed entitlement to transport subsidy under the Transport Subsidy Scheme of 1971, which provided limited transport subsidy for raw materials and finished goods for small-scale industries in specified areas, including the North Eastern Region. The petitioner's unit commenced production on 16.09.2002 and sought the subsidy for the transportation of raw materials from Assam. However, the learned Single Judge dismissed the petition, stating that the subsidy was only applicable to raw materials brought from outside the North Eastern Region, and in this case, the materials were sourced within Tripura. The appellate court noted that the scheme did not cover internal movement within the North Eastern Region, thus rejecting the appellant's claim.

2. Compliance with Pollution Control Board Clearance:
The respondents argued that the petitioner started manufacturing without electricity, using a generator, and without obtaining clearance from the Pollution Control Board. The court found this objection invalid, noting that the industrial department had certified the unit's establishment and commencement of manufacturing activity, and the subsidy scheme did not explicitly require Pollution Control Board clearance.

3. Definition of Manufacturing Activity:
The respondents contended that the petitioner’s activity of crushing boulders did not constitute manufacturing. The court dismissed this argument, stating that transforming big boulders into small chips for construction is a manufacturing process, creating a new article through mechanical means. The court emphasized that the petitioner’s initial manufacturing activity qualified for subsidy, irrespective of later engagement in job work.

4. Internal Movement of Raw Materials and Finished Goods:
The learned Single Judge concluded that the transport subsidy was not applicable as the raw materials were sourced within Tripura. The appellate court found no evidence supporting the claim that the raw materials were sourced from within the state, citing a letter from the General Manager of the District Industrial Centre indicating procurement from Assam. However, the appellate court upheld the dismissal, interpreting the scheme to exclude transport subsidy for movements confined within the North Eastern Region. The scheme envisaged subsidy only for movements between the North Eastern Region and other parts of the country, not for intra-regional movements.

Conclusion:
The appeal was dismissed, with the court affirming the learned Single Judge’s decision but providing a different rationale. The court clarified that the Transport Subsidy Scheme of 1971 did not cover the internal movement of raw materials within the North Eastern Region, thus disqualifying the appellant’s claim for subsidy. Pending applications were also disposed of.