1987 (11) TMI 93 - HC - Central Excise

Summary

Issues:
Classification of steel ingots for excise duty benefits based on the manufacturing process.

Analysis:
The petitioner, a company operating a mini steel plant using a unique process involving oxygen and coke for steel ingots production, challenged the denial of excise duty benefits under two notifications due to not using an electric furnace like other mini steel plants. The petitioner argued that the classification based on the manufacturing process was discriminatory and unrelated to the notifications' objective of encouraging steel mills. The respondents contended that the benefits were only for steel mills using an electric furnace, as per the clear language of the notifications.

The court examined the purpose behind the condition in the notifications and found no rational basis for granting benefits only to steel mills using an electric furnace. The classification lacked an intelligible basis and did not connect with the objective of encouraging mini steel plants. Despite no material justifying the classification, the respondents failed to show a valid reason for the distinction between steel plants using different manufacturing processes. The court noted that the petitioner's factory was also a mini steel plant and deserved the same encouragement as others.

Considering the relief, the court decided to extend the benefits of the notifications to the petitioner's steel ingots, even though produced without an electric furnace. The court cited a previous case where discriminatory treatment was rectified by extending benefits uniformly. Instead of striking down the contentious words in the notifications, the court directed the extension of benefits to the petitioner's factory. The petitioner accepted this declaration, and the court allowed the writ petition, granting the benefits under the notifications to the petitioner's steel ingots without an electric furnace.

In conclusion, the court found the classification based on the manufacturing process for excise duty benefits to be unreasonable and discriminatory. By extending the benefits to the petitioner's factory, the court rectified the unjust treatment and ensured equal treatment for all mini steel plants, irrespective of the manufacturing process used.