Case: Union of India Vs. Indian Charge Chrome

two. Project suggests something very much more extensive than a plant. The learned senior counsel for the appellants is right in submitting that "Power project" could not have meant "power plant" also and the scope for confusion or doubts, if any, was done away by inserting a clarification. Thus, the amendment notification was clarificatory merely. 16. In Kasinka Trading and another v. Union of India & anothers case (supra) this Court has held that the power of exemption under Section 25(1) of the Act has been granted to the Government by the Legislature with a view to enabling it to regulate, control and promote the industries and industrial productions in the country. Where the Government on the basis of the material available before it is satisfied bona fide that the public interest would be served by either granting exemption or by withdrawing, modifying or rescinding an exemption already granted it should be allowed a free hand to do so. What was given in public interest can also be curtailed in public interest. Individual interest must yield in favour of societal interest. In the case at hand we find the respondent in its writ petition having laid challenge to the validity of the amendment notification on the ground of invidious discrimination but there is no plea raised that formation of opinion as to public interest was based on no material or was vitiated by malafides. 17. Coming to the fourth point, in so far as the refusal to register the contract with M/s Asea Stal is concerned, no fault can be found therewith. Mere making of an application for registration does not confer any vested right in the applicant. The application has to be decided in accordance with the law applicable on the date on which the authority granting the registration is called upon to apply its mind to the prayer for registration. the correspondence between the parties shows that further information-material in nature and having impact on acceptability of the respondents prayer - was called for from the applicant and therefore the prayer was not ripe for consideration. In between there were drastic changes in the factual matrix. The exemption notification had stood clarified and Project Imports (Registration of Contract) Regulations, 1965 under which the application for registration was made had stood superseded by Project Imports Regulations, 1986. No fault can be found with the refusal to register the contract. We find no merit in the submission of the learned senior counsel for the respondent that one application for registration having been moved in respect of the two contracts and the goods forming subject matter of the two contracts being complementary to each other for the purpose of erecting the power plant, the registration of one on the contracts having been allowed, the prayer for registration of the other contract could not have been refused. Though the refusal to register the respondents contract with M/s Asea Stal as contained in the letter of Assistant Collector of Customs, Paradeep dated 17.8.1987 is being upheld, we would like to make it clear that this refusal has to be read in the light of the averments made in the application dated 28.1.1986 of the respondent wherein it was stated that the registration of the contract was sought for securing the benefit of the Exemption Notification No. 71/85-cus. of 17.3.1985 and thereby treating the respondents imports for power project assessable at nil duty. If the respondents contract is entitled for registration for any purpose other than the one mentioned in the application, i.e., seeking exemption from payment of customs duty on the plea of the imports being referable to power project, the rejection would not come inthe way of the respondent pressing its prayer for registration of the contract for such other purpose. Such an application, if made, shall be dealt with and disposed of by the authority concerned in accordance with law.18. As to the fifth and last point, the appellants contract with Gotaverken Engery Systems was registered under the Import (Registration of Contract) Regulations, 1965 promulgated under the Custom Tarrif Act, 1975. Under the Regulations as importer claiming assessment of articles falling under any of the sub-headings of Heading No. 84.66 had to apply to the proper officer of the customs for registration of the contract at the port where the goods were to be imported. The registration was duly applied fro and granted by a competent officer. The Project Imports (Regulation of Contract) Regulations, 1965 were superseded with effect from 3.4.1986 by the Project Imports Regulations, 1986 issued in exercise of the power conferred by Section 157 of the Customs Act, 1962. The Preamble to the new Regulations clearly carves out an exception as regards things done or omitted to be done before such supersession. The new Regulations do not contain any provision for superseding or cancelling any registration of the contract allowed under the superseded Regulations of 1965. Admittedly, no opportunity of hearing was given to the respondent before cancelling the registration of contract. In our opinion the new Regulations having specifically saved things done or omitted to be done under the superseded Regulations the authority empowered to register the contract could not have cancelled the registration already done, more so without affording the respondent any opportunity of hearing. The High Court was therefore justified in setting aside the communication by the Assistant Collector of Customs cancelling the registration of the contract. We may however make it clear that what will be the effect of such registration on the dutiability or exemption from payment of duty on the goods imported pursuant to the contract is not an issue before us and therefore we have not expressed any opinion thereon leaving it to be adjudicated upon as and when an occasion may arise for the purpose.19. This judgment deals only with the notifications referred to in the opening part of this judgment and by reference to which only the case was argued before us by the learned counsel for the parties.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]From the very beginning the intention was not totally excluded. "Generation and distribution of electricity was placed in Schedule "A".The resolution mentions that all new units in these industries (i.e. listed in Schedule A), save where their establishment in the private sector had already been approved would be set up only by the State Government though ordinarily there would be no bar to small privately owned units undertakings generation of power for local needs and small scale mining. In thefiled on behalf of the Central Government apart from referring to the said Industrial Policy Resolution, it was further been pointed out that under the Industries (Development and Regulation) Act, 1951 it was not possible for the private units like the respondent to set up a power project for generation and distribution of electricity. The Industrial Resolution made a clear distinction between "power project" which is set up for generation and distribution of electricity and a "power plant" which is set up to generate power for the own requirement or captive consumption of the industrial unit. the captive "power plant" cannot be considered as "power project" and the two cannot be equated with each other. A power project is set up by the Government to cater to the needs of public by generating and distributing the electricity generally while a captive power plant is set up by an industrial unit to feed power to its own plant or unit for manufacturing of goods other than power. Though it is true that an industrial unit installing a power plant to the extent of the electricity generated by it shares the burden of the Government power projects generating electricity for distribution and to that extent their purpose may be alike, the fact remains that a power generating unit in public sector has its own limitations and short comings as well. An industrial unit depending on public power generation source shall have to bear with power cuts, failure and other regulations and restrictions imposed in public interest. By installing its own power plant, the industrial unit is free to generate and avail uninterrupted power supply or the quantum and flow of electricity suited to its own requirements and thereby it can maximise its production and consequently its profits. It is therefore, clear that power plant projects engaged in generation and distribution of power as its and product the sense in which the expression has been used in the Industrial Policy Resolution constitute a class by themselves distinct from the power plants established by industrial units generating electricity for captive consumption and not for distribution. The two classes are well defined.14. What is prohibited by Article 14 of the Constitution is class legislation. If the Legislature takes care to reasonably classify persons for legislative purposes, so long as the classification is founded on an intelligible differentia which lays down a perceptible differentiation between the two groups and the differentiation has a rational relation with the object sought to be achieved, such a classification does not fall foul of Article 14 of the Constitution. We have already held that the two classes in the case at hand have a well defined differentiation. There is nothing wrong in the Central Government forming an opinion that it was in public interest to grant exemption from payment of custom duty to the imports meant for power projects engaged in production of power as an end product meant for public distribution as such while denying a similar benefit to the imports referable to power plants generating electricity for captive consumption only.15. We agree with the learned senior counsel for the appellants in his submission that the exemption granted by the Notification No. 133/85 related to the goods falling under the Heading No. 84.66 of the First Schedule to the Customs Tariff Act, 1975 imported into India for power projects) the end product whereof was electricity meant for public distribution and therefore the amendment notification (No. 306/86) dated 1.5.1986 was only clarificatory in nature. It only clarified that the full exemption from payment of customs duty as granted by the Central Government by Notification No. 133/85 was not intended to apply to such power plants which were set up by units engaged in activities other than power generation and which generated power for captive consumption. The words used in the Notification No. 133/85 were"Power Projects (including gas turbine Power Projects)". A power plant is not the same thing as a power project. Chambers 20th Century Dictionary defines Project as "a proposal for undertaking : an undertaking." Plant is defined as "equipment, machinery, apparatus for an industrial activity." The distinction between the two terms is determinable by reference to mass, magnitude or extent of the two. Project suggests something very much more extensive than a plant. The learned senior counsel for the appellants is right in submitting that "Power project" could not have meant "power plant" also and the scope for confusion or doubts, if any, was done away by inserting a clarification. Thus, the amendment notification was clarificatory merely.Coming to the fourth point, in so far as the refusal to register the contract with M/s Asea Stal is concerned, no fault can be found therewith. Mere making of an application for registration does not confer any vested right in the applicant. The application has to be decided in accordance with the law applicable on the date on which the authority granting the registration is called upon to apply its mind to the prayer for registration. the correspondence between the parties shows that furtherin nature and having impact on acceptability of the respondents prayerwas called for from the applicant and therefore the prayer was not ripe for consideration. In between there were drastic changes in the factual matrix. The exemption notification had stood clarified and Project Imports (Registration of Contract) Regulations, 1965 under which the application for registration was made had stood superseded by Project Imports Regulations, 1986. No fault can be found with the refusal to register the contract. We find no merit in the submission of the learned senior counsel for the respondent that one application for registration having been moved in respect of the two contracts and the goods forming subject matter of the two contracts being complementary to each other for the purpose of erecting the power plant, the registration of one on the contracts having been allowed, the prayer for registration of the other contract could not have been refused. Though the refusal to register the respondents contract with M/s Asea Stal as contained in the letter of Assistant Collector of Customs, Paradeep dated 17.8.1987 is being upheld, we would like to make it clear that this refusal has to be read in the light of the averments made in the application dated 28.1.1986 of the respondent wherein it was stated that the registration of the contract was sought for securing the benefit of the Exemption Notification No.of 17.3.1985 and thereby treating the respondents imports for power project assessable at nil duty. If the respondents contract is entitled for registration for any purpose other than the one mentioned in the application, i.e., seeking exemption from payment of customs duty on the plea of the imports being referable to power project, the rejection would not come inthe way of the respondent pressing its prayer for registration of the contract for such other purpose. Such an application, if made, shall be dealt with and disposed of by the authority concerned in accordance with law.18. As to the fifth and last point, the appellants contract with Gotaverken Engery Systems was registered under the Import (Registration of Contract) Regulations, 1965 promulgated under the Custom Tarrif Act, 1975. Under the Regulations as importer claiming assessment of articles falling under any of theof Heading No. 84.66 had to apply to the proper officer of the customs for registration of the contract at the port where the goods were to be imported. The registration was duly applied fro and granted by a competent officer. The Project Imports (Regulation of Contract) Regulations, 1965 were superseded with effect from 3.4.1986 by the Project Imports Regulations, 1986 issued in exercise of the power conferred by Section 157 of the Customs Act, 1962. The Preamble to the new Regulations clearly carves out an exception as regards things done or omitted to be done before such supersession. The new Regulations do not contain any provision for superseding or cancelling any registration of the contract allowed under the superseded Regulations of 1965. Admittedly, no opportunity of hearing was given to the respondent before cancelling the registration of contract. In our opinion the new Regulations having specifically saved things done or omitted to be done under the superseded Regulations the authority empowered to register the contract could not have cancelled the registration already done, more so without affording the respondent any opportunity of hearing. The High Court was therefore justified in setting aside the communication by the Assistant Collector of Customs cancelling the registration of the contract. We may however make it clear that what will be the effect of such registration on the dutiability or exemption from payment of duty on the goods imported pursuant to the contract is not an issue before us and therefore we have not expressed any opinion thereon leaving it to be adjudicated upon as and when an occasion may arise for the purpose.19. This judgment deals only with the notifications referred to in the opening part of this judgment and by reference to which only the case was argued before us by the learned counsel for the parties.