Jai Bhagwan Oil & Folour Mills vs U.O..I. & Ors

2. By notification dated 23.7.1971 the Government of India formulated a `Transport Subsidy Scheme' for grant of subsidy on the transport of raw materials and finished goods to and from certain selected areas with a view to promote growth of industries in such areas. Clause 6 contains the details of the Scheme. Sub-clause (i) thereof provided that "a transport subsidy will be given 2 to the industrial units located in selected areas in respect of raw materials which are brought into and finished goods which are taken out of such areas." Sub- clause (iv) specified the north-eastern region including the State of Assam as one of the selected areas to which the scheme was made applicable. Sub-clause

(xii) required the State Government to set up a Committee consisting of Director of Industries, a representative of the State Industries Department, a representative of the State Finance Department, and a nominee of the Central Government (Ministry of Industrial Development), to scrutinize and settle all claims for transport subsidy arising in the State. The said Committee was required to call upon the applicants for subsidy, to provide proof of raw materials imported into the State and finished goods exported out of the State by their industrial units, to decide their eligibility for transport subsidy. The Committee was also required to scrutinize and settle the claims in the manner indicated in the scheme. The words `industrial unit', `raw material' and `finished goods' were defined in sub-clauses (a), (h) and (i) of clause (4) of the scheme, as follows :-

3. The appellant claimed that it has its industrial unit at Tinsukia, Assam; that it was engaged in the manufacturing activity of crushing mustard seeds and producing two distinct products namely mustard oil and oil cake, as finished goods; and that it was registered under the transport subsidy scheme, after verification as provided in the Scheme. It was also claimed that crushing of mustard seeds yielded 30-34% mustard oil and 60-64% oil cake, each product having a separate identity and different markets.

4. The appellant made several claims for grant of transport subsidy in respect of raw materials, oil cake and oil, from time to time. According to appellant, after giving credit to Rs.5,88,421/- released as subsidy, the amount due towards subsidy claim till August, 1993, was Rs.58,44,531/-. As there was inordinate delay in settling the claims, the appellant filed a writ petition in the year 1996, seeking a direction for release of the said transport subsidy amount. The said writ petition was disposed of on 15.5.1996 with a direction to scrutinize appellant's claim and if found eligible, disburse the amount. The State Government scrutinized and recommended to the Government of India, the release of Rs.58,44,531 as transport subsidy to the appellant. On 18.6.1997, the Government of India sanctioned and released Rs.44,14,922 as 4 transport subsidy as against the recommended claim of Rs.58,44,531. On 14.7.1997 the Government of India issued a clarification that the transport subsidy under the said scheme would not be applicable in regard to oil cake as it was only a by product. Aggrieved by the disallowance of transport subsidy for oil cake, appellant filed another writ petition (C.R. No.376/1997) for release of subsidy in respect of oil cake, as sanctioned by the State Level Committee. A learned Single Judge of the Guwahati High Court by order dated 4.10.1982 rejected the writ petition. The writ appeal filed by the appellant was also dismissed on 27.10.2008. The said order is challenged in this appeal.

12. We therefore allow this appeal, set aside the orders of the Division Bench and single judge of the High Court and allow the writ petition before the High Court by declaring that oil cake is `finished goods' for the purpose of transport subsidy scheme and consequently the appellant was entitled to the subsidy. Respondents are directed to verify and release the subsidy amount due to the appellant in regard to oil cake exported out of the State. Compliance within six months.