MUNICIPAL COMMISSIONER, CHINCHWAD NEW TOWNSHIP MUNICIPAL COUNCIL versus M/S. CENTURY ENKA LTD.

Citation: [1995] SUPP. 3 S.C.R. 540 · Decided: 12-09-1995 · Supreme Court of India · Bench: K. RAMASWAMY, B.L. HANSARIA · Disposal: Dismissed

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Judgment (excerpt)

A 
MUNICIPAL COMMISSIONER, CHINCHWAD NEW TOWNSHIP 
MUNICIPAL COUNCIL 
v. 
M/S. CENTURY ENKA LTD. 
B 
SEPTEMBER 12, 1995 
[K. RAMASWAMY AND B.L. HANSARIA, JJ.] 
Municipalities : 
C 
Municipal Council-Octroi-Exemption from levy-Resolution regard-
D 
ing-Exemption to initially imported plant and machinery by new industrial 
Undertaking--Clalification appended to Resolution-lndustlies f onned by 
splitting up or reconstntction of business in existence would not be a new 
lndust!JScope of-Held : unit set up to effect substantial expansion of 
existing business was entitled to exemption. 
The appellant-Council passed a Resolution whereunder initially im-
ported plant and machinery by a new Industrial Undertaking was ex-
empted from the levy of octroi. However, clause (1) of the Clarification 
appended to the Resolution provided that an Industry formed by the 
E 
splitting up or the reconstruction of a business already in existence would 
not be a new industry. The respondent-Company set up a unit for manufac-
turing polyester filament yarn to effect substantial expansion of the exist-
ing business. Its claim for exemption under the aforesaid resolution was 
denied on the ground that the importation of plant was machinery for 
F 
G 
setting up of unit - being by existing undertakings, the same was not meant 
for 'new industrial undertaking'. On a petition filed by the respondent-
Company the High Court directed the Municipal Council to grant the 
exemption sought for. 
Dismissing the appeals filed by the Appellant-Council, this Court 
HELD : It cannot be held that the unit set up by the respondent for 
manufacturing of polyester filament yarn has to be regarded as result of 
reconstruction of the business already in existence, merely because the 
same bad come into existence for effecting "substantial expansion" of the 
business in existence. If the new undertaking be separate and independent 
H production units were to come in .existence in the sense of producing a 
540 
MUNICIPALCOMMNR. v. CENTURY ENKA LTD. (HANSARIA,J.] 541 
distinct commercial tJroduct and the undertaking could be carried on A 
separately, the same Would not be treated as being formed by reconstruc-
tion of the old business. The unit set up by the respondent did meet these 
requirements. Therefore, exemption could not have been denied by taking 
a view that it was not a new industry because of what has been stated in 
clause (i) of the Claritication. [543-F, 544-C-D] 
B 
Commissioner of Income Tax v. Indian Aluminium Co. Ltd., 108 ITR 
367; Commissioner of Income Tax v. Olient Paper Mills Ltd., 176 ITR 110 
and Textile Machbwy C01poration Ltd. v. The Commissioner of Income Tax, 
[1977) 2 SCR 762, relied on. 
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 8257-60 
of 1995. 
From the Judgment and Order dated 14/16.8.90 of the Bombay High 
Court in W.P. Nos. 4190, 2216/83, S.C.A. No. 1312/78, and 1539 of 1978. 
K. Madhava Reddy, V.B. Joshi, Umesh Bhagwat, Alok Singh, for the 
Appellant. 
Dr. A.M. Singhvi, Sunil Dogra, Ms. Monica Sharma, S.S. Shrof, S. 
c 
D 
Ganesh, Ravinder Narain, Amrit Mitra and Rajan Narain, for the Respon-
dents. 
E 
The Judgment of the Court was delivered by 
HANSARIA, J. These appeals by special leave raise the question of 
exemption from octroi, inter alia, on initially imported plant and machinery, 
pursuant to Resolution No. 63 of Chinchwad New Township Municipal 
Council adopted in its meeting held on 4.7.1970. That Resolution reading 
as below permits exemption : 
F 
"(i)n the first two years of new Industrial undertaking, initially 
imported plant and machinery (including spare and substitute G 
parts) required in the beginning and building materials (i.e.) Iron, 
Steel, Cement or bricks are necessary for erection of the premises. 
Clarification: New Industry means an Industry which is : 
(i) Not formed by the splitting up or the reconstruction of a H 
A 
B 
c 
D 
E 
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542 
SUPREME COURT REPORTS (1995] SUPP. 3 S.C.R. 
business already in existence; 
(ii) Not formed by transfer to a new business of a building, 
machinery or plant previously used for any purpose and 
. (iii) which begins or has begun to manufacture or produce 
goods within the Municipal area for the first time on or after 
the date on which the Council levies the tax under these rules 
or at any time within a period of 5 years immediately 
proceeding such levy." 
The respondents (though two in number, we would refer to the facts 
of M/s. Century Enka Ltd.) cl

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