Article 14 reasonable classification fails where excise exemption is denied to similarly situated steel ingot manufacturers

A restrictive excise notification condition limiting concession and exemption to steel ingots manufactured with the aid of an electric furnace was found to lack a rational basis under Article 14. The classification was not shown to rest on any real difference between furnace-based units and a mini steel plant producing identical steel ingots by another process, and it had no demonstrated connection with the object of encouraging mini steel plants. On that reasoning, the denial of the benefit to a similarly situated manufacturer was held to be discriminatory and unreasonable, and the benefit was available despite the absence of electric furnace-based production.

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Issues: Whether the condition in the excise notifications restricting the concession and exemption to steel ingots manufactured with the aid of an electric furnace was discriminatory and violative of Article 14, and whether the petitioner was entitled to the same benefit despite using an alternative manufacturing process.

Analysis: The notifications granted the benefit only to steel mills manufacturing with the aid of an electric furnace, even though the petitioner produced identical steel ingots by a different process in a mini steel plant. The Court found no intelligible or rational basis for the distinction and no material to show that furnace-based units stood on a different footing or that the classification had any real connection with the object of encouraging mini steel plants. In the absence of justification for denying the benefit to a similarly situated manufacturer, the classification failed the test of reasonable classification under Article 14.

Conclusion: The restrictive condition was held to be discriminatory and unreasonable, and the petitioner was entitled to the benefit of the notifications notwithstanding that its steel ingots were not produced with the aid of an electric furnace.

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