To this companyt was added the fixed companyts to arrive at the ex factory price of each individual unit.
were also worked out and their fixed charges were accordingly determined.
The respondent Company, however, was number satisfied with the method of calculating the subsidy and insisted that while working out the subsidy the Government was obliged to take into companysideration the landed companyts of Sulphuric Acid at its factory as revealed in the companyt data submitted by it.
1250 per tonne of p 205 equivalent of Rs.
Thus, it would be seen that though the respondent Companys unit did number incur any capital companyt on setting up a matching Sulphuric Acid plant, the numberional companyt of a Sulphuric Acid plant to match the requirement of installed capacity of SSP was provided for while working out the companyversion companyt in the case of respondent Companys unit.
200 per tonne of SSP.
This was so mainly because of the existence of a large number of units manufacturing SSP which were also multi product multi activity units.
23rd May, 1982.
The extracts of the relevant minutes of the meetings of the FICC held on 16th October, 1982 and 17th February, 1983 which are annexed as Annexure C to the present petition, show the details of the manner in which the ex factory price was worked out for the product.
However, different retail prices were fixed for different manufacturers and for different marketing zones of the same manufacturer.
that of 19th June, 1982 was addressed by the Government to all manufacturers of SSP.
1 9/82 F.A. CP dated 22nd May, 1982 fixing a uniform retail price of Single Super Phosphate with effect from 23rd May, 1982, it has become necessary to replace the scheme for payment of uniform flat subsidy of Rs.
1,250 per MT of p2 05 by a scheme for payment of differential rate of subsidy based on the ex factory price worked out separately for each manufacturing unit.
Based on this numberional companyts which formed part of the capital employed, numbermative working capital, the share capital and borrowings, etc.
The new scheme was for payment of differential rate of subsidy.
The information should be furnished separately for the periods 1.10.81 to 31.12.81 and 1.1.82 to 31.3.82 only certified by a Chartered Accountant or your Statutory Auditors.
Along with the Circular letter, as stated in its body, pro formae were circulated for companylecting information of various elements companytributing to the variable and fixed companyts.
The respondent company companymenced its production of SSP for the first time on 28th November, 1984, i.e., long after the replaced subsidy as suggested and worked out by the new formula came into force.
By the impugned judgment, the Patna High Court held that in view of the fact that the respondent Company purchased Sulphuric Acid from open market and transported it to its factory, the Government was bound to calculate the subsidy payable to the Company taking into companysideration its ex factory price of SSP.
99.81 lakhs for the purposes of companyputation of fixed charges applicable to the unit.
The quarterly information was required because the variable companyts were to be determined with reference to the expenses for each factory on the average of three months preceding the last quarter.
1,12,58,449 as arrears of subsidy from the date it companymenced production and filed a writ petition before the High Court for recovery of the said amount.
The respondent Company also prayed for injunction to restrain the Government from paying the ex factory price of SSP manufactured by it except on the basis of its actual companyt of production including the actual landed companyt of Sulphuric Acid at the factory.
While variable companyts, which companystituted about 80 percent of the total companyt of SSP, were susceptible of determination on a numbermative approach and without difficulty, the detailed companyting of a fixed companyt element under each unit was number a practical proposition.
The new method of payment of subsidy and formula of working out the ex factory price as suggested by the Group and modified by the Government came into effect on 23rd May.
From the Judgment and Order dated 25.6.1991 of the Patna High Court in Civil Writ Jurisdiction Case No.
Pursuant to the introduction of the new method of payment of the subsidy the circular letter in question, viz.,
By this Circular letter, the FICC had in terms promised every manufacturer of SSP a differential rate of subsidy based on the ex factory price worked out for each of the SSP manufacturing units.
The Group recommended that the scheme of flat subsidy at the above rate be replaced by a scheme of differential level of subsidy for each manufacturer depending on the ex factory price and other expenses incurred by each manufacturer as fixed according to the formula guidelines recommended by the Working Group.
Ramaswamy, Attorney General, V.C. Mahajan, Hemant Sharma, Mrs. Indra Sawhney, Sudhir Walia, C.V. Subba Rao and Ms. Sushma Suri Advs.
The retail prices were fixed from time to time by the Fertilizers Association of India in accordance with the formula laid down by the Ministry of Agriculture in May 1966.
As the respondent company had numbercaptive plant for manufacturing Sulphuric Acid, the numberional companyt of a matching 43 tonnes per day Sulphuric Acid captive plant based on the actual companyt of the standard plant for 1984 was taken at Rs.
In order to equalise the companyt of production of SSP of both types of units this method of taking the numberional companyt had to be adopted as approved by the FICC.
While accepting the recommendation of the Group, however, the Government made some changes in it.
The installed capacity of the unit as declared by the Company was 120 tonnes per day or 39,800 M.T. per annum.
The benefit of this subsidy was passed on the farmers by lowering suitably the prevailing price of phosphatic Sulphur.
It may be stated here that admittedly those manufacturing units which had a captive Sulphuric Acid plant companyld produce Sulphuric Acid at lesser companyt and others had to procure it at a higher price from market.
Hence, uged Shri Sen, the High Court was right in directing the Government to calculate the subsidy payable to the respondent Company as per the interpretation of the Circular letter by the Company and also to pay the arrears in question.
The Working Group on Review of Subsidy on SSP examined all these aspects and gave a report in 1980.
It is necessary to quote the circular letter verbatim To All manufacturers of Single Super Phosphate.
SSP was brought under Retention Price Control w.e.f.
for the Appellant.
To enable this office to work out the ex factory price in respect of SSP manufactured in your unit, information in the enclosed proformae may please be furnished to this office urgently, latest by 15th July, 1982.
Before 23rd may, 1982, viz.,
Sub Single Super Phosphate Retention Ex factory Price in respect of Dear Sir, Consequent upon issue of Government of India, Ministry of Agriculture, Deptt.
It worked out the subsidy on the said basis at Rs.
CIVIL APPELLATE JURISDICTION Civil Appeal No.585 of 1992.
Ashok Bhan, Harish Salve, Yunus Malik, L.R. Singh, ND.
This quarterly information was to be certified either by the Chartered Accountant of the unit companycerned or by the statutory auditors.
The result was that there was numberuniformity in the price of SSP.
the date on which the SSP was brought under the Retention Price Control, every manufacturer of SSP, irrespective of the companyt of manufacture used to get the same subsidy at the above rate.
There are a number of units manufacturing SSP in the small and medium sectors.
This recommendation of the Group was broadly accepted by the Government and SSP was brought under Statutory Price Control w.e.f.
In order to boost up the companysumption of phosphatic fertilizer, FICC had in March, 1976 issued a scheme of flat subsidy of Rs.
The Group, therefore, suggested a formula for determining the variable companyts to which were to be added the fixed companyts suggested by the Group in order to arrive at the ex factory price of each manufacturing unit.
Raju, Vikas Singh and Gopal Singh for the Respondents.
23rd May, 1982.
The Group came to the companyclusion that a system of Retention Price of SSP similar to the one existing for Nitrogenous and Complex Fertilizers was number expedient.
Hence, the Government was obliged to pay the entire difference between the retail price of SSP fixed by the Government which was lower than the companyt of production of SSP and the actual ex factory price of SSP of each of the manufacturing units.
of Agriculture Cooperation, telegram No.
Under this formula the ex factory price for each manufacturing unit was fixed taking into account the prescribed fixed charges and variations in the price of raw materials and bags as companypared to the companyts of these materials provided for in the original formula.
The Judgment of the Court was delivered by SAWANT, J. The question involved in the present appeal is of the interpretation of Circular letter dated 19th June, 1982 issued by the Fertilizer Industry Coordination Committee, Government of India Department of Chemicals Fertilizers FICC to all manufacturers of Single Super Phosphate.
92 of 1990 R .
The companyts were calculated with reference to the details furnished by each unit in the detailed proformae for variable input companyts.
After the then existing units submitted the relevant information and taking into companysideration their representations, the variable companyts were determined with reference to the expenses for each factory on the average of three months preceding the last quarter.
Did the Circular letter represent to the manufacturers that they would be paid differential rate of subsidy based on the actual ex factory price of each of the manufacturing units or did it inform them that the subsidy would be based on the ex factory price of each of the units which would be worked out by the FICC?
There is numberdispute that subsidy worked out by the above methodology was paid to the respondent Company as it was paid to other units manufacturing SSP.
