K. Sreedhar Rao, Actg. C.J.

1. The material facts concerning the litigation are set out hereunder in a brief and laconic manner. The Government of India, by official memorandum, dated 24.12.1997, formulated a new Industrial Policy declaring total exemption of Central Excise Duty in the Northeastern region for a period of 10 years. The silent object of the said policy is to stimulate development of industries in the Northeastern region, which continued to be the backward region. Therefore, in order to boost and stimulate industrial activity in the Northeastern region, the policy was formulated. The significant concessions offered in the policy are in the nature of fiscal incentives to the new industrial units and their substantial expansions. The Clause C of the policy reads thus:

"FISCAL INCENTIVES TO NEW INDUSTRIAL UNITS AND THEIR SUBSTANTIAL EXPANSION.

i. Government has approved for converting the growth centers and IIDs into a total Tax Free Zone for the next 10 years. All industrial activity in these zones would be free from Income Tax, Excise for a period of 10 years from the commencement of production. State Government would be requested to grant exemptions in respect of