UNION OF INDIA AND ORS. vs M/S. WOOD PAPERS LTD. AND ANR.

The Supreme Court held that under Notification No. 163 of 1965, the exemption for production of packing and wrapping paper is strictly limited to the extent of the factory's enlarged capacity and does not extend to production attributable to the capacity as it existed in 1967. The Court emphasized that exemptions must be construed strictly against the subject, and since the Respondent Company did not qualify under the first clause of the notification, its claim for exemption based on existing capacity was dismissed. The appeal by the Union of India was allowed, and the writ petition of the Company was dismissed.