Promissory estoppel preserved an excise duty exemption where the unit relied on the earlier industrial policy.

Withdrawal of an excise duty exemption granted under the earlier Sikkim industrial package could not defeat an industrial unit's accrued entitlement where the unit had set up operations and commenced commercial production in reliance on the assurance of a fixed exemption period. The analysis notes that the exemption was a statutory concession intended to promote industry, and that the later withdrawal by delegated legislation was not supported by adequate material showing overriding public interest. The stated reliance on the product being a health-hazardous good was not backed by disclosed scientific or policy material. The unit therefore continued to enjoy the exemption for the full assured period of 10 years from commencement of production.

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Issues: Whether the withdrawal of excise duty exemption by Notification No. 21/2007-Central Excise was valid against an industrial unit that had set up operations and commenced commercial production on the basis of the earlier exemption policy and notification, and whether the petitioner could invoke promissory estoppel to retain the exemption for the assured period.

Analysis: The exemption under the earlier policy and Notification No. 71/2003-Central Excise was a statutory concession granted for a fixed period to promote industry in Sikkim. The petitioner altered its position by establishing the unit and commencing commercial production before the cut-off reflected in the later policy materials. The withdrawal notification was issued through delegated legislation, but the State did not place adequate material to establish any overriding public interest justifying premature curtailment of the assured exemption. The only stated justification, that pan masala was a demerit or health-hazardous good, was unsupported by any disclosed scientific or policy material. The later policy memorandum also indicated that units commencing commercial production on or before 31-3-2007 were to continue receiving benefits under the earlier Sikkim package.

Conclusion: The withdrawal of exemption could not defeat the petitioner's accrued entitlement, and the petitioner remained entitled to excise duty exemption for the full assured period of 10 years from commencement of commercial production.

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