2021 (9) TMI 1046 - HC - Central Excise

Supreme Court Upholds Excise Duty Modifications, Recognizes Right to Special Rate Application

Ahinsha Chemicals Ltd. Versus The Union Of India And 4 Ors. The Secretary to The Govt. Of India, Ministry Of Commerce And Industry, The Commissioner CGST And Centtral Excise, The Assistant Commissioner CGST And Central Excise, Guwahati, The Superintendent (Technical- I) Guwahati

Ahinsha Chemicals Ltd. Versus The Union Of India And 4 Ors. The Secretary to The Govt. Of India, Ministry Of Commerce And Industry, The Commissioner CGST ... Issues Involved:1. Validity of notifications modifying excise duty exemptions.2. Application of the doctrine of promissory estoppel.3. Interim orders and their implications on excise duty refunds.4. Legal right to request fixation of a special rate for value addition to manufactured goods.5. Timeliness of applications for special rate fixation.6. Constructive res judicata in the context of application rejection.Issue-wise Detailed Analysis:1. Validity of Notifications Modifying Excise Duty Exemptions:The petitioner, a public limited company, challenged the validity and vires of notifications No.17/2008-CE dated 27.03.2008 and No.31/2008-CE dated 10.06.2008, which modified the excise duty exemptions under the Northeastern Industrial Policy. The High Court initially set aside these notifications, but the Supreme Court eventually upheld them, thereby dismissing the writ petitions challenging the notifications.2. Application of the Doctrine of Promissory Estoppel:The petitioner argued against the notifications based on the doctrine of promissory estoppel, claiming they had a legitimate expectation of continued benefits under the original policy. However, this argument was not upheld by the Supreme Court, which restored the notifications.3. Interim Orders and Their Implications on Excise Duty Refunds:During the pendency of the appeal, the Supreme Court issued an interim order on 07.12.2015, directing the release of 50% of the amount due to the respondent, subject to certain conditions. This interim order was applicable to all similarly situated assessees, as clarified by the Division Bench of the High Court in Raj Coke Industries –vs- Union of India.4. Legal Right to Request Fixation of a Special Rate for Value Addition to Manufactured Goods:The petitioner invoked notifications No.32/99-CE dated 18.07.1999 and No.31/2008-CE dated 10.06.2008, which allowed manufacturers to apply for a special rate representing actual value addition. The court recognized the legal right of the petitioner to request such a rate, noting that the application must be considered on its merits.5. Timeliness of Applications for Special Rate Fixation:The petitioner submitted an application on 28.09.2020 for the financial years 2014-2015, 2015-2016, and 2016-2017. The Principal Commissioner of GST, Guwahati, rejected the application as time-barred, stating it should have been filed by 30th September of the respective financial year. However, the court noted that the necessity for such a request arose only after the Supreme Court's final judgment on 22.04.2020, and thus, the application was timely under the circumstances.6. Constructive Res Judicata in the Context of Application Rejection:The court highlighted that the earlier order dated 03.03.2021 in WP(C) No.617/2021 did not raise the issue of timeliness. Therefore, rejecting the application on this ground would not be appropriate. The principle of constructive res judicata was applied, preventing the respondent authorities from rejecting the application based on its submission date.Conclusion:The court directed the Principal Commissioner, GST, Guwahati, to consider the petitioner's application dated 28.09.2020 on its merits, without rejecting it on the ground of timeliness. The writ petition was allowed, ensuring the petitioner's legal right to request a special rate for value addition to manufactured goods was upheld.