TaxTMI 
TaxTMI 
2002 (5) TMI 806
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....India announced a separate Industrial Policy for the North-Eastern Region in the month of December, 1997 to stimulate development of industries so that the Region overcomes its continuing backwardness. The State of Assam also announced their industrial policy. In order to make operational the policy, number of Notifications were issued by the Government of India as well as the State of Assam and out of them Excise Notification issued by the Ministry of Finance on 8-7-99 on the eve of the Hon'ble Prime Minister's visit to Assam was the major incentive. 4. The case of the writ petitioner is that pursuant to the said notification, they (writ petitioners) before us established new units to manufacture cigarettes and for the purpose all of them obtained provisional registration certificate. After the completion of the project, commercial production commenced and the petitioners approached the concerned Central Excise Department, Guwahati for releasing the excise benefits as per the said notification. The Exemption Notification No. 32/99, dated 8-7-99 issued by the Central Excise (hereinafter referred as Exemption Notification No. 74) reads as follows :- "Exemption from excise....
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....nth under consideration, and thereafter may adjust the amount of refund by such amount as may be necessary in the subsequent refunds admissible to the manufacturer. 3. The exemption contained in this notification shall apply only to the following kind of units namely :- (a) New industrial units which have commenced their commercial production on or after the 24th day of December, 1997. (b) Industrial units existing before the 24th day of December, 1997 but which have undertaken substantial expansion by way of increase in installed capacity by not less than twenty-five per cent on or after the 24th day of December, 1997. 4. The exemption contained in this notification shall apply to any of the said units for a period not exceeding ten years from the date of publication of this notification in the Official Gazette or from the date of commencement of commercial production whichever is later." 5. In the present case there is no dispute at the Bar that the industrial units established by the petitioner are all new units having commenced their commercial production on or after 24-12-97 and they are all situated within the specified area mentioned i....
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....uing, the writ petitioners deposited their excise duty for the subsequent months of July, August, September, 2000 etc. and claimed refund. The respondent authorities, however, initially postponed their release of the refund and it relates to certain correspondences between the parties. Some of the writ petitioners approached this court by filing writ petitions for a direction to the respondents to release the refund. This court vide interim order directed the Assistant Commissioner of Central Excise to refund the amount of excise duty paid as provided under clause 2(3) of the exemption notification. The respondent authorities filed an application for vacation of the said direction whereupon the matter was heard and this court vide order dated 8-2-2001 provided as follows :- "For the aforesaid reasons, I am not inclined to vacate the interim order passed by this court but considering the fact that the said order has not been complied with as yet for reasons which may not be altogether be justified. I allow time to the Assistant Commissioner of Central Excise Department up to 28-2-2001 to comply with the interim order of this Court. Misc. case stands disposed of." 7. Th....
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....ndia. The Central Excise Act, 1944 provides a complete machinery to challenge the impugned order. As a matter of fact the petitioner has availed the Appellate remedy under Section 35E(4) and the Appellate Commissioner is in seise of the matter. Thus the writ petition filed by the petitioner is not maintainable in its present form. (1) Titagar Paper Mills Co. Ltd. v. The State of Orissa reported in AIR 1983 S.C. 603 (para 11); (2) Asstt. Collector of Central Excise, Chandan Nagar v. Dunlop India Ltd. reported in AIR 1985 S.C. 330 (para 3); (3) H.B. Gandhi, Excise & Taxation Officer cum Assessing Authority v. M/s. Gopinath & Sons and others reported in 1992 Supp (2) SCC (312) (para 6)." 10. In the case of Titagar Paper Mills Co. Ltd. and another v. State of Orissa and another, reported in AIR 1983 SC 603 the Apex Court held :- "The Act provides for a complete machinery to challenge an order of assessment, and the impugned orders of assessment can only be challenged by the mode prescribed by the Act and not by a petition under Art. 226 of the Constitution. It is now well recog....
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.... however, submitted that the petitioner cannot be thrown out on the ground of maintainability in view of the peculiar facts and circumstances of the case and the following factors :- (1) That the fate of the appeal is predetermined. (2) The act of the respondents was arbitrary. (3) That there is apparent error on the face of the order and the principles of natural justice have been violated. (4) The order was passed without jurisdiction. (5) Once rule has been issued and parties have filed their affidavits, counter affidavits, rejoinders, additional affidavits, etc., when the matter is pending for nearly two years, it will amount to injustice, if they are thrown out without considering the merit. 13. The case of the writ petitioners is that after the commencement of commercial production, the Central Excise Department after verification of the records and other documents found that the writ petitioners are entitled to exemption and accordingly granted the same to them. However, the problem arose when the Director of Industries and Commerce, ....
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....ing. Sir, On the above mentioned context, it has been instructed by the Commissioner of Central Excise, Shillong (Camp: New Delhi) that the following steps/actions are to be initiated immediately in respect of Cigarette Manufacturing Units under your jurisdiction who are availing the benefits of Notification No. 32/99-C.E., dated 8-7-99." 15. Even the learned Counsel representing the Central Excise made submission before the learned Single Judge while the misc. case was taken up and his submission finds mention in the order of this court dated 8-2-2001, which reads as follows :- "Mr. Mahanta further submitted that the Assistant Commissioner or the Deputy Commissioner concerned has taken up the matter with the higher authorities including the Central Board of Excise and Customs and that the Assistant Commissioner or the Deputy Commissioner concerned has been instructed to take some more time so that the matter could be resolved by the higher authorities." 16. The learned Counsel for the writ petitioner submitted that the decision was rendered by the superior authorities and the decision in the appeal is a foregone conclusion as there is no effective remedy i....
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....medy. The High Court did not pose to itself the question, who would grant relief when the impugned order is passed at the instance of the Chief Minister of the State. To whom did the High Court want the appeal to be filed over the decision of the Chief Minister. There was no answer and that by itself without anything more would be sufficient to set aside the judgment of the High Court." 17.  In recent case of Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and others, reported in (1998) 8 SCC 1 the Apex Court observed :- "14. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari for the enforcement of any of the Fundamental Rights contained in Part III of the Constitution but also for "any other purpose". 15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has i....
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.... where the action has been taken arbitrarily without the sanction of law. 19. The writ petitioners have also submitted that the impugned orders were passed by the concerned authority without jurisdiction, that is, the matters were decided on the basis of irrelevant factors without considering the relevant factors. The writ petitioners contend that PMT was not relevant factor for deciding the refund whereas the concerned authority did so although on earlier occasion they held that condition of PMT cannot be incorporated in the exemption notification. Further, the Assistant Commissioner of Central Excise the proper authority under the notification, on being satisfied that all the conditions of the exemption notification have been fulfilled granted exemption for the months of April, 2000 to June, 2000 on provisional basis and subsequently respondent No. 4 sanctioned the refund finally for the said period. The Assistant Commissioner has no power to review his own order once he had decided that the unit is entitled or eligible for exemption. But, in the instant case they have done so without approaching the Commissioner for revision of the order u/s. 35E of the Act. Respondents ....
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....f statutory remedy have no application in a case where the impugned order has been made in violation of the principles of natural justice. 21. In the present case, we find that Rule was issued and the matter is pending for the last one and half years during which both the parties have filed numerous applications, affidavits, counter affidavits, rejoinder and volume of documents. In view of foregoing discussions, this court is of the view that this is not a case where the writ petitioners are to be thrown out on the ground of existence of alternative remedy. Accordingly, it is held that the writ petitions are maintainable and it is proposed to dispose of on merit. 22. Before interpreting the exemption notification, it will be fruitful to examine the principles of interpretation of exemption notification. In the case of Hansraj Gordhandas v. H.H. Dave, reported in 1978 (2) E.L.T. (J 350) (S.C.) = AIR 1970 S.C. 755, the Apex Court held : - "It is well established that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words. The entire matter is governed wholly by the language of the notification. If the tax-pa....
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....d be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them. When a notification is issued in accordance with power conferred by the statute, it has statutory force and validity and, therefore, the exemption under the notification is, as if it were contained in the statute itself. The notification has to be read as a whole in the context of other relevant provisions in the statute. When two views of a notification are possible, it should be construed in favour of the subject as notification is part of a fiscal enactment. Though in a taxing Act provision enacting an exception to the general rule of taxation has to be construed strictly against those who invoke its benefit, but while interpreting an exemption clause, liberal interpretation should be imparted to the language thereof, provided no violence is done to the language employed. It is only, however, in the event of there being a real difficulty in ascertaining the meaning of a particular enactment that the question of strictness or of liberality of construction arises. However, absurd results of construction should b....
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....is. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i.e., by the plain terms of the exemption." In this connection the following observations of the Apex Court in the case of Harbhajan Singh v. Press Council of India & Ors., reported in JT 2002 (3) SC 21 may be pertinent : "7. Cross, in Statutory interpretation (third edition, 1995) states : "The governing idea here is that if a statutory provision is intelligible in the context of ordinary language, it ought, without more, to be interpreted in accordance with the meaning an ordinary speaker of the language would ascribe to it as its obvious meaning, unless there is sufficient reason for a different interpretation. Thus, an 'ordinary meaning' or 'grammatical meaning' does not imply that the judge at attributes a meaning to the words of a statute independently of their context or of the purpose of the statute, but rather that he adopts a meaning which is appropriate in relation to the immediately obvious and unresearched....
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....n the Government of India Notification dated 24-12-1997 provides that "In view of the continuing backwardness of North-East Region, the need for a new and synergetic incentive package was widely felt to stimulate development of industries". Under the Heading of Fiscal Incentives to New Industrial Units and their Substantial Expansion as provided is as follows :- "i. Government has approved for converting the growth centres and HDs 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 exemption in respect of Sales Tax and Municipal Tax." 25. Pursuant to the above, the State Government announced as under :- "Today, the State Government is pleased to announce that due to the efforts of the State Industries Department, major portions of the policy have been made operational for the States of Assam and Tripura. A number of notifications have been issued by the concerned Ministries in the Government of India, the important ones being the Excise notifications issued by the Ministr....
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....ate Governments. On the other hand, we find that the Exemption Notification No. 74 further provided that the goods specified in the First Schedule and Second Schedule to the Central Excise Tariff Act, 1985 are exempted and the manufacturing of cigarettes comes under the said Tariff. It may be further mentioned here that during the subsistence of the scheme, exemption on cigarettes manufacturing was withdrawn by the Government of India vide their notification dated 31-12-1999 but within a short period the said notification was withdrawn vide Notification No. 1/2000 thereby bringing the cigarette manufacturing under the purview of exemption notification. Moreover, vide order dated 22-1-2001 the benefits of excise exemption in respect of cigarette manufacturing was withdrawn by the Government of India. In this writ petition the claim of the writ petitioners is in respect of the excise duty till the exemption notification was in force and the legality or validity of the withdrawal notification dated 22-1-2001 is not under challenge before us. 29. The above mentioned two withdrawal notifications issued by the Central Government fully decries the respondents' plea that the benefi....
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.... industrial policy did not envisage such narrow and pedantic approach or view. Further, the benefits and incentives granted under the said policy were not made dependent upon the availability or working of each other scheme. It was held, that the requirement of PMT as a condition precedent for grant of excise benefits cannot be gathered from the scheme or objective thereof and the same was irrelevant for the purpose of deciding the question of excise refund. Learned Counsel for the writ petitioner submitted that PMT was a mere ploy to harass the industrialists and deprive them of their dues and even in cases, where proper PMTs were available, the refund was withheld. 31. In the case of the writ petitioner in WP(C) No. 310/2001, we find, on the respondents' own admission as per Annexure-V of their additional affidavit filed on 3-4-2002 that the said writ petitioner started their commercial production on 14-6-2000 and the PMT was issued to them on 19-6-2000, that is, within 5 days of the same. The following portion of the letter dated 10-7-2000 issued by the Assistant Commissioner, Central Excise, Jorhat clearly shows the hollowness in the respondents' plea : "M/s. Kreesna....
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....r the PMT was that a cigarette manufacturer was required to establish/take effective steps for establishing tobacco based industries. The admitted case is that the units were given time till December, 2000 to establish such industries. The Central Excise Department was not authorised to sit over the decision of the State Government and deny the benefits of exemption of July, 2000 itself before the expiry period of the condition. Moreover, the petitioners have submitted that at no point of time the Excise Department enquired with them regarding the fulfilment or non-fulfilment of the said condition. Mr. P.K. Goswami, learned Counsel for the writ petitioner Newzone has submitted that the said petitioner had already started non-tobacco based industries and the commercial production started long back; similarly is the claim on behalf of the writ petitioner in WP(C) No. 310/2001. 35. In view of what has been stated above, it is held that the above action of the respondent Department shows their lack of bona fide. Further, PMT was not a condition precedent for availability of exemption notification as stated above. 36. During the course of argument, the learned Counsel fo....
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....ined such licence before setting up the new distilleries their action in setting up the new distilleries was illegal and could not give rise to any rights in their favour. But, this contention is also unsustainable. In the first place, no such contention was raised in the writ petitions and neither the State Government nor respondents Nos. 5-11 had any opportunity of answering such contention. This contention is based on facts and we cannot permit the petitioners to raise it for the first time in the present appeals. The foundation for this contention should have been laid in the writ petitions and the necessary facts should have been pleaded in support of it. No such plea having been raised and no such facts having been pleaded in the writ petitions, we cannot allow this contention to be raised before us. Moreover, it is obvious from section 11 read with the definitions of 'factory' and 'industrial undertaking' contained in sub-sections (c) and (d) of section 3 of this Act that licence from the Central Government for setting up new distilleries would be necessary only if 50 or more workers would be working in such distilleries and here in the present writ petitions, there is nothi....
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....ficate issued by the State Government constitutes a valid approval for undertaking an activity which is otherwise under purview of licensing? I shall be grateful for an early reply in the matter. With warm regards, Yours sincerely (P.G. Mankad) Shr Ajit Kumar Secretary, Deptt. of Industrial Policy, Promotion & Industrial Development, Udyog Bhawan, New Delhi." Reply given by the Secretary, Deptt. of Industrial Policy and Promotion, Govt. of India on 18-9-2000 reads as follows : "D.O. No. 7(9)/2000-IP Dear Shri Mankad, Please refer to your D.O. letter No. F.332/36/2000-TRU, dated 30th August, 2000 regarding licensing policy for manufacture of cigarettes by SSI units. Manufacture of cigarettes is a licensable activity under the Industries (Development and Regulation) Act, 1951. An industrial unit, whether SSI or non-SSI (registered with State Government or otherwise), intending to manufacture cigarettes, requires an industrial licence under the Act. However, provisions of the existing Act, including licensing, do not apply to units which employ less than 50/100 workers with/without the aid of power. We are attempting to rectify this anomaly in....
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.... be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to effect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself." Orders are not like old wine becoming better as they grow older." 43. In view of the above-mentioned finding, the provisions of the IDR Act was not applicable in case an unit is engaged in the manufacturing of cigarettes provided the total number of workers working are less than 50 in case of manufacturing with the aid of power. This goes to show that such an unit could have been established any where in India. Job working is a recognised process of industrial activity all over the world. In the case of Ujagar Prints v. Union of India, reported in AIR 1989 S.C. 516, it was held that the purpose of the Excise Act is that the unit engaged in the process of manufacturing on job work basis shall be deemed to be manufacturer and liable to pay excise duty : The matt....
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.... was exempted by the exemption notification for the North-East Region and if some manufacturers were taking advantage of the said notification by establishing an industry in that area, how the same can be called a sham transaction ? The respondent wanted to deprive the petitioners of the refund of the excise duty by referring to the following clause of the agreement between G.P. India Ltd. and the writ petitioner in W.P.(C) No. 2549/2001. The relevant clause reads as follows :- "GPI shall provide necessary declaration on packing materials and specification RCTL who in turn will get the Central Excise approval, wherever applicable, expressly understood and agreed that the onus of Central Excise tax payment with RCTL but GPI will provide all kind of assistance for arranging the fund discharging the said liability. However, in case of dispute in regard to determination of such liability, financial or otherwise, the entire responsibility solely by that of RCTL." 45. Admittedly, the writ petitioners were small businessmen compared to the G.P. India Ltd. or Vazir Sultan and in view of the amount of excise duty involved, if some assistance was sought or given by the other in th....
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.... very clear and straight and there was no ambiguity in it. There was no scope to read in the language of the notification any intendment as submitted by the respondents. The question that arises for consideration is whether the Central Excise Department can be allowed to sit over the judgment of a policy maker and thereby deny the benefits of exemption notification which was in force. This court has not been called upon to decide about the legality of the Notification dated 22-1-2001 which reads as follows :- "FROM : JOINT SECRETARY (TRU), CBEC, NEW DELHI TO : CCE, SHILLONG F. No. 354/13/2001-TRU(.) NOTIFICATION NO. 1/2001-CENTRAL EXCISE HAS BEEN ISSUED TODAY ON 22ND JANUARY, 2001(.) THE EFFECT OF THE NOTIFICATION IS TO PRECLUDE CIGARETTES FROM THE SCOPE OF THE SCHEME OF EXCISE EXEMPTIONS GRANTED TO THE NORTH-EAST(.) THUS, WITH EFFECT FROM 22 JANUARY, 2001, THE BENEFIT OF NOTIFICATION NOS. 32/99-C.E. AND 33/99-C.E. WILL NOT BE AVAILABLE TO CIGARETTE UNITS IN THE NORTH-EAST (.) A COPY OF THE NOTIFICATION NO. 1/2001-C.E. IS ENCLOSED (.)" 49. Admittedly, the exemption notification included cigarettes till 21-1-2001 and the benefit ceased to be available to the ciga....