TaxTMI 
TaxTMI 
2016 (1) TMI 1210
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....egion, in order to give stimulus to the development of industrial infrastructure. Pursuant thereto, a further notification was issued on 8-7-1999 granting new industrial units which would commence commercial production on or after 24-12-1997 and to the category of industrial units those would increase substantially their installed capacity after that date and cleared goods from the units located in the group centre and integrated infrastructure centres. There is no dispute that the said notifications No. 32/99-C.E. and No. 33/99-C.E., dated 8-7-1999 were issued in exercise of the powers conferred by sub-section (1) of Section 5A of the [Central] Excise Act, 1944 read with sub-section (3) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and sub-section (3) of Section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 by exempting the goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act. By the notification under No. 33/1999-C.E., dated 8-7-1999, some amendments in the Notification No. 32/99-C.E., dated 8-7-1999 has been made. 'Pan masala' was excluded from exemption. 2.&em....
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....the said notification, in the opening paragraph, for the words, figures and brackets 'the goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (1 of 1986)', the words, figures and brackets 'the goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (1 of 1986) other than the goods falling under Chapter 24 or Heading No. 21.06 of the said First Schedule or the Second Schedule, as the case may be' shall be substituted." 4. The purport of the said notification dated 31-12-1999 was obvious that the exemption of the central excise as accorded was withdrawn in respect of goods falling under Chapter 24 or Heading No. 21.06 of the First Schedule or the Second Schedule respectively. Those (under Chapter 24 of the First Schedule) include Tobacco substitutes, cigarettes, chewing tobacco, etc., and under Heading No. 21.06 of the Second Schedule, pan masala. Thereafter, by the Notification No. 1/2000-C.E., dated 17-1-2000, the further amendment in the notification dated 8-7-1999 was carried out in the following manner : "In the said notification, in the opening paragraph, the words, figures ....
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....leaving aside the entries made against serial Nos. 1, 2, 3, 6 & 7. SL. No. Notification No. and date Amendment (1) (2) (3) 4 32/99-Central Excise, dated the 8th July, 1999 In the said notification, in the first paragraph, for the words, figures and brackets 'the goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (1 of 1986)', other than cigarettes falling under Chapter 24 of the First Schedule' the words, figures and brackets 'the goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (1 of 1986) other than goods falling under Chapter 24 of the said Schedules' shall be substituted. 5 33/99-Central Excise, dated the 8th July, 1999 In the said notification, in the first paragraph, in item (a), for the words, figures and brackets 'specified in the Schedule appended to this notification other than cigarettes falling under Chapter 24 of the First Schedule to the Central Excise Tariff Act, 1985 (1 of 1986)' the words, figures and brackets `specified in the Schedule appended to this notification other than goods falling under Chapter 24 of the First Schedule ....
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....d Textile Articles) Act, 1978 (40 of 1978), retrospectively at all material times. (3) No suit or other proceedings shall be maintained or continued in any court, tribunal or other authority for any action taken or anything one or omitted to be done, in respect of any goods under the said notifications, and no enforcement shall be made by any court, tribunal or other authority of any decree or order relating to such action taken or anything done or omitted to be done as if the amendments made by sub-section (1) had been in force at all material times. (4) Recovery shall be made of all amounts of duty or interest or other charges which have not been collected or, as the case may be, which have been refunded but which would have been collected or, as the case may be, which would have not been refunded if the provisions of this Section had been in force at all material times, within a period of thirty days from the day on which the Finance Bill, 2003 receives the assent of the President, and in the event of non-payment of duty or interest or other charges so recoverable, interest at the rate of fifteen percent, per annum shall be payable from the date immediately after....
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.... Shillong and Dibrugarh. It has also been brought to the notice of the Board that in some cases, orders for recovery of the central excise amounts refunded to the affected units, have also been issued. 3. In this regard, Finance Minister at the consideration stage of the Finance Bill had made the following statement in the Parliament : 'No industry other than tobacco in the North-East region or Assam is affected by it. What you are now asking about tobacco is to make an exception for chewing tobacco and gutkha. I will consider it fully. I will try and find a suitable legal answer for this purpose.' 4. The matter has been examined by the Board and in view of the assurance given by the Hon'ble FM, it has been decided to keep all such show cause notices, issued in respect of Chewing Tobacco and Gutkha, pending till a final decision is taken in this regard. In case Adjudication orders for recovery in this regard have been issued, the actual recovery of such amounts may also be kept pending till further orders. Accordingly, you are directed to keep all such show cause notices pending till further orders on the matter. It is however, clarified that show cause notices a....
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.... and (iv) has continued its manufacturing activities after the 28th day of February, 2001; (B) an amount equal to the difference between the sum of basic excise duty, special excise duty and additional excise duty, payable, but for the exemption in this notification, and the sum of basic excise duty, special excise duty and additional excise duty, paid, shall be utilised by the manufacturer only for investment in plant and machinery in a manufacturing unit which is located in the State of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland or Tripura; (C) the investment in terms of condition (B), shall be made before the expiry of six months from the end of each quarter; (D) the manufacturer shall provide all details relating to the investment made in terms of condition (B), within one month after the expiry of the period of six months referred to in condition (C), to a Committee consisting of, the Chief Commissioner of Central Excise, Shillong, the Principal Secretary of the Department of Industry of the State concerned in which the investment is made, and shall have to prove to the satisfaction of the said Committee that th....
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.... well as qualifying clause as regards the notification dated 8-7-1999. "(A) the exemption under this notification shall be available only in respect of a unit which - (i) is located in the State of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland or Tripura; (ii) had commenced commercial production on or after the 24th day of December, 1997, but not later than the 28th day of February, 2001; (iii) had availed of the benefit under the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 32/99-Central Excise, dated the 8th July, 1999 [G.S.R. 508(E), dated the 8th July, 1999] or No. 33/99-Central Excise, dated the 8th July, 1999 [G.S.R. 509(E), dated the 8th July, 1999]; and (iv) has continued its manufacturing activities after the 28th day of February, 2001; (B) an amount equal to the sum of basic excise duty, special excise duty, additional excise duty and National Calamity Contingent duty, payable, but for the exemption in this notification, shall be utilised by the manufacturer only for investment in - (i)....
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....msp;Apparent, it is that certain restrictions and conditions for reinvestment have been enforced for getting the exemption out of the goods falling under the said sub-headings, with further provision that if the investment made is withdrawn before the expiry of ten years and is not reinvested in the manner as laid down, the duty which is equal to the amount so withdrawn and not so reinvested shall be paid by the manufacturer on the date on which the investment is withdrawn. By the Notification No. 28/2004-C.E., dated 9-7-2004 certain amendments had been made in the notification dated 21-1-2004 particularly in the conditions (C), (D) and (E). Those conditions after modification as intended, have been substituted with additional clause namely, Clause E(a). "(C) the investment in terms of condition (B), shall be made in the following manner : (i) an amount equal to the sum of basic excise duty, special excise duty, additional excise duty and National Calamity Contingent duty, payable in a quarter, but for the exemption under this notification, shall be deposited by the manufacturer, within sixty days from the end of the quarter, in an escrow ac....
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.... Committee referred to in condition (D) is satisfied that the investment as specified in condition (B), has been made, it shall issue a certificate to this effect to the manufacturer within a period of one month from the receipt of the details as referred to in condition (D) and on the issuance of which, the liability of the manufacturer shall stand discharged to the extent of investments so certified; (EA) if the manufacturer fails to make the deposit or does not invest the amount specified in condition (B), within the stipulated period and in the manner, then, the duty which is equivalent to the amount not so deposited or invested shall be recoverable from the manufacturer along with interest thereon at the rate specified under Section 11AB of the Central Excise Act, 1944, and without prejudice to any action that may be taken under the provisions of the said Act or any other law for the time being in force, by forfeiture of amount in the said escrow account." 11. Not only the procedural stringency, but also imposition of interest at the rate specified under Section 11AB of the Central Excise Act, 1944, that to, without prejudice to any further action that may be t....
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....efits of the office memorandum dated 24-12-1997 was discontinued. But by the Notification under No. 11/2007-C.E., dated 1-3-2007, the Government of India has notified as under : "NOTIFICAITON No. 11/2007-Central Excise 10 Phalguna, 1928 (Saka) New Delhi, the 1st March, 2007 G.S.R. (E) - In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1994), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), and sub-section (3) of section 136 of the Finance Act, 2001 (14 of 2001), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 8/2004-Central Excise, dated 21st January, 2004 which was published in the Gazette of India, Extraordinary, vide number G.S.R. 60(E) of the same date, namely :- In the said notification, after paragraph 1, the following paragraph shall be inserted, namely :- '2. The exemption contained in this notification sha....
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....E., dated 25-8-2003, Annexure-H to the writ petition, there was partial restoration of the exemption that was withdrawn and the exemption as proposed thereby was to the extent of 50% of the duty payable, however, subject to certain conditions as laid therein, for the units located in the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Nagaland and Tripura and for those units that had commenced commercial production on or after 24-12-1997 but not later than 28-2-2001. The further condition that has been laid down in the notification dated 25-8-2003 is that the unit had continued its manufacturing activities after 28-2-2001. This notification is not under challenge rather the petitioners seek to avail the benefits flowing from that notification as modified from time to time. As regards, the exemption through reinvestment and its mode as prescribed by the respondents are also not under challenge by the petitioners. In the words of Dr. Saraf, learned senior counsel, in the present case, the petitioner had not claimed exemption from payment of excise duty for a period prior to 14th May, 2003 (the date on which Finance Act, 2003 was enacted). In fact the benefit of exemption whic....
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....l of the exemption. It is apparent on the face of the submission of Dr. Saraf, learned senior counsel that he has structured his submission on the principle of promissory estoppel. Premature withdrawal has adversely affected the petitioners as they had altered their position by investing a huge amount on the clear and fundamental assurance given by the State. He has, therefore, submitted that by the office memorandum dated 1-4-2007, Annexure-K to the writ petition, it has been clearly reassured that the new industrial policy and other concessions in the North-Eastern region, announced by the office memorandum No. EA/1/2/96-IPD, dated 24-12-1997 (NEIP, 1997) will cease to operate w.e.f. 1-4-2007 but in clear terms it has been mentioned that 'industrial units which have commenced commercial production on or before 31-3-2007 will continue to get benefits/incentives under NEIP, 1997' (Para 2 of the said office memorandum dated 1-4-2007). Even in the Finance Act, 2007 exemption of the income-tax under NEIP, 1997 under Section 80(1B) and 80(1C) had not been curtailed or taken away. Thus, the impugned notification dated 1-3-2007, Annexure-L to the writ petition, which has provided that th....
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....oncession beyond 31-3-2009 and that is why the notification has used the expression '........ for the period ending 31-3-2013' without otherwise indicating the concession already being enjoyed by the eligible units till 31-3-2009. 13. The High Court, with great respect, has gone wrong in not appreciating the background of the case and the decision of the Council of Ministers to extend its own Industrial Policy announced in 2004 and the tax concession beyond 31-3-2009. Once the Council of Ministers takes a policy decision, the implementing Department cannot issue a notification contrary to the policy decision taken by the Government. The High Court also erred in analyzing and understanding the Notification dated 18-6-2009 as if it introduced the CST concession @ 1 per cent with effect from the date of issuance of notification. As we have already clarified, it is not the introduction of a new policy but an extension of the benefits under the extended policy. It is in this context, the decision of this Court in Suprabhat Steel Limited (supra) and State of Jharkhand and Others v. Tata Communications Limited and Another - (2006) 4 SCC 57 become relevant." 17. It is not i....
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....y has the doctrine of promissory estoppel been adopted in its fullness but it has been recognized as affording a cause of action to the person to whom the promise is made. The requirement of consideration has not been allowed to stand in the way of enforcement of such promise. The doctrine of promissory estoppel has also been applied against the Government and the defence based on executive necessity has been categorically negatived. It is remarkable that as far back as 1880, long before the doctrine of promissory estoppel was formulated by Denning, J., in England, A Division Bench of two English Judges in the Calcutta High Court applied the doctrine of promissory estoppel and recognised a cause of action founded upon it in the Ganges Manufacturing Co. v. Surajmuli and other - (1880) ILR 5 Cal 669. The doctrine of promissory estoppel was also applied against the Government in a case subsequently decided by the Bombay High Court in Municipal Corporation of Bombay v. The Secretary of State - (1905) IIR 29 Bom. *   *   * 23. It was also contended on behalf of the Government that if the Government were held bound by every representation made by ....
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....the promise would be enforceable against the Government at the instance of the promises, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution. It is elementary that in a Republic governed by the rule of law, no one, howsoever high or low, is above the law. Everyone is subject to the law as fully and completely as any other and the Government is no exception. It is indeed the pride of constitutional democracy and rule of law that the Government stands on the same footing as a private individual so far as the obligation of the law is concerned: the former is equally bound as the latter. It is indeed difficult to see on what principle can a Government, committed to the rule of law, claim immunity from the doctrine of promissory estoppel. Can the Government say that it is under no obligation to act in a manner that is fair and just or that it is not bound by considerations of "honesty and good faith"? Why should the Government not be held to a high "standard of rectangular rectitude while dealing with its citizens? There was a time when the doctrine of executive nec....
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....this position and the public interest likely to suffer if the promise were required to be carried out by the Government and determine which way the equity lies. It would not be enough for the Government just to say that public interest requires that the Government should not be compelled to carry out the promise or that the public interest would suffer if the Government were required to honour it. The Government cannot, as Shah, J., pointed out in the Indo-Afghan Agencies case, claim to be exempt from the liability to carry out the promise Ion some indefinite and undisclosed ground of necessity or expediency', nor can the Government claim to be the sole judge of its liability and repudiate it 'on an ex parte appraisement of the circumstances'. If the Government wants to resist the liability, it will have to disclose to the Court what are the facts and circumstances on account of which the Government claims to be exempt from the liability and it would be for the Court to decide whether these facts and circumstances are such as to render it inequitable to enforce the liability against the Government. Mere claim of change of policy would not be sufficient to exonerate the Government f....
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....toppel in their favour when the State of Kerala purports to act differently. Several decisions of this Court were cited in support of the stand of the appellants that in similar circumstances the plea of estoppel can be and has been applied and the leading authority on this point in the case of M.P. Sugar Mills v. State of U.P. - AIR 1979 SC 621. On the other hand, reliance has been placed on behalf of the State on a judgment of this Court in Bakul Cashew Co. v. Sales Tax Officer, Quilon - (1986) 159 ITR 565 (SC). In Bakul Company's (supra) case this Court found that there was no clear material to show any definite or certain promise had been made by the Minister to the concerned persons and there was no clear material also in support of the stand that the parties had altered their position by acting upon the representations and suffered any prejudice. On facts, therefore, no case for raising the plea of estoppel has been made out. This Court proceeded on the footing that the notification granting exemption retrospectively was not in accordance with Section 10 of the State Sales Tax Act as it then stood, as there was no power to grant exemption retrospectively. By an amendment that....
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....eing made of the concessions granted the Court may permit the Government to do so but before allowing the Government to resile from the promise or go back on the assurance the Court would have to be satisfied that allegations by the government about misuse being made or undue advantage being taken of the concessions given by it were reasonable well established. In the present case, there is nothing on record to show that any such misuse was being made or undue advantage taken of the said concessions by the newly established industries. The Government had, therefore, failed to establish the requisite ground or the basis of which it might be allowed to go back on its promise. The first submission of the learned Counsel for the appellants must, therefore, fail." 21. Having referred to Assistant Commissioner of Commercial Taxes (Asst.), Dharwar and Ors. v. Dharmendra Trading Company and Ors., Dr. Saraf, learned senior counsel has submitted that there is no averment in the counter-affidavit to show that any misuse was made of the concessions or undue advantage had been taken by the petitioners. Therefore, the Govt. cannot be permitted to resile from the promise. 22. Havi....
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....Dr. Saraf, learned senior counsel has contended that the impugned notification dated 1-3-2007 cannot take away the benefits as available under NEIP, 1997. 23. In State of Jharkhand and Ors. v. Tata Cummins Ltd. and Anr. reported in (2004) 6 SCC 57, the Apex Court has observed as under : "16. Before analyzing the above Policy read with the notifications, it is important to bear in mind the connotation of the word "tax". A tax is a payment for raising general revenue. It is a burden. It is based on the principle of ability or capacity to pay. It is a manifestation of the taxing power of the State. An exemption from payment of tax under an enactment is an exemption from the tax liability. Therefore, every such exemption notification has to be read strictly. However, when an assessee is promised with a tax exemption for setting up an industry in the backward area as a term of the industrial policy, we have to read the implementing notifications in the context of the Industrial Policy. In such a case, the exemption notifications have to be read liberally keeping in mind the objects envisaged by the Industrial Policy and not in a strict sense as in the case of exemptions ....
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....distinction has to be made between the delegated legislation and the primary legislation framed by the Legislature. 29. In Section 49 there is no specific stipulation that the notification issued under Section 49 of the Act of 1948 can be revoked at any time as was in the case of Shree Durga Oil Mills & Anr. - (1998) 1 SCC 572 where Section 6 of the Orissa Sales Tax Act itself provided that the notification is capable of being revoked at any time. Therefore, a distinction has to be made between the delegated legislation and the primary legislation. So far as the primary legislation is concerned, if the Act is passed by State Legislature and denies the benefit by the primary legislation then no estoppel can be applied against that Act but so far as the case of delegated legislation is concerned, where delegated authorities passes certain notification in exercise of his delegated authority there is no contemplation mentioned in the act itself that it is capable of being revoked at any time. Then such acts cannot be treated at par with the primary Act passed by the State Legislature. The State is fully competent to pass an Act prospectively as well as retrospectively but retro....
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....l areas, they were misusing it or there was theft of the energy at a large scale by these persons to whom the concession had been given then of course such factors, if all the datas were brought on record of course could have persuaded the Court to take a different view of the matter. But simply because there was theft of energy allow the State cannot persuade us to hold that the revocation of such concession can be said to be in public interest. Since the benefit was given to these units in the hill areas, there should have been overwhelming evidence to show some mala fide on the part of these consumers which have persuaded the Corporation to revoke it. If there was no misuse of the energy by these units in the hill areas to whom the concession had been granted then in that case it cannot be taken that there was really public interest involved which persuaded the Corporation to revoke the same. 32. No person can be permitted to misuse the concession or benefit and invoke promissory estoppel. Promissory estoppel is not one sided affair, it is rather two sided affair. If one party abuses the concession then it is always open to the other party to revoke such concession but i....
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....of promissory estoppel. In order to keep the faith and maintain good governance it is necessary that whatever representation is made by the State which induced the other party to act, the State cannot be permitted to withdraw from that. This is a matter of faith. 26. Dr. Saraf, learned senior counsel appearing for the petitioners has placed his reliance on M/s. Unicorn Industries v. Union of India, reported in 2013 (290) E.L.T. 33 (Sikkim), Shree Sanyeeji Ispat Pvt. Ltd. and Anr. v. State of Assam and Ors., reported in (2006) 3 GLR 870 and Sunrise Biscuits Co. Ltd. and Anr. v. State of Assam and Ors., reported in (2006) 148 STC 587 (Gauhati) for further streamlining his submission. From reading of those reports the common enunciation that emerges can be found in the passage as reproduced hereunder : "The true meaning and scope of the doctrine of promissory estoppel, in the realm of governmental promises and application of this doctrine to the facts of the present case, may be summarised thus : Where the Government makes a promise knowing or intending that it would be acted upon by the promisee and, in fact, the promisee, acting upon the promise, alters his position, the ....
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....when the law does not bar the Government from making the promise, as might have been made by the Government, or when making of the promise itself is not contrary to law, the Government would be required to abide by the promise. The Government has to function as a cohesive body and its different organs or departments have to act in tandem with each other and in harmony with each other on the principles of collective responsibility. The Constitutional Scheme of governance of the Government does not permit the Government to work in violation of the principles of collective responsibility. It will, therefore, be no defence for the Finance Department, in a case of the present nature, to merely contend that until the time requisite notification, in terms of the relevant statute, is published, the promise for tax exemption made by the Government under its industrial policy cannot force the Government to grant such exemption, for, there is no estoppel against the statute. In a case of this nature, if the promise made by the Government is not barred by law, though the same might not have been made strictly in accordance with the relevant statute, yet it will be the duty of the court to trac....
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....financial institutions for restructuring package. The Company's proposal for financial assistance and restructuring has been approved by various financial institutions, in principal. However, the same has been made conditional on certain preconditions being met. One of the conditions imposed by the financial institutions was that the restructuring package would be made available only on the Company obtaining a Sales Tax exemption for a period of 5 years from the State Government, in terms of Industrial Policy, 1995. 5. Accordingly, Company submitted an application to the State Government on 21-11-1997 for grant of Sales Tax exemption under the Industrial Policy, 1995 for a period of 5 years w.e.f. 1-1-1998. Thereafter, the matter remained pending for consideration by the State Government and the Financial Institutions. There were a series of joint meetings of the Government, Financial Institutions and the Company, over the next three years. In all these meetings, as well as correspondence categoric assurances were given that the necessary Sales Tax exemption notification would be issued shortly. However, no such notification was issued causing great hardship to the Company.....
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.... policy to defeat the just and valid claim of the Company. For the same reason we are unable to accept the submissions of the learned senior counsel for the appellant that no relief can be granted to the Company as the Policy has lapsed on 31-8-2000. Accepting such a submission would be to put a premium and accord a justification to the wholly arbitrary action of the appellant, in not issuing the notification in accordance with the provisions contained in Clause 24 of the Industrial Policy, 1995." 27. While closing the submission, Dr. Saraf, learned senior counsel appearing for the petitioners has submitted that the petitioner No. 1 commenced the commercial production on 8-8-2000 and the petitioner No. 2 commenced the commercial production on 24-12-1997 and as such, in terms of the Notification No. 69/2003-C.E., dated 25-8-2003 read with Notification Nos. 32/99-C.E. and 33/99-C.E., dated 8-7-1999 the petitioners are entitled to have the benefits irrespective of the lapse in issuing the notification in terms of the NEIP, 1997. 28. It is to be noted that by the order dated 5-4-2010 delivered in C.M. Application No. 119/2010, arising from this writ petition, the follow....
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....mption benefit was not allowed on or after 1-3-2007 and this was done in public interest.' Withdrawal of any exemption benefit by issuing the notification in the public interest is lawful and within the ambit of the provisions of Central Excise Act, 1944. In Paras 14, 15, 16, 17 and 18 those respondent Nos. 4 and 5 have asserted as under : "14 .......as per provisions of Section 5A(4) of Central Excise Act, 1944, every notification issued under sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, in force immediately and shall continue to have the same force and effect after commencement until it is amended under the provision of this section. Under Section 5A(4) of the Central Excise Act, 1944, force and effect of the Notification shall be continued until it is 'amended'. So, provision for amendment of Notification is also there within the provision of Section 5A under CEX Act, 1944 if the Central Govt. is satisfied that it is necessary in the public interest to do so. Subject to this nothing stated by the petitioners is admitted. Amendment has been made considering the Govt. Policy, public interest and all relevant considerations. 15. That with reference to P....
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....n 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), by which the Notification No. 32/99-C.E. and the Notification No. 33/99-C.E. both dated 8-7-1999 have been amended w.e.f. 31-12-1999 to the extent that all tobacco related products including pan masala falling under Chapter 24 or Heading No. 21.06 of the First Schedule or the Second Schedule from the purview of exemption granted by the Notification No. 32/99-C.E. and the Notification No. 33/99-C.E. both dated 8-7-1999. In this regard, it may be noted that Heading No. 21.06 relates to pan masala and Chapter 24 relates to pan masala containing tobacco. They have also admitted that by the Notification No. 1/2000, dated 17-1-2000 the notifications dated 8-7-1999 were restored to the extent of the goods falling under Chapter 24 or Heading No. 21.06 of the First Schedule and the Second Schedule respectively of the Central Excise Tariff Act by making necessary amendments. They have asserted that the Central Govt. in exercise of powers conferred by or under sub-section (1) of Section 5A of Central Excise Act, 1944 read with sub-section (3) of Section 3 of the Additional Duties of Excise (Goods of S....
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....ion No. 33/99-C.E., dated 8-7-1999 and further that those units continued manufacturing activities on and after 28-2-2001. The respondents in Para 27(x) have asserted that in suppression of the notification dated 25-8-2003 another Notification No. 8/2004, dated 21-1-2004 was issued in the public interest exempting all goods falling under sub-heading No. 2401.90, 2402.00, 2404.41, 2404.49, 2404.50 or 2404.99 of the First Schedule of the Central Excise Tariff Act as stated from whole of the excise duties thereby granting 100% exemption under certain conditions that they have to invest in (i) plant and machinery and (ii) infrastructure or civil work or social project retaining other conditions in the Notification No. 69/2003-C.E., dated 25-8-2003. Those respondents have categorically admitted that in pursuance to the notifications dated 25-8-2003 and 21-1-2004 the petitioners are entitled to retain the excise duty and invest at their own volition in the project undertaken by them, subject to verification by the Investment Appraisal Committee (IAC) on whose certification the said exemption can be availed. By another Notification under No. 28/2004, dated 9-7-2004, as stated earlier, it ....
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....ble Court and the writ petition of the writ petitioner is not amenable as writ petition, on this account writ petition of the writ petitioner is deserved to be dismissed in its threshold. The petitioner during the period from 25-8-2003 to 8-7-2004 availed the amount of duty exemption for Rs. 96,61,11,858.00. The writ petitioners were duty bound to produce the investment certificates for the said amount. In fact, the writ petitioners had produced investment certificates only for an amount of Rs. 34 crore. It was the responsibility of the petitioner to voluntarily deposit the unutilised amount to the Government exchequer, immediately and by not depositing the said amount the petitioner acted upon illegally and taken the responsibility in his shoulder for consequences by not investing the amount in the manner specified in the notification. The petitioner has resorted to litigation causing inordinate delay in recovering the Government money. Recovery of such huge money locked in litigation is/was grave concern to the department and also to the respondent being jurisdictional Commissioner responsible for the safeguard of the Government revenue." 32. Subsequently by the Notifi....
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....the new section been enforced at all material times within a period as specified therein. 65. The Ninth Schedule adumbrated in Section 154 so newly inserted withdrew w.e.f. 8-7-1999 from the purview of exemption of payment of excise duty (a) cigarettes falling under Chapter 24 of the First Schedule or the Second Schedule to the Tariff Act and (b) pan masala containing tobacco under subheading Nos. 2106.00 and 2404.49 in the First Schedule or the Second Schedule of the said Act. Further w.e.f. 1-3-2001, the incentives by way of exemption from payment of excise duty was rescinded vis-à-vis goods falling under Chapter 24. The combined effect thus in view of this statutory precept was that whereas cigarettes falling under Chapter 24 and pan masala containing tobacco falling under sub-heading 2106.00 and 2404.49 of the First Schedule or the Second Schedule to the Tariff Act, 1985 were denied the exemption from payment of excise duty w.e.f. 8-7-1999, all goods falling under Chapter 24 were dislodged from the benefit of exemption on and from 1-3-2001. This progression of events teed off (sic) by the notification dated 31-12-99 and culminating with the introduction of Sectio....
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....pted amount of excise duty would have to be utilised by the manufacturer only for investment in its plants and machineries located in the North-Eastern States and will not be allowed to be withdrawn before the expiry of 10 years, there is nothing decisive therein to indicate that it was in extension of the incentives conceived of and hitherto granted by the Policy, 1997. The Respondents' plea that this notification is thus independent of the Policy, 1997 in the narrated background of facts and more particularly in view of Section 154 of the Finance Act, 2003 along with Schedule 9 thereto thus commends for acceptance. The benefit of partial exemption from payment of excise duty vis-à-vis some of the goods under Chapter 24 of the Tariff Act, 1985, as indicated in the said notification thus cannot be construed to be under the Policy, 1997 as insisted upon by the Petitioner. The notification No. 8/2004-C.E., dated 21-1-2004 appearing in the scene thereafter exempted all goods falling under sub-heading 2401.90, 2402.00, 2404.41, 2404.49, 2404.50 or 2404.99 of the First Schedule and Second Schedule to the Tariff Act, 1985 from whole of the duties of excise, additional duties of ex....
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....cise Tariff Act, 1985 (5 of 1986). (iii) Plastic carry bags of less than 20 microns as specified by Ministry of Environment and Forests Notification No. S.O. 705(E), dated 2-9-1999 and S.O. 698(E), dated 17-6-2003. (iv) Goods falling under Chapter 27 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) produced by petroleum oil or gas refineries. 69. Clause (2) of the Policy, 2007 however provided that the Policy, 1997 would cease to operate on and from 1-4-2007 and the industrial units, which had commenced commercial production on and from 31-3-2007, would continue to receive the benefits/incentives under the earlier Policy. While reserving to the Government the right to modify any part of the Policy in public interest all concerned Ministries/Departments of the Government of India were requested to amend their respective Acts/rules/notifications etc. and to issue necessary instructions for giving effect to the decisions engrafted in the Policy, 2007. The office memorandum No. 10(3)/2007-DBA-II/NER, dated 1-4-2007 also of the same Ministry in substance reiterated the cessation of the effect of the Policy, 1997 o....
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....ith the specific intention of excluding the industries engaged in the manufacture of goods under Chapter 24 and pan masala under Chapter 21 of the First Schedule to the Tariff Act, 1985, these would still continue to avail the benefits/incentives under the Policy, 1997 only because the units concerned had commenced commercial production on and from 31-3-2007. As it is, the Policy, 2007 has not been assailed by the petitioner and the reliefs sought for by it are wholly founded on the assumption that it has by Clause (2) thereof assured the continuance of the benefits/incentives of exemption from payment of excise duty as promised by the Policy, 1997. As a matter of fact, all its formulations qua the various legal principles highlighted stem from such a notion. If the interpretation of Clause (2) of the Policy, 2007 as intended by the petitioner is accepted, the negative list for all intents and purposes would be rendered redundant and otiose. Further it would signify effacement of the march of events prior thereto ending with Section 154 of Finance Act, 2003, the vires whereof has been upheld by the Apex Court in R.C. Tobacco, supra. 71. The Apex Court in Novopan India Ltd.,....
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....n complex economic matters every decision is necessarily empiric and it is based on experimentation or what one may call 'trial and error method' and, therefore, its validity cannot be tested on any rigid 'a priori' considerations or on the application of any strait jacked formula. The court must while adjudging the constitutional validity of an executive decision relating to economic matters grant a certain measure of freedom or 'play in the joints' to the executive.... ...Mere errors of Government are not subject to our judicial review. It is only its palpably arbitrary exercises which can be declared void.... The Court cannot strike down a policy decision taken by the State Government merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical. The court can interfere only if the policy decision is patently arbitrary, discriminatory or mala fide. 72. In the above view of the matter, on a totality of the aforementioned considerations, the challenge to the notifications dated 1-3-2007 and 25-4-2007 based on Policy, 1997 cannot be sustained. A contrary intention being apparent from Section 154 of the Finance Act, ....
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....e is no ambiguity in the said notification. That apart, withdrawal of exemption benefit prematurely is a policy decision of the Government which might appear resiling from the promise, but in the circumstances under which the said policy has been adopted cannot be held unsustainable. 36. What has emerged from the contention and counter contention calling for response from this Court may briefly be formulated as under : (i) Whether the impugned notification dated 1-3-2007, Annexure-L to the writ petition is hit by promissory estoppel by restraining premature withdrawal of the benefits? (ii) Whether the Notification No. 69/2003-C.E., dated 25-8-2003, Annexure-H to the writ petition has been completely eclipsed by the Notification No. 8/2004-C.E., dated 21-1-2004, Annexure-I to the writ petition? And (iii) Whether there is any misuse of process or public interest element justifying the withdrawal of benefits as granted by the NEIP, 1997 by virtue of the notification dated 1-3-2007, Annexure-L to the writ petition? 37. There cannot be any amount of dispute that by the Notification No. 69/2003-C.E., dat....
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....997, or in other words whether the impugned notification dated 1-3-2007, Annexure-L to the writ petition in respect of premature withdrawal of the benefits is hit by promissory estoppel? 38. To a larger extent, law of promissory estoppel has been crystallised without leaving even a thin penumbra. In the case in hand, the representation or the promise is unequivocal and the petitioners have altered their position acting on such promise or assurance, even though the respondents have averred whether the petitioners have invested huge amount or not is highly questionable but they have not denied that both the units of the petitioners availed the incentive. If incentives were not availed, but they are covered by the notifications dated 25-8-2003 and 21-1-2004 conjointly, they are entitled to get such incentives in the form of exemption subject to their compliance of the conditions as laid down therein, till withdrawal or expiry of the promised period. 39. G. Spencer Bower in his celebrated treatise, The Law Relating to Estoppel by Representation (London: Butterworths, 2004, 4th ed., Para 1.2.2) has observed that : "......where one person ("the representor") has made a....
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....roblem to part payment of debt and in doing so the precedent created by Foakes v. Beer (1884), it appears thus, the judicial innovations have taken place in finding fair solution to a dispute so far those relate to applying the doctrine of promissory estoppel and that is the reason why it has been held that whether the doctrine of promissory estoppel would apply or not, it depends on various factual aspects and subject to leeway to the public interest and other conditions such as misuse and garnering undue advantage from the executive promise. In this case also the petitioners have given into the restructured promise and now they have approached this court to enforce their right which according to them is poised against the notification dated 1-3-2007, whereby an inequitable act has been resorted to by the respondents. In this regard, the ratio as laid down in Sales Tax Officer and Anr. v. Shree Durga Oil Mills and Anr., reported in (1998) 1 SCC 572 = 1998 (97) E.L.T. 202 (S.C.) and Kasinka Trading v. Union of India and Anr., reported in (1995) 1 SCC 274 = 1994 (74) E.L.T. 782 (S.C.) is based on the factual aspect that there was no unequivocal representation in respect of exemption....
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....Mills v. State of Kerala, 1986 (Supp) SCC 728 and State of Bihar and Another v. Usha Martin Industries Ltd., (1987) 65 STC 430. 41. In addition to the decision as already referred by the learned counsel appearing for the parties, in State of H.P. v. Ganesh Woods Products, reported in AIR 1996 SC 149, the interplay of the doctrine of promissory estoppel and the public interest has been quite lucidly enunciated in the passages extracted hereunder : "54. The doctrine of promissory estoppel is by now well recognised in this country. Even so it should be noticed that it is an evolving doctrine, the contours of which are not yet fully and finally demarcated. It would be instructive to bear in mind what Viscount Hailsham said in Woodhouse Ltd. v. Nigerian Produce Ltd., (1972) A.C. 741 : I desire to add that the time may soon come when the whole sequence of cases based upon promissory estoppel since the war, beginning with Central London Property Trust Ltd. v. High Trees House Ltd., (1947) 1 K.B. 130 may need to be reviewed and reduced to a coherent body of doctrine by the courts. I do not mean to say that they are to be regarded with suspicion. But as is common with an ....
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....at the promissor should not be allowed to go back on his representation and must be held to it or does altering his position mean doing of some act, big or small, which the promisee does acting on the faith of the representation which he would not have done but for the representation? In other words, is it enough that the promisee has spent some money or has taken some step acting on the basis of representation, which can be recompensed in money or otherwise? Is it not ultimately a matter of doing equity and justice between the parties - a case of holding the scales even between the parties and deciding whether in the interests of justice and equity the promissor can be allowed to resile from his promise and compensate the promise appropriately or the promissor ought to be held to his promise and not allowed to go back since such a course is necessary in view of the change in position of promise? Our view of the matter is probably evident from the way we have posed the above questions. To wit, the rule of promissory estoppel being an equitable doctrine, has to be moulded to suit the particular situation it is not a hard and fast rule but an elastic one, the objective of which is to....
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....y demands that the promissor is allowed to resile and the promise is compensated appropriately, that ought to be done. If, however, equity demands, in the light of the things done by the promise on the faith of the representation, that the promissor should be precluded from resiling and that he should be held fast to his representation, that should be done. To repeat, it is a matter of holding the scales even between the parties - to do justice between them. This is the equity implicit in the doctrine." 42. In Bannari Amman Sugars Ltd. v. Commercial Tax Officer and Others reported in (2005) 1 SCC 625, the Apex Court has again restated the law after making reference to development of doctrine of promissory estoppel in India holding that even the beneficiaries are not entitled to opportunity of hearing before prematurely withdrawing the incentives. But the State must provide reason that such withdrawal is backed by supervening public interest and the action satisfied the test of fairness and reasonableness. In such case, harshness of the action can be no ground to challenge the premature withdrawal of incentives. In Mahabir Vegetable Oils (P) Ltd. and Another v. State of Hary....
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....st the State so as to inhibit it from formulating and implementing its policy in public interest. 27. The question came up for consideration before this Court in Pournami Oil Mills and Ors. v. State of Kerala and Anr., wherein it was held : (SCC p. 732, Para 7) Under the order dated April 11, 1979, new small scale units were invited to set up their industries in the State of Kerala and with a view to boosting of industrialisation, exemption from sales tax and purchase tax for a period of five years was extended as a concession and the five year period was to run from the date of commencement of production. If in response to such an order and in consideration of the concession made available, promoters of any small scale concern have set up their industries within the State of Kerala, they would certainly be entitled to plead the rule of estoppel in their favour when the State of Kerala purports to act differently. Several decisions of this Court were cited in support of the stand of the appellants that in similar circumstances the plea of estoppel can be and has been applied and the leading authority on this point is the case of M.P. Sugar Mills. On the other hand, relia....
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....t would, in the circumstances, be inequitable to allow the State Government now to resile from its decision to exempt milk and demand the purchase tax with retrospective effect from 1st April, 1996 so that the respondents cannot in any event re-adjust the expenditure already made. The High Court was also right when it held that the operation of the estoppel would come to an end with the 1987 decision of the Cabinet." Though, there may appear some apparent conflicting edges in the decision of Mahabir Vegetable Oils (P) Ltd. and Another v. State of Haryana and Others and State of Punjab v. Nestle India Ltd. and Another, but a close reading would show that the element of public interest is the ultimate determinant. Even the court may make a comparative assessment of reasons and strike a balance thereof. In this case one important aspect as canvassed by the respondents requires relook. In Para 27(xiv) the respondents has stated as under : "That, subsequently the Govt. of India, Ministry of Finance, Department of Revenue issued another Notification bearing No. 21/2007-C.E., dated 25-4-2007 under Section 5A of the Central Excise Act, 1944 amending Notification No. 32/99-C.E., dated....
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....counter-affidavit in support of such deletion and substitution of the first proviso by the Notification No. 21/2007-C.E., dated 25-4-2007 cannot be brushed aside. Pan masala containing tobacco may cause health hazard as claimed by the respondents. As such, even though the petitioners have not thrown the categorical challenge against the said notification dated 25-4-2007, the said notification will not absolve the respondents from its obligation under the promissory estoppel so far the pan masala without tobacco content is concerned. In view of the saving clause as engrafted in NEIIPP, 2007, as the petitioners' units have commenced commercial production on or before 31-12-2007 will continue to get benefits/incentives under NEIP, 1997 in terms of the Notification No. 8/2004-C.E., dated 21-1-2004 subject to the notification dated 25-4-2007. For deposit, the petitioner would get relaxation for purpose of counting limitation in terms of Notification 28/2004-C.E., dated 9-1-2004. The limitation would start from this day for compliance of the modality as laid down in the Notification Nos. 8/2004-C.E., dated 21-1-2004 and 28/2004-C.E., dated 9-7-2004. This court, however, has not made any ....