TaxTMI 
TaxTMI 
2019 (6) TMI 1067
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.... in furtherance thereof demand notices were issued dated 28-7-2014, 15-9-2014 & 12-10-2015 under the seal and signature of Assistant Commissioner of Central Excise and Service Tax, Agartala for recovery of the said investment amount which was disallowed with interest in the instant proceedings. 3. With consent of the parties facts have been noticed from WP (C) No. 354/2014 in brief, which may be relevant for the purpose are that the petitioner Dharampal Satyapal Ltd. is a company incorporated under the Companies Act, 1956 having its Registered office at 1711, S.P. Mukherjee Marg, Delhi-110006 and its manufacturing units in the State of Tripura and also in the State of Assam in addition to other places. The petitioner is engaged in the manufacture of Scented Chewing Tobacco/Pan Masala containing tobacco falling under tariff heading 2403 99 30 and 2403 99 10 of the First Schedule to the Central Excise Tariff Act, 1985 (hereinafter referred to as the Act of 1985) in addition to other products. 4. The Government of India pursuant to North Eastern Industrial Policy dated 24-12-1997 issued Notification No. 32/1999-C.E. and Notification No. 33/1999-C.E., dated 8-7-1999 und....
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....y for investment in plant and machinery in a manufacturing unit which is located in the seven North Eastern States including Tripura and the said investment had to be made before the expiry of six months from the end of each quarter. Further, the manufacturer was under an obligation to furnish details of investments made within one month of the expiry of the six months period indicated under the notification dated 25-8-2003 to a committee consisting of Chief Commissioner of Central Excise, Shillong, Principal Secretary of the Department of Industry of the State concerned in which the unit is located and the Principal Secretary of the Department of Industry of the State (hereinafter called Committee) where the investment was made. It was also incumbent upon the manufacturer to prove to the satisfaction of the committee that the investment has been made for plant and machinery in a manufacturing unit located in the North Eastern States including Tripura and only after the committee recorded its satisfaction that the investment has been made in the identified sector in a manufacturing unit, was to issue a certificate to this effect to the manufacturer within a time bound framework of ....
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....e 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, 1997 [G.S.R. 508(E) dated the 8th July, 1997] or No. 33/99-Central Excise, dated the 8th July, 1997 [G.S.R. 509(E), dated the 8th July, 1997]; 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, Naga....
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.... goods 8% 6% 6% 5. 2404.50 All goods 8% 6% 6% 6. 2404.99 All goods 8% 6% 6% (G.S. Karki) Under Secretary to the Government of India F. No. 354/29/2003-TRU" 10. Indisputably, the petitioner's unit stood covered by the notification dated 25-8-2003 aforementioned and was eligible to receive benefit of exemption from payment of excise duty or additional duty of excise in terms of the notification in this regard. In furtherance thereof, the Central Government in supersession of the notification dated 25-8-2003 issued another Notification No. 8/2004-C.E., dated 21-1-2004 for complete exemption from payment of excise duty or additional duty of excise leviable under the said Central Excise Tariff Act, the Additional Duties of Excise (Goods of Special Importance) Act and National Calamity Contingent duty leviable thereon under sub-section (1) of Section 136 of the Finance Act, 2001 to be available to the manufacturers who have established their units in the seven North Eastern States including Tripura and apart from the fact that commercial production commenced on or after 24-12-1997, but not later than 28-2-2001 and had av....
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....8th 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) plant and machinery in a manufacturing unit which is located in the State of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland or Tripura ; or (ii) infrastructure or civil works or social projects in the State of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland or Tripura; (C) the investment in terms of ....
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....hinery or in infrastructure or civil works or social projects in the seven North Eastern States including Tripura and the procedure for receiving exemption, however, remains the same as embodied under the earlier notification dated 25-8-2003 as being referred to in Conditions D & E in a time bound phases to the satisfaction of the committee regarding their investments as being specified in Condition B and on issuance of a certificate to this effect to the manufacturer within a time framework by the Jurisdictional Central Excise Officer with a proviso that investments made under notification dated 21-1-2004 shall not be allowed to be withdrawn before the expiry of 10 years and if any investment is withdrawn prior thereto or is not reinvested as referred to under the notification, 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. 13. In furtherance of the notification dated 21-1-2004 in ease of doing business and to make the system more effective and transparent, the Central Government made certain amendments vide notification dated 9-7-2004 issued in exercise of powers ....
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....ys from the end of the quarter, in an escrow account opened by the manufacturer, for this purpose, in a bank authorized for excise duty collection; (ii) operations including withdrawals from and closure of the said escrow account shall be made with the prior approval of the jurisdictional Commissioner of Central Excise, taking into account the conditions specified in this notification and to safeguard the revenue; (iii) the manufacturer shall, pending investment in the manner specified in condition (B), execute a bond, as may be specified by the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, binding himself to pay on demand an amount equal to the amount referred to in clause (i) along with interest thereon at the rate specified under section 11AB of the Central Excise Act, 1944, and not so invested, in terms of condition (B), with the amount lying in balance in said escrow account as security or collateral; (iv) the amount deposited in the said escrow account, in terms of clause (i), shall be invested, in the manner specified in condition (B), within two ....
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.... of India Note : The principal Notification No. 8/2004-Central Excise, dated the 21st January, 2004 was published in the Gazette of India, vide number G.S.R. 60(E), dated the 21st January, 2004." 14. The notification dated 9-7-2004 provided further that the manufacturer has to first open the escrow account for collection of excise duty and operation including withdrawal or closer of the account shall be made with the prior approval of the Jurisdictional Commissioner of Central Excise and to execute a Bond to the effect that if the amount not so invested as required has to repay along with interest as specified under Section 11AB of the Central Excise Act, 1944 and thereafter submit a quarterly statement within 60 days from the end of relevant quarter to the committee, giving details of deposits and withdrawals made from the escrow account along with the details of investments made during the quarter, not later than one month after the expiry of the period of two months referred to in Condition C to prove to the satisfaction of the committee that the investment has been made for the purpose as specified in Condition B and the committee after recording its satisfacti....
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....who may examine the investments to its satisfaction in terms of the notification and in case, it is found that the assessee has made investments in terms of the notification he will be entitled for full benefits and in case the assessee has not made the investments in terms of the earlier notification or part of the investments are not in accordance with the earlier notification, the State as well as the Central Government would be beneficiaries as per the notification and overruling the objection of the respondents, this Court directed that the committee be constituted in terms of the notification shall meet and decide the matter in respect of the investments made by the petitioner earlier latest by 31-10-2013 to examine whether the investment has been made by the assessee in terms of the earlier notifications. 17. The order passed by this Court in WP (C) No. 111/2013, dated 9-7-2013 came to be challenged by the respondents in SLP (C) No. 31756/2013 before the Apex Court and that came to be decided vide order dated 24-1-2014 with a direction to the committee to conclude its work within three months and if the findings of the committee are against the concerned units which ....
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....f hearing to the petitioner to justify and to rule out the impression of the committee in failing to record its satisfaction in reference of details of investments made in its meetings held on 4-4-2014 and 17-4-2014 and in consequence thereof, demand notices impugned dated 28-7-2014, 15-9-2014 & 12-10-2015 came to be served upon the petitioner at different intervals by the Assistant Commissioner of Central Excise and Service Tax for depositing of the said amount in reference to which the investments made by the petitioner after prior approval of the Jurisdictional Commissioner of Central Excise being disallowed by the committee has to be deposited with interest which is impugned in the instant proceedings. 20. At this the petitioner filed the instant writ petition and it may be noticed that when the matter initially came at the motion stage, after hearing the parties interim order was passed by this Court dated 27-8-2014 with a direction to stay further proceedings provided the petitioner deposits with the Excise Authority 50% of the amount demanded on or before 1st November, 2014 and furnish security for the remaining 50% to the Assessing Officer by 1st November, 2014. The....
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.... considered by the Division Bench of the High Court of Gauhati in WP (C) No. 1174/2013 where the committee has not recorded satisfaction in reference to the investments made and without any notice to show cause and affording an opportunity of hearing demand notices were raised came to be challenged in WP (C) No. 1174/2013 and taking note of the earlier view in reference to the interpretation of the relevant three notifications indicated considered in the judgment reported in 2010 (1) GLT 744 allowed the writ petitions preferred by the petitioner under judgment dated 7-8-2013. 22. Counsel for the petitioner submits that once the selfsame controversy has been concluded holding that the unilateral decision of the committee in disallowing the investments made in the identified sectors with the prior approval of the Jurisdictional Commissioner of Central Excise and raising Demand Notices in furtherance thereof without affording an opportunity of hearing to the petitioner is in violation of the principles of natural justice has been quashed and set aside, there is no reason for the respondent to further defend its action which indeed is in violation of the principles of natural j....
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....ings dated 4-4-2014 and 17-4-2014 and since cogent reasons have been assigned by the committee disallowing certain investments made by the petitioner which might have been made with the prior approval of the Jurisdictional Commissioner of Central Excise but that is always subject to the final approval of the committee and the committee once has disapproved certain investments in its meetings held on 4-4-2014 and 17-4-2014 based on the reports of the Monitoring Committee pursuant to which a demand notice has been raised in strict compliance of the notifications relied upon by the petitioner needs no further fact finding enquiry and the decision of the committee is in conformity to the notifications referred to supra needs no further judicial review by this Court u/Article 226 of the Constitution of India. 26. Counsel for the respondents further submits that there is no requirement of principles of natural justice as the committee has proceeded in compliance of order of the Apex Court and since reasons have been assigned for disallowing the investments made by the petitioner, even if this Court comes to a conclusion that there is a denial of principles of natural justice but ....
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....India & Others, reported in 2010 (1) GLT 744 decided on 6-1-2010 and view of the Learned Single Judge of the High Court of Gauhati in the case of the very petitioner has been confirmed by a Division Bench of the High Court of Gauhati on dismissal of the writ appeal of the Revenue in detail. 30. We consider appropriate to quote the extract of Paras 30-35 and 168-169 of the judgment of the Learned Single Judge of High Court of Gauhati ad infra :- "30. What is, now, of prime importance to borne in mind is that the liability of the manufacturer to satisfy the jurisdictional Commissioner that the withdrawal, sought for by the manufacturer, is for such a purpose as is envisaged by the Notification, dated 9-7-2004, imposes a corresponding duty, on the jurisdictional Commissioner, to ensure that he does not permit any withdrawal by a manufacturer from the Escrow Account unless the withdrawal, sought to be made, is for the purpose of making 'investment' on such a project, which is envisaged and permitted by the notification aforementioned, namely, that the 'investment' is in 'plant and machinery', or in 'infrastructure', or 'civil works', or 'social project'. ....
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....free flow of investment'. 32. It was, obviously, therefore, that the Central Government deemed it fit that before an 'investment' is made, the scheme of 'investment' is examined by an appropriate authority, to be appointed by the Central Government, so that no 'investment' is made unless it is covered by the purposes, which are specified under the Notifications. At the same time, it was also necessary that the interest of revenue be safeguarded so that a manufacturer, who invests on a project, which is not covered by the Notifications, does not, having already made such impermissible 'investment', claim exemptions and drags thereby the Central Government into litigation by trying to justify that his 'investment' falls within the scheme of the Notifications. 33. Thus, in order to make the earlier scheme workable, the scheme, introduced later by the Notification, dated 9-7-2004, has brought into picture the jurisdictional Commissioner, who has been vested with the power to allow, or not to allow, withdrawal from the Escrow Account. This apart, safeguarding the interest of revenue, all such amounts, which would be claimed as exemption, are required, now, to....
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....his role of examining the question, as to whether an 'investment', sought to be made, is for a purpose, as mentioned in the Notification, or not, is concerned. If a manufacturer seeks to make an 'investment' and it is allowed by the jurisdictional Commissioner, the inference would be that the 'investment' is for a purpose covered by the Notification. The Central Government is bound by the permission, which the jurisdictional Commissioner grants, even if he exceeds jurisdiction in granting such permission. When he grants permission to make an 'investment', it would be regarded as a valid 'investment'. Even if he exceeds jurisdiction and allows an 'investment' to be made, which is, otherwise, found to be not covered by scheme, it has to be treated as an 'investment' made with the permission given purportedly in exercise of the powers given to a jurisdictional Commissioner by the Notification, dated 9-7-2004. In such cases, the Central Government would be bound by the decision, which the jurisdictional Commissioner has taken. Such a decision would also be binding on the IAC. The IAC cannot, therefore, if an 'investment' has been made by a manufacturer after withdrawing money from Escr....
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....ws as to why his claim for 'investment' has been rejected and he can, if required, take recourse to appropriate provisions of law. Extended logically, it would mean, as I have already discussed above, that when the IAC takes a decision refusing to approve an 'investment', the jurisdictional Excise Officer, in terms of the Notification, dated 21-1-2004, or the jurisdictional Commissioner, in terms of the Notification, dated 9-7-2004, cannot straightway direct 'forfeiture' of the amount, which is not certified by the IAC. In such circumstances too, jurisdictional Commissioner, or the Jurisdictional Excise Officer, as the case may be, is required to issue notice to the manufacturer directing him to show cause as to why the amount, which has not been certified by the IAC, be not recovered from him in terms of the provisions of section 11a read with the provisions of section 11b, or be not 'forfeited' from the Escrow Account of the manufacturer in terms of the provisions contained in the notification, dated 9-7-2004, if the amount, sought to be recovered, relates to post Escrow Account period." 31. After going through the judgment of the Learned Single Judge of the High Court of....
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....urs/manufacturers to establish their manufacturing units in the seven North Eastern States in availing exemption from central excise by investing in plant and machinery in the manufacturing units or infrastructure or civil works or social projects in the seven North Eastern States including Tripura in availing such benefits. 35. The Central Government has come out with various Central Development Projects in the North East sharing 90 per cent of the cost which was later on converted into 100 per cent funding by the Central Government for projects in the region and also introduced "Act East Policy" to enhance the importance of the region in engaging with South East Asian neighbours and to promote North East Special Infrastructure Development Scheme and with this object behind it Central Government has come with a scheme to grant exemption from the excise duty under its notifications dated 25-8-2003, 21-1-2004 followed with dated 9-7-2004 respectively. 36. It appears that the primary object was to make the North Eastern States economically viable and industrial growth in the manufacturing sectors and development in the Real Estate which indeed may create job opportuni....
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.... the committee has to record satisfaction regarding the investments made under the specified sectors in Condition B and to 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 issuance of which the liability of the manufacturer shall stand discharged to the extent of investments so certified. 38. If the manufacturer fails to make the deposit or does not invest the amount as specified in the sectors indicated in Condition B it will be liable to refund the duty which is equivalent to the amount not so deposited or invested to be recoverable from the manufacturer along with interest at the rate specified under Section 11AB of the Central Excise Act, 1944 without prejudice to any other action which would be contemplated by law. 39. Indisputably, in the instant case, the petitioner opened the escrow account and all operations including withdrawals and investments have been made with a prior approval of the Jurisdictional Commissioner of Central Excise who has been introduced as an officer to monitor the functioning of the manufacturers with restrictions and adequate check ....
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....the view expressed by the High Court of Gauhati, but we would further like to observe that power has been vested in the Jurisdictional Commissioner of Central Excise to examine when the application is filed for withdrawal from the escrow account and investments made in the sectors which are identified in Condition B of the notification seeking prior approval and it presupposes that in the ordinary course of business compliance of the requirement under notification has been made unless it is proved to be contrary. 43. Indisputably, the Jurisdictional Commissioner of Central Excise is not the authority subordinate to the committee or the committee is not the appellate authority to review/revisit the decisions of the Jurisdictional Commissioner of Central Excise. At least under the notifications, there is no clarity in respect to the jurisdiction of the committee and what is its ambit and scope and to what extent the committee can interfere in the decisions of the Jurisdictional Commissioner of Central Excise with whose prior approval the manufacturer withdrew the money from the escrow account and made investments in the sectors which are identified under Condition B of the no....
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....s. 46. So far as the submission made in reference to opportunity of hearing not being afforded or in violation of principles of natural justice remains an empty formality suffice it to say that the Apex Court in the judgment reported in (2015) 8 SCC 519 = 2015 (320) E.L.T. 3 (S.C.) in the case of the very petitioner has examined and finally arrived to a conclusion holding that the principles of natural justice are integral part of Article 14 of the Constitution and no decision prejudicial to a party should be taken without affording an opportunity of hearing or supplying the material which would be the basis for the decision and this is otherwise the settled principle of law that no one should be condemned unheard needs no elaborate discussion since the law of natural justice and its scope has been considered by the Apex Court in the judgment reported in (2015) 8 SCC 519 = 2015 (320) E.L.T. 3 (S.C.). 47. We find further substance in the submission made by the petitioner's counsel that reference has been made of the report of the Monitoring Committee and its report has been relied upon by the committee in taking its decision but we find that neither the report of the....
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....nt proceedings and we find that the committee has primarily relied upon the report of the Monitoring Committee which was never supplied to the petitioner and under whose authority it was constituted and who are its members to whom the work was entrusted is not available on records and mere presence of the authorized representatives of the petitioner as alleged by the respondents in their counter affidavit would not be construed as approval or consent of the petitioner to the report, if any, being submitted by the Monitoring Committee to the committee. At the same time, we find that the expenses which were incurred by the petitioner with the consultancy firm payment of TDS/service tax in preparation of drawing and design from the engineers, all the consultancy charges under a single stroke are disallowed and the investments which are made in the category of civil works, TDS payments made to the contractors are straightway being disallowed, at the same time, we further find that the investments made in the plant and machinery has been disallowed for the reason that the Monitoring Committee has reported that the investments made in plant and machinery has not been installed and are fo....
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....ucratic approach of the Government officials but the ground realities are quite different. Even in the instant case, we find that the petitioner is under litigation for a sufficient long time in reference to the interpretation of the notifications dated 25-8-2003, 21-1-2004 and 9-7-2004 and he has been at least in three rounds of litigation before the High Court of Gauhati and at least in two rounds of litigation in this Court and despite a clarification being made by the High Court of Gauhati in detail of which we too are in conformity still we find that when the matter is remitted back to the committee, no Government authority because of bureaucratic approach and red-tapism take responsibility on its shoulders and wants to shift the buck from one shoulder to the other and leaving the entrepreneur/manufacturer in lurch as in the instant case after so many rounds of litigation and a recent judgment of the Single Bench of the High Court of Gauhati in the case of the present petitioner which appears to be the third round of litigation in WP (C) No. 5353/2014, decided on 27-7-2018 which again has remitted the petitioner back to square one with no positive results coming forward. 54....