TMI Blog2013 (8) TMI 1111X X X X Extracts X X X X X X X X Extracts X X X X ..... d 31-12-2012, issued by the Commissioner of Central Excise, based on the decision of the Investment Appraisal Committee (in short, IAC ) indicating to the effect that the IAC has reached a finding that the petitioner company s claim fo r an amount of ₹ 18,66,86,576.29 is inadmissible as investment. The petitioner alleges that while reaching the finding that its claim for the said sum of ₹ 18,66,86,576.29 is inadmissible as investment, the IAC has not assigned reasons. This apart, neither any notice to show cause was given to the petitioner company nor was the petitioner company given any opportunity to have their say, in the matter, by the IAC before the IAC arrived at the said finding and rejected the petitioner company s claim for treating the said sum of ₹ 18,66,86,576.29 as investment made by the petitioner company within the meaning of the relevant scheme. 4. As a demand notice, dated 26-10-2013, has been issued by the Assistant Commissioner of the Central Excise on the basis of the above findings of the IAC, the demand notice, dated 26-10-2013, has also been put to challenge in the present writ petition inasmuch as the demand notice, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... By Notification No.69/2003-CE, there was a partial but conditional restoration of the exemption, which had been withdrawn vide Notification No.6/2001-CE and Section 154 of the Finance Act, 2003, to the extent of 50% of the duty payable. It was stipulated therein that the exemption would be subject to certain conditions, the conditions being that exemption from payment of central excise duty would be available only in respect of units, which were located in the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland or Tripura, and for those units, which had commenced commercial production on or after 24.12.1997, but not later than 28.02.2001 and that the unit ought to have continued its manufacturing activities after 28.02.2001 and ought to have availed of the benefit under Notification Nos.32/99-CE and 33/99-CE. It was further stipulated under the Notification No.69/2003-CE that the sum of duty payable, but for the exemption, was to be utilized by the manufacturer only for investment in plant and machinery in a manufacturing unit, which is located in the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland or Tripura and the investment had to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he manufacturer within 60 days from the end of the quarter in an Escrow Account opened by the manufacturer for this purpose. Under Notification No. 28/2004-CE, dated 09.07.2004, the operation, including withdrawals from, and closure of, the said Escrow Account, had to be made with the prior approval of the jurisdictional Commissioner of Central Excise by taking into account the conditions specified in the said Notification. The manufacturer was also to invest the amount, deposited in the said Escrow Account, within two years from the date of the deposit and the amount, withdrawn from the Escrow Account, was to be utilized for the purpose specified within 60 days of its withdrawal. (vi) The respondents/authorities concerned, however, in illegal and arbitrary manner, took steps for appropriation of various amounts from various Escrow accounts of the petitioner company and issued instructions not to allow any withdrawal in respect of the Escrow Accounts of the petitioner company. The said action was challenged before this Court by filing a writ petition being W.P.(C) No.591/2008. The petitioner company, by filing W.P. (C) No. 2814/2008, also challenged the functioning of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, 2011, and the judgment of this Court rendered on 06.01.2010 and 29.06.2010. The Division Bench also held that the judgment of this Court, dated 06.01.2010 and 29.06.2010, were fully executable and the parties were to act in accordance with the terms and conditions of the Finance Act, 2011, and the respondents were to deal with the matter and finalize the same within 3 months from the date of receipt of the order. 9. After the judgment and order of the Division Bench of this Court and in compliance with Section 72 of Finance Act 2011, the petitioner company, admittedly, received Investment Appraisal Certificates/Reports, wherein certain amounts were said to be not admissible without giving any reason for the inadmissibility/ineligibility of the investment. This apart, no hearing whatsoever was given to the petitioner company before holding the investment to be not allowable. 10. It is pertinent to mention here that the provisions, embodied in the relevant Notification, specifically stated that the manufacturer has to prove to the satisfaction of the Investment Appraisal Committee that the investment was made for the purposes specified in the notification. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the IAC and the IAC must allow manufacturer to show cause against such a tentative finding of the IAC. What the IAC has to do, in such a case too, is that it has to issue notice, to the manufacturer concerned, stating therein the reason, which did not satisfy the IAC that the details of the investments are correct. Only upon giving notice to show cause, in every case, as indicated here in before, that necessary decision can be given either allowing the investments as certifiable or disallowing the investments as not certifiable. Whatever decision is, eventually, reached by the IAC, must be communicated, along with the reasons therefore, to the manufacturer so that the manufacturer knows 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 a IAC takes a decision refusing to approve an investment, the jurisdictional excise officer, in terms of the Notification dated 21.01.2004 cannot straightway direct forfeiture of the amount, which is not certified by the IAC. In such circumstances too, jurisdictional Commissioner, or the Jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apal Ltd. vs. Union of India Ors. [2010 (1) GLT 744. 15. Notwithstanding the contention of the respondents that no notice to show cause and no opportunity to have their say were required to be given by the IAC to the petitioner company before the claim for investments, having been made under the scheme, in question, were disallowed, it may be noted that it has been, as rightly pointed out, on behalf of the petitioner company, clearly held, in Dharampal Satyapal Ltd. (supra), that the principle of natural justice binds the IAC to give notice to show cause clearly specifying in the notice as to why, in the considered view of the IAC, not an investment made in any of the project. This Court has further held that even when the IAC finds, in a given case, that the investments, claimed to have been made, are of doubtful quality, the IAC cannot reject the investment; rather, the opinion, which the IAC, so forms, must be treated as its tentative opinion and the IAC must allow the manufacturer to show cause against its such tentative finding. 16. In the present case, it is the admitted position that before disallowing the claim for investments, which the petitioner compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be done because the representative of the State of Tripura did not attend the meeting of IAC. In our view, without entering into any other disputes, at this stage, it would be better if the State ensures that an appraisal in accordance with the terms of the scheme is done at the earliest possible. The State is therefore directed to take up the matter with the Excise Department at the Central Government level so that another meeting of the IAC with regard to the investment made in Tripura can be held. Holding of such a meeting at an early stage would also be for the benefit of the State because it is only this Committee which can find out whether the assesse has actually used the amount of excise refund to it for the purpose provided for under the scheme. In case the Committee finds that such refund excise has been used for other purposes the State can be a beneficiary along with the Central Government. Mr. Datta, learned counsel, may obtain instruction within 6(six) weeks as to how soon the said Committee can hold its meeting. List on 2nd July, 2013. The interim direction to continue till the next date. Pursuant to the said order we ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. We find ourselves in complete agreement with the directions, which have been given by the Division Bench of Tripura High Court, in WP(C) No. 111/2013, by its order, dated 09-07-2013 and we, too, direct that when the petitioner company has claimed to have made the investment in terms of the Notification, which form the subject-matter of the writ petition, the petitioner company is entitled to the benefit, which the relevant scheme has promised. 20. Considering, therefore, the matter in its entirety and in the interest of justice, the impugned demand notice, dated 26-10-2013, is hereby set aside and the matter is remanded to the IAC for its disposal bearing in mind the position of law as has been indicated by this Court in Dharampal Satyapal Ltd. (supra) and also by the Division Bench of this Court in WA Nos. 394/10 and 395/10. We further direct that the steps, in tune with the directions given by the Tripura High Court, in its order, dated 09-07-2013, shall be taken by the respondents/authorities concerned so that the claim of the petitioner company, as regards making of investments, is, adequately and fully, decided by the IAC. 21. The whole exercise, as dire ..... X X X X Extracts X X X X X X X X Extracts X X X X
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