TMI Blog2013 (5) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... y notification. Since both, i.e. the exemption and withdrawal notifications, are issued in exercise of delegated legislation, the first contention of the respondents deserves to be rejected. Coming to the real and basic question of public interest, the only public interest indicated in the reply is about the nature of the product being manufactured by the petitioner, i.e. Pan Masala, which has been termed to be falling in the category of “demerit goods” and health hazardous. Both the contentions deserve to be rejected in view of the observations made hereinabove. At the cost of prolixity, it may be noticed that the demerit goods have not been defined anywhere. Pan Masala has not been declared as a health hazardous by any notification or order of the Government of India or the State Government. Even no material or scientific reports have been placed on record to demonstrate that the Pan Masala containing no tobacco is health hazardous. Mere ipse dixit terming the goods manufactured by the petitioner as health hazardous or under the category of demerit goods does not in any manner constitute justifiable public interest. The doctrine of promissory estoppel thus becomes enforceable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02-2003/901 dated 17-2-2003, whereunder various Fiscal Incentives to new Industrial Units and existing Units with substantial expansion were notified. The Fiscal Incentives, inter alia, include 100% income tax and excise duty exemption for a period of 10 (ten) years besides various other subsidies etc. The controversy in the present petition, however, is confined to the exemption from the Central Excise Duty. Since the excise duty is leviable under the Central Excise Act, 1944, with the view to implement the industrial policies referred to above the Central Government in exercise of its power under sub-section (1) of Section 5A of the Central Excise Act, 1944 and other related provisions whereunder additional duties of excise were imposed from time to time, issued a statutory Notification No. 71/2003-Central Excise, dated 9-9-2003 for exemption of excise duty in the State of Sikkim in respect to the goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 other than goods specified in Annexure-I to the Notification. The Notification contains various stipulations and conditions for availing the exemption envisaged under the Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 and was entitled to refund of the same on clearances of the goods in accordance with the prescribed procedure under the exemption Notification No. 71/2003-Central Excise, dated 9-9-2003. The petitioner filed its returns in prescribed Form E.R. 1 and on clearances of the goods he was allowed to refund of the excise duty paid by it up to the month of April, 2007. 5. While the petitioner was availing the exemption from payment of excise duty on the goods manufactured by it in the State of Sikkim, the Ministry of Finance, Department of Revenue, Government of India issued the impugned Notification No. 21/2007-Central Excise, dated 25-4-2007, whereby various notifications specified therein were amended including Notification No. 71/2003-Central Excise, dated 9-9-2003 wherein exemption from the payment of excise duty was granted to the Industries set up in the State of Sikkim. Annexure-I to the Notification No. 71/2003-Central Excise was substituted and Pan Masala falling under Chapter 21 of the First Schedule of the Central Excise Tariff Act, 1985 was included in the Annexure-I, meaning thereby the excise duty exemption earlier allowed on manufacturing of Pan Masala came to be with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nos. 1, 2 and 3 through the Superintendent, Central Excise, Rangpo Range opposing the petition. All factual averments in respect to the issuance of IPR by the Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, Government of India in respect to the North-Eastern Region and Sikkim vide Notification No. 71/2003-Central Excise, dated 9-9-2003 and establishment of industry by the petitioner in the State of Sikkim, its investment and commencement of commercial production with effect from 27-6-2006 have been admitted. Payment of excise duty and grant of exemption, refund of the duties paid by the petitioner on the goods manufactured by its Sikkim unit up to the month of April, 2007 are also not disputed. Respondents have justified the withdrawal of benefit of excise duty exemption on manufacturing of Pan Masala only on the ground that the action is in public interest since the Pan Masala falls within the category of demerit goods as it is found hazardous to health. It is further stated that it was felt necessary so as not to encourage production and consumption of such goods through tax incentives. Further submission to oppose the relief/claim of the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... validity of the policy decision of the Government of India, but unfortunately the counter affidavit has not been filed by any Secretary level officer either from the Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, Government of India or the Ministry of Finance, Department of Revenue, Government of India. To the contrary the counter affidavit has been filed by an officer in the rank of Superintendent of Central Excise posted at Rangpo in the State of Sikkim. Even in this affidavit, no reference is made to any access to the records of the Government of India nor the statements made in the affidavit are relatable/referable to any record of the Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, Government of India or of the Ministry of Finance, Department of Revenue, Government of India. 9. I have heard Mr. P.M. Dave, learned counsel appearing for the petitioner and Mr. B.K. Gupta, learned counsel for the respondents nos. 1, 2 and 3 at length. The sole question that comes up for judicial scrutiny is the validity of impugned Notification No. 21/2007-Central Excise, dated 25-4-2007 on the touch stone of doctrine of promi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of Sikkim, though prior to the aforesaid Notification, the Government of India had issued its New Industrial Policy for concessions in the North-Eastern Region vide its Office Memorandum dated 24-12-1997. This policy decision has been formally implemented by issuing statutory Notification No. 1/2003-Central Excise, dated 9-9-2003 by granting exemption from payment of Central Excise Duty on goods manufactured as specified in the First and Second Schedule of the Central Excise Tariff Act, 1985 except those notified in Annexure-I thereto in the State of Sikkim. Admittedly manufacturing of Pan Masala was not one of the products incorporated in Annexure-I which is in fact a negative list. It is admitted case of the parties that the petitioner was entitled to exemption from payment of the excise duty in accordance with the procedure prescribed in terms of the exemption Notifications dated 17-2-2003 and 9-9-2003. Through the impugned Notification No. 21/2007-Central Excise, dated 25-4-2007, Pan Masala has been introduced in Annexure-I so as to withdraw exemption granted in respect to manufacture of this item under Notification No. 71/2003-Central Excise, dated 9-9-2003. It is equal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his was felt necessary so as not to encourage production and consumption of such goods through tax incentives. It was on these grounds that NEIIPP (North Eastern Industrial Investment Promotion Policy), 2007 was framed, in larger public interest, that no excise duty exemption/concessions be provided to pan masala , for units located in the NER and Sikkim. In this background, it would have been iniquitous to continue to extend the benefit of Central Excise exemption to manufacturers of pan masala under Notification No. 71/2003-C.E., dated 9-9-2003. A copy of the North Eastern Industrial Investment Promotion Policy, 2007 is enclosed herewith and marked as Annexure R-1. 11. As observed above, this affidavit has not been filed by any competent official of the Government of India from the Ministry of Commerce and Industry, Department of Industrial Policy and Promotion or even from the Ministry of Finance, Department of Revenue who is associated or acquainted with the Policy making/decision of Government or is custodian of such record or has access to it. The impugned Notification is a Government of India s policy decision. The reasons for issuance of impugned Notification could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on import duty under the Customs Act on the import of PVC resins for the period from 15-3-1979 to 31-3-1981 was prematurely withdrawn vide withdrawal notification dated 16-10-1980. Validity of this withdrawal notification came to be examined by the Hon ble Supreme Court. The plea of the Government of India has been noticed by the Hon ble Supreme Court, the relevant extract from paragraph 19 is noticed hereunder :- 19 . It was stated that it was with a view to equalizing sale prices of the indigenous and the imported material and to make the commodity available to the consumer at a uniform price, keeping in view the trends in the supply of the material, that the Cabinet had decided to issue the exemption Notification No. 66 of 1979 under Section 25(1) of the Act. Subsequently, when it was found and realized that the international prices of the product were falling and consequently the import prices had become lower than the ex-factory prices of the indigenous material, the matter was examined by the Government of India and it was decided in public interest to withdraw the exemption notification. Thus, the Union of India has disclose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity duty or any other charges by virtue of whatsoever name called by the Central or the State Government on the electricity supplied to the consumer. Considering these facts, Hon ble Supreme Court held that there is no breach of Article 14 of the Constitution or the promise/assurance extended by the State to the industries established in the hilly areas. Hon ble Supreme Court also relied upon an earlier judgment of the Apex Court in U.P. Power Corporation Ltd. v. Sant Steels and Alloys (P) Ltd. - (2008) 2 SCC 777. In this case, Hon ble Supreme Court while upholding the doctrine of promissory estoppel against the State action, held that theft of electricity is no ground to withdraw the benefit granted to the industries of the hilly areas and the same does not constitute public interest. However, it has also been held that statutory notification issued by the Government in exercise of delegated legislation cannot be pressed into service to deny the benefits granted under the earlier statutory notification and the principle that there can be no estoppel against the statute is not applicable in so far the delegated legislation is concerned except where it is found to be in public inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r concessions for the State of Sikkim dated 23-12-2002. With the announcement of the North East Industrial and Investment Promotion Policy (NEIIPP), 2007 which covers the State of Sikkim also, the New Industrial Policy and other concessions for the State of Sikkim issued vide O.M. No. 14(2)/2002-SPS dated 23-12-2002 and the various subsidy Schemes thereunder viz. Central Capital Investment Subsidy Scheme, 2002, Central Interest Subsidy Scheme, 2002 and the Central Comprehensive Insurance Scheme, 2002 all notified vide Notification No. 14(2)/2002-SPS dated 24-12-2002, will cease to exist with effect from 1st April, 2007. 2. However, industrial units which have commenced commercial production on or before 31-3-2007 will continue to get benefits/incentives under the New Industrial Policy and other concessions for the State of Sikkim dated 23-12-2002. Sd/- (N.N. Prasad) Joint Secretary to the Government of India 17. In paragraph 1 of the aforesaid Memorandum, reference is made to North East Industrial and Investment Promotion Policy (NEIIPP), 2007, whereunder various subsidy Schemes under various office memorandums/policies have been revoked with effect from 1-4-2007. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith effect from 27-6-2006 i.e. before 31-3-2007, has been protected for the specified period of 10 (ten) years. Mr. B.K. Gupta, learned counsel, however, insisted that by virtue of the impugned Notification, the writ petitioner ceases to be the beneficiary as the intention of the respondents is to withdraw and discontinue the benefit of excise duty exemption with effect from the date of issuance of Notification dated 25-4-2007. In view of the stand of the respondents, it becomes necessary to examine the question of application of doctrine of promissory estoppels in case of petitioner. 18. Other relevant decisions on the issue including those referred to and relied upon by petitioner may be noticed :- 18.1 In Union of India Ors. v. Godfrey Philips India Ltd. Ors. - 1985 (22) E.L.T. 306 (S.C.) = (1985) 4 SCC 369, Hon ble Supreme Court reiterating its earlier decision in Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P. - (1979) 2 SCR 641 = (1979) 2 SCC 409, held that the Government is bound by its promise held to the manufacturer. 18.2 In Pawan Alloys Casting Pvt. Ltd., Meerut v. U.P. State Electricity Board Ors. - (1997) 7 SCC 251, Hon ble Supreme Court, upholding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by government order in exercise of power under Section 7 of the Bihar Finance Act, if is found to be repugnant to the industrial policy declared in a government resolution, then the said notification must be held to be bad to that extent. In the case in hand, the notification issued by the State Government on 4-4-1994 has been examined by the High Court and has been found, rightly, to be contrary to the Industrial Incentive Policy, more particularly, the policy engrafted in clause 10.4 (i)(b). Consequently, the High Court was fully justified in striking down that part of the notification which is repugnant to sub-clause (b) of clause 10.4 (i) and we do not find any error committed by the High Court in striking down the said notification. We are not persuaded to accept the contention of Mr. Dwivedi that it would be open for the Government to issue a notification in exercise of power under Section 7 of the Bihar Finance Act, which may override the incentive policy itself. In our considered opinion, the expression such conditions and restrictions as it may impose in sub-section (3) of Section 7 of the Bihar Finance Act will not authorize the State Government to negate the incentiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Government to grant exemption, it would not be possible to enforce the representation against the Government, because the Government cannot be compelled to act contrary to the statute. But if the statute confers power on the Government to grant the exemption, the Government can legitimately be held bound by its promise to exempt the promisee from payment of sales tax. (SCC p. 453) xxxxxx xxxxxx xxxxxx 47. The appellant has been unable to establish any overriding public interest which would make it inequitable to enforce the estoppel against the State Government. The representation was made by the highest authorities including the Finance Minister in his Budget speech after considering the financial implications of the grant of the exemption to milk. It was found that the overall benefit to the State s economy and the public would be greater if the exemption were allowed. The respondents have passed on the benefit of that exemption by providing various facilities and concessions for the upliftment of the milk producers. This has not been denied. It would, in the circumstances, be inequitable to allow the State Government now to resile from its decision to exempt mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18.9 In MRF Ltd. v. Assistant Commissioner (Assessment) Sales Tax - (2006) 8 SCC 702 = 2006 (206) E.L.T. 6 (S.C.) = 2008 (12) S.T.R. 206 (S.C.), apart from applying principle of legitimate expectation as held in Bannari Amman Sugars Ltd. (supra), it has also been held that doctrine of promissory estoppels applies to statutory notifications where the State does not plead any overriding public interest/equity. 19. In the present case, the State has failed to disclose any material to indicate the public interest. The plea that the Pan Masala falls under the category of demerit goods and that the same is health hazardous is not supported by any scientific analysis or material to justify the plea. What is public interest has to be established on the basis of a specific plea based on material or record to enable the Court to examine the foundation of the plea and to find out whether it is an abstract and real public interest or only a device to justify the action. The law evolved on the doctrine of principle of promissory estoppel and legitimate expectation from time to time postulates that the doctrine of promissory estoppel and equitable estoppel represents plea of equity to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it is only the principle legislation which protects the State against enforceability of an equitable promise as there can be no estoppel against statute. However, this principle is inapplicable to the delegated legislation where existence of justifiable public interest is must. In Mahavir Vegetable Oil (P) Ltd. (supra), Hon ble Supreme Court held that doctrine of promissory estoppel operates even in legislative field and accrued rights cannot be taken away by amendment of statutory notification. Since both, i.e. the exemption and withdrawal notifications, are issued in exercise of delegated legislation, the first contention of the respondents deserves to be rejected. 21. Coming to the real and basic question of public interest, the only public interest indicated in the reply is about the nature of the product being manufactured by the petitioner, i.e. Pan Masala, which has been termed to be falling in the category of demerit goods and health hazardous. Both the contentions deserve to be rejected in view of the observations made hereinabove. At the cost of prolixity, it may be noticed that the demerit goods have not been defined anywhere. Pan Masala has not been declared a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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