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Bajaj Auto Ltd. Versus Union of India through Secretary, Ministry of Commerce and Industry, Government of India, New Delhi and others

2017 (3) TMI 781 - UTTARAKHAND HIGH COURT

NCCD - Benefit of exemption under N/N. 50/2003 dated 10th June 2003 - Area based exemption - It is the case of the appellant that after almost three and half years of the application for registration and after two and half years of the Audit Objection and response, appellant came to be served with Annexure-8 Show Cause Notice dated 26th August, 2011, whereby the appellant was called upon the pay NCCD and the cesses. A proposal was also made to impose an equal amount of penalty. Demand was raised .....

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e in a little over six months from the date of the policy decision. It is nearly after four years that the Industrial Unit commences the commercial production. By the time, the industrial unit was set up, in fact, the appellant must be attributed with clear notice of the express terms of the Notification, which does not provide for exemption from NCCD. - The appellant cannot be permitted to raise a plea of promissory estoppel in the facts of this case based on the policy decision dated 07.01 .....

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pellant challenges the Notification, it would amount to questioning the benefits, which the appellant is admittedly entitled to. It is pointed out, however, that the reliefs sought by way of Prayer No. 1, namely, declaration that the appellant is entitled to the benefit of exemption under Notification in respect of levy of duty of Excise as NCCD for a period of 10 years would suffice. - The interpretation should, as far as possible, be beneficial in the sense that it should suppress the misc .....

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we could, on the strength of the Notification, as issued, vouchsafe the benefit of exemption to the appellant? - Held that: - It may be true that the goods manufactured by the appellant is to be found in the seventh schedule to the Finance Act of 2001 as also the schedule to the Excise Act mentioned in the notification. It is true that by virtue of sub-section (3) of Section 136, the provision relating to exemption from duty is made applicable to NCCD. This only means that it is open to the Auth .....

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f the interest is levied from the relevant time, but we do not wish to finally conclude this issue as we would allow the appellant to raise this contention before the statutory authority duly constituted. We also leave open the contention of the appellant to impugn the quantum of interest. - Penalty - Held that: - we would think that there is indeed express power as provision of imposition of penalty is available in respect of NCCD. As regards the quantum and even whether penalty should be .....

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petition was filed seeking the following reliefs: A. An appropriate writ order or direction that this Hon ble Court declaring that the petitioners are entitled to avail of the exemption under Notification No. 50/2003 dated 10th June 2003 in respect of the exemption contained therein from the levy of the duty of excise known as NCCD for a period of ten years calculated from the date of commencement of commercial production by the Petitioners; B. To issue a writ of prohibition or an appropriate w .....

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e manufacture of 2/3 wheeler motor vehicles; the vehicles are chargeable to excise duty under the Central Excise Act, 1944 (hereinafter referred to as the Act). 3. On 7th January, 2003, the Prime Minister visited Uttaranchal from 29th to 31st March, 2002. He made certain announcements that Central Excise concessions will be made to attract investments in the industrial sector for certain special categories of States, including the State of Uttaranchal. Annexure - 1 dated 07.01.2003 to the writ p .....

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ng Zones, Theme Parks (Food Processing Parks, Software Technology Parks, etc.) as stated in Annexure-1 and other areas as notified from time to time by the Central Government, are entitled to: (a) 100% (hundred percent) outright excise duty exemption for a period of 10 years from the date of commencement of commercial production. (b) 100% income tax exemption for initial period of five years and thereafter 30% for companies and 25% for other than companies for a further period of five years for .....

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mentioned in para 3(I) & (II) above in the entire state of Uttaranchal and Himachal Pradesh without any area restrictions. 4. Finally, we may also notice paragraph 5, which reads as follows: The Ministry of Finance & Company Affairs (Department of Revenue), Ministry of Agro & Rural Industries, Ministry of Textiles, Minsitry of Food Processing Industries, Ministry of Small Scale Industries, etc. are requested to amend Act /rules / notifications, etc, and issue necessary instructions f .....

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ocated in the Industrial Growth Centre or Industrial Infrastructure Development Centre or Export Promotion Industrial Park or Industrial Estate or Industrial Area or Commercial Estate or Scheme Area of Uttarakhand and Himachal Pradesh.-In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944) 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 s .....

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or Export Promotion Industrial Park or Industrial Estate or Industrial Area or Commercial Estate or Scheme Area, as the case may be, specified in [Annexure-II and Annexure III] appended hereto, from the whole of the duty of excise or additional duty of excise, as the case may be, leviable thereon under any of the said Acts. [Provided that the exemption contained in this notification shall apply subject to the following conditions, namely:- (i) The manufacturer who intends to avail of the exempt .....

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auses of the Notification, we are not concerned. 7. It is the case of the appellant that they started manufacturing vehicles since April, 2007 after obtaining Central Excise Registration. Till February 2007, it is their case that neither respondent no. 3 or 4, with whom returns were filed, ever raised any objection or observation on eligibility of exemption from payment of National Calamity Contingent Duty (hereinafter referred as NCCD) or any cess thereon. However, in February, 2009, an audit t .....

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Annexure 6. It is the case of the appellant that after almost three and half years of the application for registration and after two and half years of the Audit Objection and response, appellant came to be served with Annexure-8 Show Cause Notice dated 26th August, 2011, whereby the appellant was called upon the pay NCCS and the cesses. A proposal was also made to impose an equal amount of penalty. Demand was raised for interest also and, thereupon, the appellant filed the writ petition seeking .....

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of 10 years from the date of commencement of the commercial production, was persuaded to invest in the State of Uttaranchal. Having made the promise, as is embedded in the Office Memorandum dated 07.01.2003, which is a policy decision taken after the announcement by the Prime Minister earlier, the Notification, which we have adverted to earlier, must be read as an implementing notification. The Notification is issued to secure the object, namely, to spur growth in a backward area. Having acted u .....

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, he would submit that it will be unfair on the part of the Authorities to deviate from their proclaimed policy having induced the appellant to set up a unit by the promise, which found articulation, also, in the Office Memorandum. In this regard, reliance was placed on the judgments of the Hon ble Apex Court in the case of Manuelsons Hotels Pvt. Ltd. vs. State of Kerala reported in (2016) 6 SCC 766, SVA Steel RE-Rolling Mills Ltd. vs. State of Kerala reported in (2014) 4 SCC 186, Devi Multiplex .....

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n the case of Lloyd Electric and Engineering Limited vs. State of Himachal Pradesh reported in (2016) 1 SCC 560. Apparently, he seeks to support the said stand also with reference to the judgments of the Hon ble Apex Court in the case of State of Bihar and others vs. Suprabhat Steel Ltd. and others reported in (1999) 1 SCC 31 and State of Jharkhnad and others vs. Tata Cummins Ltd. reported in (2006) 4 SCC 31. 11. Next, he would contend that being an implementing policy, the Notification calls fo .....

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ional situation, where the Exemption Notification is geared to engender and advance economic activities. Economic activity brought about by making investments in a backward area would obviously generate employment and create wealth, which will pave the way for economic development of the State. Such Notification calls for a liberal approach, runs the argument. 12. Next, he would contend that even proceeding on the basis that NCCD being a levy is imposed under the 2001 Finance Act, having regard .....

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sides the same, he would also rely on the judgment of the Gujarat High Court in the case of Vipore Chemicals Pvt. Ltd. vs. Union of India reported in 2009 (233) E.L.T. 44 (Guj), judgment of the Madras High Court in the case of Loyal Textile Mills vs. Jt. Secretary, MF reported in 2012 (280) E.L.T. 8 (Mad.), and the judgment of the Kerala High Court in the case of TVS Motor Co. Ltd. vs. CCE, Mysore reported in 2013 (295) E.L.T. 42 (Ker). 13. Further Sri Arshad Hidayatullah, learned Senior Counsel .....

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at the rates specified in the said Schedule. (2) The National Calamity duty chargeable on the goods specified in the Seventh Schedule shall be in addition to any other duties of excise chargeable on such goods under the Central Excise Act, 1944 (1 of 1944) or any other law for the time being in force. (3) The provisions of Central Excise Act, 1944 (1 of 1944) and the rules made thereunder, including those relating to refunds and exemptions from duties and imposition of penalty, shall, as far as .....

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sions of Chapter V of the Finance Act, 1994 and the rules made thereunder, including those relating to refunds and exemptions from tax, interest and imposition of Penalty shall, as far as may be, apply in relation to the levy and collection of Swachh Bharat Cess on taxable service, as they apply in relation to the levy and collection of tax on such taxable services under Chapter V of the Finance Act, 1994 or the rules made thereunder, as the case may be. 15. Therefore, he would point out that on .....

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lty and, that too, at the rate of 100 percent. 16. As far as the cesses are concerned, there are two cesses. Education Cess is imposed by the 2004 Finance Act and the Secondary & Higher Education Cess is imposed by the Finance Act of 2007. The cesses are actually levied on NCCD. At the time of argument, it is the submission on behalf of the appellant that the main challenge is to NCCD and if the challenge to levy of NCCD is not upheld, then, we need not be detained by any separate argument b .....

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with the knowledge of the specific terms of the Notification. Reading out the Notification, he would contend that it is clear as daylight that what was intended to be exempted is only the duties mentioned in the Notification payable under the Central Excise Act; NCCD is not a duty of excise payable under the Act; it is payable under the Finance Act of 2001. This being an indisputable position, he would submit that there is no scope for applying the principle of promissory estoppel based on the p .....

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o draw support from an unreported judgment of the Hon ble Apex Court in Civil Appeal No. 1654 of 2008 dated 24.03.2015. NCCD was imposed under an earlier enactment, namely, the Finance Act of 2001 and having regard to the express language of the Notification dated 10.06.2003, there can be no shadow of doubt that the Author of the Notification did not intend to cover NCCD within the scope of the Notification. 18. Considerable reliance was placed on the judgment of the Hon ble Apex Court in the ca .....

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or future, and which has been adopted by the other party as the basis of some course of conduct, act or omission, should not be allowed to pass muster. And the relief to be given in cases involving the doctrine of promissory estoppels contains a degree of flexibility which would ultimately render justice to the aggrieved party. 20. The above statement, based on various earlier English authorities, correctly encapsulates the law of promissory estoppel with one difference - under our law, as has b .....

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n which has been adopted by the other party as the basis of a course of conduct which would affect the other party if the assumption be not adhered to. The assumption may be of fact or law, present or future. And two, that the relief that may be given on the facts of a given case is flexible enough to remedy injustice wherever it is found. And this would include the relief of acting on the basis that a future assumption either as to fact or law will be deemed to have taken place so as to afford .....

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o time. Apart from various other concessions that were granted, exemption from Building Tax levied by the Revenue Department was one such concession. It was stated in the said G.O. that action to amend the Kerala Building Tax Act, 1975 will be taken separately. The G.O. went on to state that persons eligible for such concessions will, among others, be classified hotels i.e. from 1 to 5 stars. A Committee was set up consisting of three government officers to oversee the aforesaid scheme. Vide a L .....

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dated 11-7-1986 and stated that they were under no obligation to furnish any return under the said Act as they were exempt from payment of building tax. 3. In pursuance of the said G.O. dated 11-7-1986, the Kerala Building Tax Amendment Act of 1990 was passed with effect from 6-11-1990. The Objects and Reasons for the said Amendment Act read as follows: Statement Of Objects And Reasons The Government has declared tourism as an industry with a view to develop tourism in the State and announce va .....

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iately and as the Legislative assembly was not in session the Kerala Building Tax (Amendment) Ordinance, 1990 (Ordinance 8 of 1990) was promulgated by the Governor of Kerala on the 2nd day of November, 1990, and published in the Kerala Gazette Extraordinary dated 6th day of November, 1990. The Bill seeks to replace the said Ordinance by an Act of legislature. (Published in KG Ex No.1159 dated 7-12-1990) 4. In pursuance of the said object, Section 3-A was added, which reads as under: 3-A. Power t .....

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A was added in the Kerala Buildings Tax Rules, 1974 as under: 14-A. (1) The exemption contemplated in Section 3-A of the Kerala Building Tax Act, 1975 shall be applicable to the buildings having the following specifications in such tourism sector and the construction of which is completed during such period as may be specified in the notifications:- (i) Classified hotels (1 to 5 stars) (ii) Motels(which conform to the specification of the Department of Tourism of Kerala/ Central Government) (iii .....

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xclusive handicrafts with emporia (approved by the State/Central Department of Tourism) (2) The area so notified shall be approved Tourist Centres and such other locations certified by a Committee consisting of Secretary to Government, Tourism Department, Secretary to Government Taxes Department and Director, Department of Tourism. (3) The period of exemption shall be 10 years or such shorter period in respect of specific areas as may be notified in the Gazette based on the recommendation of the .....

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those bound by them). On the facts of the present case, a discretionary power has to be exercised on facts under Section 3A of the Kerala Buildings Tax Act, 1975. The non- exercise of such discretionary power is clearly vitiated on account of the application of the doctrine of promissory estoppel in terms of this Court s judgments in Motilal Padampat and Nestle (supra). This is for the reason that non-exercise of such power is itself an arbitrary act which is vitiated by non- application of min .....

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ion 3A was, in fact, enacted by the Kerala legislature by suitably amending the Kerala Buildings Tax Act, 1975 on 6.9.1990 in order to give effect to the representation made by the G.O. dated 11.7.1986. We find that the said provision continued on the statute book and was deleted only with effect from 1.3.1993. This would make it clear that from 6.9.1990 to 1.3.1993, the power to grant exemption from building tax was statutorily conferred by Section 3-A on the Government. And we have seen that t .....

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of promissory estoppel, as has been held by us hereinabove. The ministerial act of non issue of the notification cannot possibly stand in the way of the appellants getting relief under the said doctrine for it would be unconscionable on the part of Government to get away without fulfilling its promise. It is also an admitted fact that no other consideration of overwhelming public interest exists in order that the Government be justified in resiling from its promise. The relief that must therefo .....

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at no building tax can be levied or collected from the appellants in the facts of the present case. Consequently, we allow the appeal to the extent indicated above and set aside the judgment of the High Court. 21. Therefore, the learned Senior Counsel for the appellant would submit that the law has progressed to a stage, where it has employed the wednesbury doctrine and taken the view that the non issuance of the Notification under the provisions enabling exemption to be granted was an arbitrary .....

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the benefits. Otherwise, it would be in violation of the principles of promissory estoppel and also it would be unfair and immoral on the part of the State not to act as per its promise. 22. The case of Devi Multiplex vs. State of Gujarat reported in (2015) 9 SCC 132 is also produced alongwith the compilation, but not expressly relied on by the appellant. Announcement by the Government relating to New Package Schemes of Incentives for Tourism Projects led to the appellants seeking temporary reg .....

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or is it recorded in the formal contract under Article 299 of the Constitution of India. It reiterated that the doctrine is applicable against the Government in the exercise of its Governmental, public or executive functions and the doctrine of executive necessity or freedom of future executive action cannot be invoked to defeat the applicability of the said principle. 23. In the case of State of Punjab vs. Nestle India (2004) 6 SCC 465, respondents were paying purchase tax on milk. The Chief Mi .....

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ssued a circular intimating the Field Officers that the Government had decided to abolish purchase tax on milk. The representatives of the respondent Companies stood informed about the contents of the circular. In a meeting chaired by the Chief Minister and attended by the Finance Minister and Officers, the decision to abolish was reiterated and the formal notification was to be issued. The Finance Minister further announced that the Government had abolished the tax on milk and the Finance Depar .....

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uncil of Ministers that the decision of abolishing purchase tax on milk was not accepted. Notices were issued calling upon the respondents to pay purchase tax, which resulted in filing of the writ petitions. The Hon ble Apex Court held in view of the various provisions in the Punjab General Sales Tax Act, 1948 that the State Government had power to exempt or abolish milk as a taxable commodity. Nothing stood in the way of their doing so. It is further held that the Government cannot rely on a re .....

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us, the power in the State Government to grant exemption under the Act is coupled with the word may -signifying the discretionary nature of the word. We are of the view that the State Government s refusal to exercise its discretion to issue the necessary notification abolishing or exempting the tax on milk was not reasonably exercised for the same reasons that we have upheld the plea of promissory estoppel raised by the respondents. We, therefore, have no hesitation in affirming the decision of .....

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ver, also advert to the following judgment of the Hon ble Apex Court in the case of Monnet Ispat and Energy Limited vs. Union of India and others reported in (2012) 11 SCC 1. Therein, the Hon ble Apex Court has declared the following principles: The following principles must guide a court where an issue of applicability of promissory estoppel arises: 1. Where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or aff .....

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y estoppel may be applied against the Government where the interest of justice, mortality and common fairness dictate such a course. The doctrine is applicable agaisntthe State even in its governmental, public or sovereign capacity where it is necessary to prevent fraud or manifest injustice. However, the Government or even a private party under the doctrine of promissory estoppel cannot be asked to do an act prohibited in law. The nature and function which the Government discharges is not very .....

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for the promisee to show that by acting on promise made by the other party, he altered his position. The alteration of position by the promisee is a sine qua non for the applicability of the doctrine. However, it is not necessary for him to prove any damage, detriment or prejudice because of alteration of such promise. 5. In no case, the doctrine of promissory estoppel can be pressed into aid to compel the Government or a public authority to carry out a representation or promise which is contra .....

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7. The doctrine of promissory estoppel cannot be invoked in abstract. When it is sought to be invoked, the Court must consider all aspects including the result sought to be achieved and the public good at large. The fundamental principle of equity must forever be present to the mind of the court. Absence of it must not hold the Government or the public authority to its promise, assurance or representation. 26. Thus, clear and positive foundation has to be laid in the petition. Bald assertions, .....

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It must be intended to create legal relation or affect a legal relationship to arise in the future. Undoubtedly, it is not merely a defence, it also furnishes a cause of action by itself. Underlying the principle is the principle of equity and in the words of the Court in the case of Manuelsons Hotels Pvt. Ltd. vs. State of Kerala (2016) 6 SCC 766, it is based essentially on the premise that an unconscionable departure by one party from the subject matter of an assumption, be it a fact or law, .....

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s Policy document (hereinafter referred to as the said industrial Policy ) to provide a package of incentives to enable Environment of industrial development, improve availability of capital and increase market access to provide a fillip to the private investment for the states of Uttaranchal and Himachal Pradesh. As per the above said policy document the major fiscal incentives promised to new industrial units and to existing units on their substantial expansion were [a] 100 % outright excise d .....

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rred under Section 5A of the Act, Respondent No. 2 issued a Notification bearing No. 50/2003 CE dated 10th June 2003 (hereinafter referred to as the Notification ) thereby granting full exemption from duty of excise levied on the goods specified in Schedule I and Schedule II of the Tariff Act in respect of specified excisable goods, subject to, amongst other, the fulfillment of condition that the excisable goods are cleared by new industrial undertaking set up located in the area of the State of .....

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duly complied with all the conditions set out by the said Notification and had commenced commercial production in April 2007 i.e. well before the cut-off date of 31st March 2010. 30. Our attention was also drawn by the learned Senior Counsel for the appellant in this regard to Grounds B and D , which read as follows: B. Because it is settled law that implementing Notification has to be read in the context of the Industrial Policy, when an assessee is promised with a tax exemption for setting up .....

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ntents of Paragraph 7 need no comments. In regard to Paragraph 8, it is stated that the contents relate to record and need no comments. There is no plea of promissory estoppel, per se, which is seen raised except for perhaps what is stated in Paragraph 7, which we have adverted to already. There is no detail of any investment made and number of workers employed. In fact, on perusal of Paragraph-7, what we find is that the appellant attracted by the fiscal incentives promised by the industrial po .....

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n the Notification. We also find these pleadings quite inadequate or rather non-existent to successfully found the plea of promissory estoppel. A glance at the admitted factual position may be highly relevant. The policy is dated 07.01.2003. The Notification was issued on 10.06.2003. All that is stated in the writ petition is that the petitioner has been manufacturing at the Pant Nagar Industrial Estate since April, 2007 after obtaining Central Excise Registration. We must bear in mind that an i .....

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would cover NCCD and other cesses on the same, also as part of the Excise Duty. In this regard, we must, at once, consider the express terms of the Notification. In the Notification, reference is, no doubt, made to Section 5-A of the Act, Section 3(3) of the Additional Duties of Excise (Goods of Special Importance) Act 1957 and Section 3(3) of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978. These sections are provisions, which enable Government to grant exemption. The .....

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the Author has clearly expressed its intention to exempt the whole of the duty of excise or additional duty of excise, as the case may be leviable thereon under any of the said Acts. The words under any of the said Acts referred necessarily to the three enactments, which we have adverted to. Therefore, the Notification is, beyond the shadow of doubt, concerned with only the Excise Duty and additional duties, which are payable under the said Acts. Is NCCD levied under any of the three Acts? The a .....

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provided as follows: 136. National Calamity Contingent duty.- (1) … (2) … (3) The provisions of the Central Excise Act, 1944 (1 of 1944) and the rules made thereunder, including those relating to refunds and exemptions from duties and imposition of penalty, shall, as far as may be, apply in relation to levy and collection of the National Calamity duty leviable under this section in respect of the goods specified in the Seventh Schedule as they apply in relation to levy and collect .....

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cation to effectuate the policy decision is what apparently understood by the Authorities. The Notification took shape in a little over six months from the date of the policy decision. It is nearly after four years that the Industrial Unit commences the commercial production. By the time, the industrial unit was set up, in fact, the appellant must be attributed with clear notice of the express terms of the Notification, which does not provide for exemption from NCCD. This is, as already noted in .....

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has not included the Finance Act of 2001 or NCCD in the Notification. Non-inclusion of NCCD or the Finance Act of 2001 is not made a complaint in the pleadings. 35. Had NCCD been levied by an enactment later than the Notification, it may have been open for the appellant to contend that it involves a breach of the promise contained in the policy decision of 07.01.2003. 36. In fact, the learned Senior Counsel for the appellant drew our attention to Annexure-5 communication dated 25.03.2009, which .....

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ation, it is mentioned that: From the legal position explained above it is established that the exemption granted under the above said Notification No. 50/2003 CE dated 10/06/2003 from the duty levied under Section 3 of the CEA, 1944 on the goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1986, stands extended to and is applicable with full force to the NCCD levied under the Finance Act 2001. 38. An indispensable element to successfully found the ca .....

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llant that the said Excise Duties are being demanded of them. Could it be said with certainty, therefore, that the words Excise Duty as mentioned in the Office Memorandum dated 07.01.2003 were understood or are capable of being understood as comprehending within its scope only the duty of excise under the Act. Contrast this fact scenario with that obtaining in the case of Manuelsons Hotels Pvt. Ltd. vs. State of Kerala (2016) 6 SCC 766. Therein, the promise was clear that the building, which was .....

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t had altered its position acting on a promise as is said to be contained in the policy decision dated 07.01.2003. Is the Notification Contrary to the Policy and Whether the Notification Being An Implementing Notification is entitled to beneficial interpretation 40. In the case of Lloyd Electric and Engineering Limited vs. State of Himachal Pradesh and others reported in (2016) 1 SCC 560, on which much reliance is placed by the appellant, the question, which was raised before the Hon ble Apex Co .....

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but the Notification was issued by the Excise and Taxation Department on 18.06.2009, whereby also concession was given beyond 31.03.2009 till March 2013 or till CST is phased out, but it was stated to be with immediate effect. In such circumstances, the Court proceeded to take the following view: 14. The State Government cannot speak in two voices. Once the Cabinet takes a policy decision to extend its 2004 Industrial Policy in the matter of CST concession to the eligible units beyond 31-3-2009 .....

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nd the 2004 Industrial Policy and extend tax concession beyond 31-3-2009, merely because the Excise and Taxation Department took some time to issue the notification, it cannot be held that the eligible units are not entitled to the concession till the Department issued the notification. 15. It has to be noted that the Finance Department of the State Government had concurred with the proposal of the Department of Industries to extend the tax concession beyond 31-3-2009 till 31-3-2013 and the Coun .....

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d duly notified by the Department concerned viz. Department of Industries. 41. We cannot also be oblivious to the following passages from the judgment: 17. Even otherwise, it is not altogether a new concession that has been notified by the Excise and Taxation Department in the impugned Notification dated 18-6-2009. As we have noted above, it is an extension of the 2004 Industrial Policy and the resultant tax concession to the eligible units which was available upto 31-3-2009. Therefore, for all .....

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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. 42. The Court, we notice, relied on the judgments of the Hon ble Apex Court in the cases of State of Bihar vs. Suprabhat Steel Ltd. reported in (1999) 1 SCC 31 and State of Jharkhand vs. Tata Cummins Ltd. reported in (2006) 4 SCC 57. Since the appellant h .....

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had started production prior to 1.4.1993 and whose investment in plant and machinery did not exceed ₹ 15 crores on 1.4.1993 would be entitled to facilities of sales tax exemption on the purchase of raw material for a period of seven years. The Government had introduced a new industrial policy in 1993. The Policy Resolution had been made applicable to the industrial units, which came into production from 01.04.1993 to 31.03.1998. The persons, who were aggrieved, approached the High Court of .....

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.04.1993, whereafter, the Court proceeded to hold as follows: 7. Coming to the second question, namely, the issuance of notification by the State Government in exercise of power under Section 7 of the Bihar Finance Act, it is true that issuance of such notifications entitles the industrial units to avail of the incentives and benefits declared by the State Government in its own industrial incentive policy. But in exercise of such power, it would not be permissible for the State Government to den .....

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notification issued 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 c .....

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lf. 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 incentives and benefits which any industrial unit would be otherwise entitled to under the general policy resolution itself. In this view of the matter, we see no illegality with the impugned judgment of the High Court in striking down a part of the notification dated 4-4-1994. 43. In the ca .....

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e, of sales tax on purchase of raw materials during the period. One of the preconditions, however, for availing the exemption was that the proprietor / partner /holding company must have exclusive ownership over the building in which the factory of the unit was located and if the factory of the unit was installed on a leased land or in a building taken on lease, the exemption was to be granted only when such land or building or both have been acquired by way of a registered lease for a minimum p .....

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n 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 .....

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newal. As a part of the incentives, it was also envisaged under clause 16 that sales tax benefit / exemption shall be granted to attract investments in order to sustain industrial development in the State. It is this background, that we have to consider clause 16.1 and clause 16.2 of the Industrial Policy, 1995. The two notifications are merely instruments giving effect to the policy envisaged under the Industrial Policy, 1995. 45. It is also a case, where both the Notifications were sought to b .....

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td. The object of insisting on the ownership of the building or a lease for 15 years was only to ensure that the industry did not run away after taking the advantage of the benefit granted under the policy and that the company was really a bona fide investor of capital in the industry intended to be run in the State for a reasonable length of time. It is in this background that one has to see the investment made by Tata Cummins Ltd. As stated above, ₹ 302 crores were invested by Tata Cummi .....

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after, that the Court proceeded to appreciate the scheme of the policy. 47. In the context of the aforesaid case law, we must appreciate, whether there is any merit in the case of the appellant that the Notification is contrary to the policy. We have already adverted to paragraph 7 of the writ petition. Besides this, we have also referred to the correspondence indulged in by the appellant. Far from setting up a case that the Notification is opposed to be a policy, the case appears that the Notif .....

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led to the benefit of exemption under Notification in respect of levy of duty of Excise as NCCD for a period of 10 years would suffice. 48. We may also at this juncture refer to the case of Commissioner of Customs (Import), Mumbai vs. Konkan Synthetic Fibers reported in 2012 (278) E.L.T. 37 (S.C.). Matter arose in the said case under the Notification No. 17/01-Cus., dated 01.03.2001, as amended by Notification No. 44 /2001-Cus., dated 26.04.2001 and the question was, whether he was entitled to t .....

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2011) 2 SCC 74=2010(260) E.L.T. 487 (S.C.), (in which one of us was the party) has observed that the beneficial notification providing the levy of duty at a concessional rate should be given a liberal interpretation: 16. It is settled law that the notification has to be red as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification. The rule regarding exemptions is that exemptions should generally be strictly .....

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ent. A close scrutiny will reveal that there is no real contradiction amongst the judgments at all. The synthesis of the views is quite clearly that the general rule is strict interpretation while special rule in the case of beneficial and promotional exemption is liberal interpretation. The two go very well with each other because they relate to two different sets of circumstances. 11. In Commissioner of Sales Tax v. Industrial Coal Enterprises, (1999) 2 SCC 607, this Court has observed: 11. In .....

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ntral Excise, Shillong v. North-Eastern Tobacco Co. Ltd., (2003) 1 SCC 161= 2002 (146) E.L.T. 490 (S.C.), this Court has held: 10. The other important principle of interpreting an exemption notification is that as far as possible liberal interpretation should be imparted to the language thereof, provided no violence is done to the language employed. 13. In Associated Cement Companies Ltd. v. State of Bihar (2004) 7 SCC 642, this Court while explaining the nature of the exemption notification and .....

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State revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly speaking, liberal and strict construction of an exemption provision is to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in the nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted a .....

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laid down in an exemption notification are required to be construed strictly, once it is found that the applicant satisfies the same, the exemption notification should be construed liberally. Se CIT v. DSM Group of Industries (SCC para 26); TISCO v. State of Jharkhand (SCC paras 42 to 45); State Level Committee v. Morgardshammar India Ltd.; Novopan India Ltd. v. C.C.E. & Customs; A.P. Steel Re-Rolling Mill Ltd. v. State of Kerala and Reiz Electrocontrols (P) Ltd. v. C.C.E.] 49. We may notic .....

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truction. The Court also the view that liberal and strict construction of the Notification is to be invoked at different stages as stated above. It is, no doubt, true that exemptions, which are beneficial in nature for the purpose of encouragement or promotion of the activities should be liberally construed. 50. We may also notice that in the case of Commissioner of Customs (Preventive), Mumbai vs. M. Ambalal and Company reported in (2011) 2 SCC 74, the Court, no doubt in Paragraph 16, took the .....

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ollows: 17. The notification issued by the Central Government is exercise of the powers conferred by Section 25(1) of the Act exempts the articles enumerated in the Table annexed when imported into India from payment of duty under the Act. The language used in the notification is plain and unambiguous. Therefore, we are required to consider the same in their ordinary sense. A construction which permits one to take advantage of one s own wrong or to impair one s own objection under a statute shou .....

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advance the remedy without doing violence to the language. We notice that similar reasoning is adopted by the Court in the judgment in the case of Commissioner of Central Excise, Shillong v. North-Eastern Tobacco Co. Ltd., (2003) 1 SCC 161, which is in paragraph 12 of the judgment in 2012 (278) E.L.T. 37 (S.C.), namely, that as far as possible, liberal interpretation should be imparted to the language provided no violence is done to the language employed. 52. We have already appreciated the lan .....

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sel for the appellant. We are reinforced in this view by the unreported judgment in Civil Appeal No. 1654 of 2008 dated 24.03.2015. There, the Notification was issued under the Kerala General Sales Tax Act and the dealer, whose turn over was exempted, was poultry farmer including hatcheries in the State and the exempted turnover was the turn over of sale of chicks and chickens. The issue was, whether it would apply to the case of those poultry farmers, who effected inter-State purchase of one- d .....

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cases wherein the language of the exemption contained in the notification is simple, clear and unambiguous, the exemption notification must be given its natural meaning and the object and purpose of the notification need not be looked into. (CCE v. Favourite Industries, (2012) 7 SCC 15). In Novopan India Ltd. v. CCE and Customs, 1994 Supp (3) SCC 606, dealing with the same issue in relation to an exemption notification, a three-Judge Bench of this Court, stated the principle as follows: 16. We a .....

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ey have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the taxliablity must establish clearly that he is coverd by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reasonexplained in Mangalore Chemicals and other decisions viz. each such exception / exemption increases the tax burden on other members of the community correspondingly. Once, of course, the provision is fond applicable to him .....

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tification i.e. by the plain terms of the exemption. 17. As we have already noticed, Entry 24 of the notification contemplates two categories of dealers, (i) a poultry farmer and (ii) hatcheries. What is exempted under the notification is the turnover from sales of chicks and chickens by both types of dealers. It is not specified that if a poultry farmer imports or effects inter-State purchase of chicks and chickens, it would be ousted from the purview of the notification andthus, not be entitle .....

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d into the notification the levy with which the appellant stands visited. We would be guilty of torturing out of shape the clear expressions found in the Notification. This is impermissible even if it is in the wings of the theory of beneficial construction or it being an implementing notification. 54. The last point to be considered is whether in the absence of Notification exempting NCCD, we could, on the strength of the Notification, as issued, vouchsafe the benefit of exemption to the appell .....

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were exported. Thereupon, it filed a refund claim under Rule 18 of the Central Excise Rules. The claim for rebate relating to Education Cess was rejected in Appeal and the Appellate Order was confirmed by the Revisional Authority. Section 91 of the Finance Act provided that it would be levied and collected, in accordance with the provisions of the Chapter as surcharge for purposes of the Union, a Cess to be called as the Education Cess. Section 93 provided that Education Cess levied under Secti .....

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of Finance (Department of Revenue), under the provisions of the Central Excise Act, 1944 or under any other Law for the time being in force. It was further declared in Section 93(2) that the Education Cess shall be in addition to any other duties of excise chargeable on such goods under the Central Excise Act, 1944 or any other law for the time being in force. The provisions of the Excise Act and the Rules, including those relating to refunds and exemptions from duties and imposition of penalty .....

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, rebate on Education Cess would be allowed as the Notification defined Duty as including the Education Cess. The reasoning of the Court, however, was that the Notification dated 26.06.2001 allowed rebate on Duty of excise payable by the manufacturer in respect of the goods manufactured and exported out of India. The explanation in the said Notification included within the ambit of Excise Duty any special Excise Duty collected under any Finance Act, therefore, when under the Finance Act of 2004, .....

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in terms of existing Notification dated 26.06.2001 immediately. The later Notification dated 06.09.2004, including the Education Cess in enumerative definition was held to be clarificatory and by way of abundant caution and it was not a new rebate in relation to Excise Duty or any part thereof. At the time of surcharge it had taken the character of parent levy and it became subject to the provisions relating to Excise Duty applicable to it in the manner of collecting the same obligation of the .....

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der the Finance Act and it did not require a separate Notification in that regard. These were the facts, on which, the Court took the view that the orders impugned in the petition were unsustainable. Undoubtedly, the Special Leave Petition and the Civil Appeal were dismissed; the Court saw no reason to interfere. Apparently, this has been followed later on in the cases of Vipore Chemicals Pvt. Ltd. vs. Union of India 2009 (233) E.L.T. 44 (Guj), Loyal Textile Mills vs. Jt. Secretary, MF 2012 (280 .....

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f Excise Duty, any special Excise Duty collected under any Finance Act. It was, therefore, that when the Education Cess was treated as a Duty of Excise under the Finance Act 2004, Education Cess became a special Duty of Excise in terms of the 2001 Notification. Therefore, naturally rebate became available in respect of the levy immediately; whereas here, we are dealing with a Notification dated 10.06.2003, which provided for exemption only from the Excise Duty payable under three enactments, whi .....

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rds the whole of the duty of the excise or additional duty of excise, as the case may be , at least an attempt could have been made to rope in NCCD and other levies within the scope of the Notification. But, here we would think that merely for the reason that in Section 136 of the Finance Act of 2001, it is mentioned that NCCD will be levied by way of surcharge and it will be a duty of Excise and further that it shall be in addition to any other duties of excise chargeable on such goods under th .....

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far as the duties of excise, which are covered under the Excise Act, as already noticed, are concerned, they would be the excise duties payable under Section 3 of the Central Excise Act, 1944 or any other duties that is levied under the Act and the other enactments. We cannot lose sight of the fact that what is mentioned in Section 136 is that it is stated to be a duty of Excise or that it is in addition to the duties of Excise chargeable under the Act would not make a duty of Excise levied und .....

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ant is to be found in the seventh schedule to the Finance Act of 2001 as also the schedule to the Excise Act mentioned in the notification. It is true that by virtue of sub-section (3) of Section 136, the provision relating to exemption from duty is made applicable to NCCD. This only means that it is open to the Authority acting under Section 5-A of the Excise Act to grant exemption from NCCD invoking the power therein, but that is of far cry from saying that since the Notification was issued un .....

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after the judgment of the learned Single Judge, the order of assessment has been passed, wherein the appellant has been mulcted with interest, besides penalty at the rate of 100%. Learned Senior Counsel Sri Arshad Hidayatullah would submit that it is settled law that interest in a taxing statute must be traced to a substantive provision authorizing levy of interest. He relied on the decisions in CCE, Ahmedabad V. Orient Fabrics Pvt. Ltd. 2003 (158) E.L.T. 545 (S.C.), J.K. Synthetics Ltd. V. Comm .....

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