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TMI Blog2017 (12) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... ur Writ Petitions filed by Sun Pharma Laboratory Ltd., the common Petitioner in all the said Writ Petitions, as common issues are raised therein. It is the case of the Petitioner that the promised policy declared by the Central Government (Respondent No. 1) of 100% excise duty exemption which had persuaded the Petitioner to alter its position and invest huge amount of money has now been indiscriminately curtailed giving rise to the present cause of action to challenge the impugned notifications whittling down the exemption benefits and resulting in the passing of a series of impugned show cause notices and impugned orders by the Central Excise Commissionerate confirming demands of Central Excise duties, interest and penalties thereon. W.P.(C) No. 41/2015 2. W.P. (C) No. 41/2015 impugns Notification No. 21/2008-C.E. dated 27.03.2008 (impugned Notification No.21/2008) and Notification No. 36/2008-C.E dated 10.06.2008 (impugned Notification No.36/2008) and seeks a prayer for the Petitioner units to be permitted to avail the benefit of exemption of payment of excise duty as provided in terms of Notification No. 56/2003-C.E dated 25.06.2003 (Notification No. 56/2003). The said writ Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriate interest on the amounts confirmed in terms of Section 11 AB (now 11 AA) of the Central Excise Act, 1944 and the penalty amount of Rs. 13,76,59,868.00 (Rupees thirteen crore seventy six lakhs fifty nine thousand eight hundred sixty eight) (Rs. 5,31,41,422+ Rs. 8,45,18,446) on the Petitioner in terms of Section 11 AC (1) (c) of the Central Excise Act, 1944. However, the Petitioner was given the offer to pay only 25% of such amount as penalty on fulfilment of the conditions as prescribed under Section 11 AC (1) (e) of the Central Excise Act, 1944. By the said order the Commissioner also ordered the forfeiture of self credit facility as available to the Petitioner under the said Notification No. 56/2003 as amended by the impugned Notification No. 21/2008 in terms of the provision of sub- paragraph 2C (f) of the said notification. (iii) OIO No.22/COMM/CE/SLG/15-16 dated 08.01.2016 of the Commissioner by which he confirmed the demand of central excise duty (i) amounting to Rs. 2,27,27,200.00 pertaining to the month of February 2014 on the Petitioner under the provision of Section 11 A (1) of the Central Excise Act, 1944 read with Rule 8 of the Central Excise Rule, 2002 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the Commissioner of Customs, Central Excise & Service Tax, Siliguri directing the Petitioner to show cause as to why the amount of Rs. 82,84,25,639/- erroneously refunded in contravention to the condition as laid down in clause 3 (i) and (ii) of the said notification read with clause 2B (b) of the said notification should not be deposited forthwith as undertaken by the Petitioner to do so in the undertaking submitted to the department at the time of submitting its refund claim. The said show cause notice also required the Petitioner to show cause as to why the said amount, erroneously refunded to the Petitioner, if not deposited forthwith as per the undertaking, should not be demanded in terms of Section 11A of the Central Excise Act, 1944. It further required to show cause as to why the interest in terms of Section 11AA of Central Excise Act, 1944, should not be demanded. (iv) C.No.V(18)58/CE/Refund/Sun-754/GTK-Divn./2016-17/605 dated 20.02.2017, issued by the Deputy Commissioner, directing the Petitioner to show cause as to why the refund of Rs. 4,49,82,808/-, Rs. 5,19,93,070/-, Rs. 4,85,03,864/-, Rs. 5,01,55,727/-, Rs. 1,88,94,680, Rs. 5,09,23,261/- and Rs. 4,55,74,646/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch as, the same should be disallowed for not having fulfilled the condition as stipulated in Clause 3(i) & (ii) of Notification No.56/2003-CE dt. 25.06.2003, as amended. The said show cause notice also required the Petitioner to show cause as to why the irregular re-credit availed and utilised by the Petitioner, amounting to Rs. 43,98,61,414.00 should not be demanded and recovered in terms of Section 11A of the Central Excise Act, 1994, as amended, for violating the provisions of Clause 2C(g) of Notification No.56/2003-CE dt.25.06.2003, as amended, read with Rule 8 (3) of the Central Excise Rules, 2002. The said show cause notice further required the Petitioner to show cause as to why the Interest in terms of Section 11AA of the Central Excise Act, 1944, as amended should not be demanded and recovered till the date of deposit of the said amount and Penalty in terms of Section 11 AC 1(a) of the Central Excise Act, 1944, as amended, should not be imposed on them for having contravened the provisions of the Central Excise Act, 1944 as amended, issued under Section 5A of the Central Excise Act,1944 as amended. (ii) C.No.V(15)21/ADJ/CE/COMM/SLG/2016/895 dated 13.01.2017, issued by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8223;s first unit on 20.04.2009. It is the contention of the Petitioner that this has been done by the Respondents solely on the ground that the Petitioner had not opted for the same. The Petitioner contends that based on the Industrial Policy of 2003 which also exempted from so much of the duty of excise leviable thereon as is equivalent to the amount of duty paid by the manufacturer of the goods other than the amount of duty paid by utilisation of CENVAT credit under the CENVAT Credit Rules, 2002 for a period of 10 years from the date of commencement of commercial production, the Petitioner in the year 2005 and thereafter commenced the process of establishing a new unit for manufacture of P & P Medicaments, falling under Sl. No. 11 of the schedule to the Notification No. 56/2003 including leasing of the land for establishing the said unit, generating employment in the State etc. It is the contention of the Petitioner, in the meanwhile, Office Memorandum dated 01.04.2007 was issued notifying the Industrial Policy, 2007, which also granted 100% excise duty exemption as provided in the Industrial Policy, 2003. However, the Industrial Policy, 2007 specifically provided that the new i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mu and Kashmir had quashed the amending notifications seeking to reduce and restrict the 100% duty exemption provided pursuant to an incentive scheme for Jammu and Kashmir. Thereafter, on 22.10.2011, the Petitioner informed the authorities that it would avail 100% self- credit of the excise duty paid placing reliance on the aforesaid Judgments of this Court and the High Court of Jammu and Kashmir. For the period June, 2012 to February, 2014 the authorities denied self-credit on monthly basis on the ground that the Petitioner was not eligible to claim the benefit @ 100% of the amount paid in cash but was eligible for refund @ 56% on account of the amendment vide impugned Notification No. 21/2008 which reduced the benefit from 100%. It is the case of the Petitioner that it has invested an amount of Rs. 186.08 crores up to March 2014 and being a large project investment continued thereafter and an amount of Rs. 337.51 crores have been invested up to March 2016. 8. Mr. Vikram Nankani, learned Senior Advocate for the Petitioner would argue that the Petitioner had acted on the basis of the promise set out in the Industrial Policy, 2003 and 2007 and the original Notification No.20/2007 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OF RE-CREDIT/REFUND UNDER AREA BASED EXEMPTION NOTIFICATION 100% re-credit/ refund case (Not No. 20/2007): Value of the finished goods Duty @ 6% Input cost Input credit @ 12% Duty payment from PLA/account current 100% re-credit/refund Rs. 100 Rs. 6 Rs. 22 Rs. 2.64 Rs. 6-Rs. 2.64 = Rs. 3.36 Rs. 3.36 Re-credit/Refund as per value addition (Not no. 20/2008):- Value of the finished goods Duty @ 6% Input cost Input credit @ 12% Duty payment from PLA/account current Value addition @ 56% on total duty 100% recredit/ refund Rs. 100 Rs. 6 Rs. 22 Rs. 2.64 Rs. 6-Rs. 2.64= Rs. 3.36 Rs. 3.36 Rs. 3.36 10. The Respondents would admit that the Petitioner started industrial production w.e.f. 20.04.2009 but would contest the assertion of the Petitioner that the new unit of the Petitioner was started within the period 2005-2008. The Respondents submits that the Petitioner fell within category (a) of paragraph 3 of Notification No. 56/2003 because the Petitioner started investment on or after 23rd December, 2002 i.e. from 2005. The Respondents submits that the Petitioner is entitled only to a limited claim from exemption of central excise duty vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 56% only to the duty payable on value addition undertaken in the manufacture of the goods and not on the entire excise duty payable as promised. The attention of the Court was drawn to the explanation to clause 3(4) of the impugned Notification No. 20/2008 which provides: ".................. Explanation: For the purpose of this paragraph, the actual value addition in respect of said goods shall be calculated on the basis of the financial records of the preceding financial year, taking into account the following: (i) Sale value of the said goods excluding excise duty, Value Added Tax and other indirect taxes, if any, paid on the goods; (ii) Less: Cost of raw materials and packing material consumed in the said goods; (iii) Less: Cost of fuel consumed if eligible for input credit under CENVAT Credit Rules, 2004; (iv) Plus : Value of said goods available as inventory in the unit but not cleared, at the end of the financial year; (v) Less: Value of said goods available as inventory in the unit but not cleared, at the end of the financial year preceding that under consideration. Special rate would be the ratio of actual value addition in the production or manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d existing industrial units on their substantial expansion as defined, set up in Growth Center, Industrial Infrastructure Development Centers (IIDCs) and other locations like Industrial Estates, Export Processing Zones, Food Parks, IT Parks, etc. as notified by the Central Government are entitled to 100% (hundred percent) income tax and excise duty exemption for a period of 10 years from the date of commencement of commercial production. Thrust Sector Industries as mentioned in Annexure-II are entitled to similar concessions in the entire State of Sikkim without area restrictions." [Emphasis supplied] 16. Notification No. 56/2003 was issued by the Respondent No.1 by which the 100% excise duty exemption under Industrial Policy, 2003 was operationalized. The relevant preamble of the said Notification No.56/2003 was as under:- "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 section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e an office memorandum the Respondent No.1 notified the Industrial Policy, 2007. The Industrial Policy, 2003 was discontinued on and from 01.04.2007. This Industrial Policy, 2007 covered the State of Sikkim as well. In the said Industrial Policy, 2007 it was provided:- "(ii) Duration: all new units as well as existing units which go in for substantial expansion, unless otherwise specified and which commence commercial production within the 10 year period from the date of notification of NEIIPP, 2007 will be eligible for incentives for a period of ten years from the date of commencement of commercial production. ..................... .................... (v) Excise Duty Exemption: 100% Excise Duty exemption will be continued, on finished products made in the North Eastern Region, as was available under NEIP, 1997. However, in cases, where the CENVAT paid on the raw materials and intermediate products going into the production of finished products (other than the products which are otherwise exempt or subject to nil rate of duty) is higher than the excise duties payable on the finished products, ways and means to refund such overflow of CENVAT credit will be separately no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f CENVAT credit under the CENVAT Credit Rules, 2002", the words "to the duty payable on value addition undertaken in the manufacture of the said goods by the said unit" were substituted. Paragraphs 1A, 2 and 2A of Notification No. 56/2003 was substituted with new paragraphs 2, 2A, 2B, 2C and 2.1. 24. The Respondent No.1 vide impugned in exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excise Act, 1944, amended Notification No.20/2007. In the Preamble, for the words and figures, "to the amount of duty paid by the manufacturer of goods other than the amount of duty paid by utilisation of CENVAT credit under the CENVAT Credit Rules, 2004", the words "to the duty payable on value addition undertaken in the manufacture of the said goods by the said unit" were substituted. Paragraphs 2, 3 and 4 of Notification No. 20/2007 were substituted with new paragraphs 2A, 2B, 2C, 2D and 3. The new paragraph 2A to the said impugned Notification No. 20/2008 read as follows:- "2A. The duty payable on value addition shall be equivalent to the amount calculated as a percentage of the total duty payable on the said excisable goods of the description specified in column ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use from making the application within the aforesaid time, allow such manufacturer to make the application within a further period of thirty days : Provided further that the manufacturer supports his claim for a special rate with a certificate from his statutory auditor containing an estimate of value addition in the case of goods for which a claim is made, based on the audited balance sheet of the unit, for the preceding financial year; (2) On receipt of the application referred to in sub-paragraph (1), the Commissioner of Central Excise or Commissioner of Customs and Central Excise, as the case may be, after making or causing to be made such inquiry as he deems fit, shall fix the special rate within a period of six months of such application; (3) Where the manufacturer desires that he may be granted refund provisionally till the time the special rate is fixed, he may, while making the application, apply to the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, in writing for grant of provisional refund at the rate specified in column (4) of the said Table for the goods of description specified in column (3) of the said Tabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such excisable goods, at the rate so fixed: Provided that the refund shall not exceed the amount of duty paid on such goods, other than by utilization of CENVAT credit. 2. This notification shall come into force with effect from the 1st day of April, 2008." 26. The Respondent No.1 vide impugned Notification No. 36/2008 in exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excise Act, 1944, read with sub-section (3) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and sub-section (3) of Section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978 made further amendments to Notification No.56/2003 and notified further conditions whereby an assessee could apply to the Appropriate Authority for a specific rate for value addition. 27. The Respondent No.1 vide impugned Notification No. 38/2008 in exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excise Act, 1944 made further amendments to Notification No.20/2007. The impugned Notification No.38/2008 which further amends the new paragraph 2A as inserted by impugned Notification No. 20/2008 provides now that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the said purpose, the manufacturer may make an application in writing to the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, not later than the 30th day of September in a financial year for determination of such special rate, stating all relevant facts including the proportion in which the materials or components are used in the production or manufacture of goods : Provided that the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, may, if he is satisfied that the manufacturer was prevented by sufficient cause from making the application within the aforesaid time, allow such manufacturer to make the application within a further period of thirty days : Provided further that the manufacturer supports his claim for a special rate with a certificate from his statutory auditor containing a calculation of value addition in the case of goods for which a claim is made, based on the audited balance sheet of the unit for the preceding financial year; Provided also that a manufacturer that commences commercial production on or after the 1st day of April, 2008 may file an applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The CESTAT vide order dated 21.11.2014 granted an unconditional stay to the Petitioner against the recovery duty demanded, interest and penalty imposed relying upon the judgment of this Court in the matter of Unicorn Industries (supra). While the appeal was pending final adjudication and notwithstanding the stay granted, the Department of Central Excise issued multiple show cause notices to the Petitioner for different periods and the case of the said Department in those subsequent show cause notices were identical to the case of the said Department which was stayed by the CESTAT by the order dated 21.11.2014. The said show cause notices were (i) SC Notice No.V(15)07/ADJ/CE COMM/SLG/2013/17243 for the period December 2012 to June 2013 (ii) SC Notice No. V(15)09/ADJ/CE/COMM/SLG/14/11061 for the period July 2013 to January 2014 and (iii) SC Notice No. V(15)20/ADJ/CE/COMM/SLG/2014/1863 for the period February 2014. 30. Thus Writ Petition (C) No. 41 of 2015 was filed challenging the various impugned Notifications as detailed above. 31. By an Order dated 28.07.2016 this Court directed the CESTAT to examine (i) Appeal No. E/75930/2014-DB; (ii) Appeal No. E/76003/2015; (iii) Appeal No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore filed I.A. No. 1 of 2017 in W.P. (C) No. 27 of 2017 on 13.06.2017 seeking to amend and bring on record the order dated 12.05.2017 passed by the Assistant Commissioner. 39. On 02.12.2016 and 13.01.2017 two show cause notices were issued for the period January 2015-March 2016 in respect on second unit seeking to deny the 100% benefit. 40. It is the case of the Petitioner that notwithstanding these two notices, benefit @ 56% has been granted from January 2015 to March 2017. For the period April 2014 when production commenced until December 2014 no refund application was filed since the Petitioner started paying excise duty in cash only from January 2015. For the period prior thereto, the Petitioner had sufficient CENVAT credit amount for payment of excise duty. 41. W.P.(C) No.40/2017 filed on 21.06.2017 challenges the said two show cause notices issued by the Commissioner being (i) C.No.V(15)20/ADJ/CE/COMM/SLG/2016/24091 dated 02.12.2016 and (ii) C.No.V(15)21/ADJ/CE/COMM/SLG/2016/895 dated 13.01.2017. The said Writ Petition also seeks a writ of Certiorari to quash and set aside impugned Notification No. 20/2008 and Notification No. 38/2008. Consideration 42. It is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Central Excise Act, 1944 as is equivalent to the amount of duty paid by the manufacturer of goods other than the amount of duty paid by utilisation of CENVAT Credit Rules, 2004. 46. It is quite clear that when the Industrial Policy, 2007 was declared on 01.04.2007 which was followed by the issuance of the Notification No. 20/2007, the Petitioner had already started investing, as per the Petitioner, from the year 2005 itself. The exemption provided for in Notification No.20/2007 would be available to new industrial unit which commence commercial production on or after 01.04.2007 but not later than 31.05.2017. It would also apply to those industrial units existing before 01.04.2007 but which have undertaken substantial expansion by way of increase by not less than 25% in the value of fixed capital investment in plant and machinery for the purpose of expansion on capacity/modernization and diversification and have commenced commercial production from such expanded capacity on or after 01.04.2007 but not later than 31.05.2017. The exemption contained in Notification No.20/2007 were to apply to any of the said units for a period not exceeding 10 years from the date of publication of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturing P & P medicaments falling under Sr. No. 11 of the schedule to Not No. 56/2003-CE dt. 25.06.2003 is a matter of record which the Petitioner may establish during the course of the hearing of this instant writ petition. The Respondents state that reference to para 3 of the said Notification the petitioner falls within category (a) because the Petitioner started investment on or after 23rd December 2002 i.e. from 2005. However, the production of P & P medicament commenced from the year 20.04.2009 which is as per their paragraph 5 of the writ petition." 50. In paragraph 4 of the rejoinder filed by the Petitioner it has been pleaded:- "4. That with regard to the statements contained in Para 6 and 7 of the counter affidavit, it is submitted that the effective step of implementation has been taken and proper intimation has been filed with appropriate authorities. It is further submitted that the capital expenditure for establishing new unit has started in the year 2005, and year wise investment is already given in the petition. The deponent craves leave of this Hon'ble Court to rely upon and produce documents to substantiate the above facts at the time of hearing." 51. In pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sikkim (including those manufactured by the Petitioner), the Petitioner continued to make its investments in Sikkim for the setting up of Unit. The Petitioner did everything necessary under law so as to allow it to engage people of Sikkim in employment at their plant. Consequently a large number of people from Sikkim are in employment of the Petitioner working at the Unit for the manufacture of the goods. In total, the investments made by the Petitioner from 2005 to 2014 can be summarized as follows, (Rs in Lakhs) Financial Year Net Investments in fixed assets & Capital Work in Progress Cumulative Investments in fixed assets & Capital Work in Progress 2005-06 50.31 50.31 2006-07 1799.83 1850.14 2007-08 191.84 2041.98 2008-09 2970.81 5012.79 2009-10 3657.79 8670.58 2010-11 2523.82 11194.40 2011-12 2744.04 13938.44 2012-13 3481.78 17420.22 2013-14 4012.93 21433.15 Total 21433.15 " 52. In paragraph 6, 7, 8 and 9 of the counter-affidavit filed by the Respondents to W. P. (C) No. 08 of 2017 it is pleaded:- "6. That with reference to the statements and allegations made at paragraphs 3 (i,ii,iii and iv) are matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00% excise duty exemption, the Petitioner, in 2005 and thereafter, the process for establishing a New Unit ("Unit-1") for the manufacture of P & P medicaments, falling under Serial No. 11 of the Schedule to the Notification 56/2003 was commenced, including leasing of the land for establishing the said unit, generating employment in the State, etc." 56. In paragraph 8 of the counter-affidavit filed by the Respondents to W. P. (C) No.40 of 2017 it is pleaded:- "8. That with reference to the statements made at paragraphs 6 to 9 of the Writ Petition, no comment." 57. A conjoint and wholesome reading of the pleadings in the present proceedings and specifically those quoted above makes it unequivocally clear that the Petitioner started its investment only in the year 2005 and thereafter. When the Petitioner thus started its investment in the year 2005 the incentive scenario in Sikkim was that under the previous regime Notification No. 56/2003 by which the Industrial Policy, 2003 was operationalized had been amended vide impugned Notification No.27/2004 by making it clear that only those new industrial units which have commenced commercial production on or after 23.12.2002 but not lat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make. Thus the investments made by the Petitioner as detailed in the investment chart must be accepted. It is quite evident that the Petitioner had in fact altered its position and made further huge investments to avail of the promise held out by the Respondent No. 1 to its detriment. 58. The Appellant in re: Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh & Ors (1979) 2 SCC 409 was engaged in the business of manufacture and sale of sugar. The State Government gave an assurance that new vanaspati units in the State which went into commercial production by 30.09.1970 would be given concession in sale tax for a period of 3 years. The Appellant set up the vanaspati unit and went into commercial production on 02.07.1970 and sought exemption. In August 1970, by which time the Appellant had already gone into commercial production, the Government rescinded its earlier decision taken in January 1970. A Writ Petition filed in the High Court was rejected and the matter travelled to the Apex Court. After a detailed discussion of its authorities the Apex Court would hold:- "24. ... The law may, therefore, now be taken to be settled as a result of this decision, that wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no reason why the Government should not be compelled to make good such promise like any other private individual. The law cannot acquire legitimacy and gain social acceptance unless it accords with the moral values of the society and the constant endeavour of the courts and the legislature, must, therefore, be to close the gap between law and morality and bring about as near an approximation between the two as possible. The doctrine of promissory estoppel is a significant judicial contribution in that direction. But it is necessary to point out that since the doctrine of promissory estoppel is an equitable doctrine, it must yield when the equity so requires. If it can be shown by the Government that having regard to the facts as they have transpired, it would be inequitable to hold the Government to the promise made by it, the court would not raise an equity in favour of the promisee and enforce the promise against the Government. The doctrine of promissory estoppel would be displaced in such a case because, on the facts, equity would not require that the Government should be held bound by the promise made by it. When the Government is able to show that in view of the facts as have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the public interest in the Government acting otherwise than in accordance with the promise is so overwhelming that it would be inequitable to hold the Government bound by the promise and the court would insist on a highly rigorous standard of proof in the discharge of this burden. But even where there is no such overriding public interest, it may still be competent to the Government to resile from the promise "on giving reasonable notice, which need not be a formal notice, giving the promisee a reasonable opportunity of resuming his position' provided of course it is possible for the promisee to restore status quo ante. If, however, the promisee cannot resume his position, the promise would become final and irrevocable. Vide Ajayi v. R.T. Briscoe (Nigeria) Ltd. [Ajayi v. R.T. Briscoe (Nigeria) Ltd., (1964) 1 WLR 1326 (PC)]" 59. In re: Pournami Oil Mills & Ors. v. State of Kerala & Anr (1986) supp. SCC 728 under the order dated 11.04.1979 of the Kerala Government, new small scale units were invited to set up their industries in the State of Kerala and with a view of boost industrialisation, exemption from sales tax and purchase tax for a period of 5 years, which was to run from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the first order namely, the one dated April 11, 1979 gave more of tax exemption than the second one. The second notification withdrew the exemption relating to purchase tax and confined the exemption from sales tax to the limit specified in the proviso of the notification. All parties before us who in response to the order of April 11, 1979 set up their industries prior to October 21, 1980 within the State of Kerala would thus be entitled to the exemption extended and/or promised under that order. Such exemption would continue for the full period of five years from the date they started production. New industries set up after October 21, 1980 obviously would not be entitled to that benefit as they had notice of the curtailment in the exemption before they came to set up their industries." 60. In re: Manuelsons Hotels Private Limited v. State of Kerala & Ors. the State Government by a Government Order, on the recommendation of the Respondent No.1, declared tourism as an industry enabling those involved in tourism promotional activities to become eligible for concessions/incentives as applicable. Exemption from building tax levied by the Revenue Department was one such conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... glish authorities, the Apex Court would hold:- "14. It is important to notice that the necessary exemption notification in Motilal Padampat case [Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979) 2 SCC 409 : 1979 SCC (Tax) 144 : (1979) 2 SCR 641] had not been issued under Section 4 of the U.P. Sales Tax Act, 1948. Yet, this Court held that sales tax for the period in question could not be recovered. This was done presumably because promissory estoppel is itself an equitable doctrine. One of the maxims of equity is that one must regard as done that which ought to be done. In this view of the matter, it is obvious that the High Court judgment is incorrect when it holds that as no exemption notification was, in fact, issued by the Government under Section 3-A, the petitioner would have to be denied relief. This judgment has been followed repeatedly and has been applied to give the benefit of sales tax exemption in similar circumstances in Pournami Oil Mills v. State of Kerala [Pournami Oil Mills v. State of Kerala, 1986 Supp SCC 728 : 1987 SCC (Tax) 134] , Supp SCC at paras 7 and 8." Then again "20. The above statement, based on various earlier English authorities, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecifically provided for exemption from building tax if hotels were to be set up in the State of Kerala pursuant to the representation made in the said G.O. True, no mandamus could issue to the legislature to amend the Kerala Building Tax Act, 1975, for that would necessarily involve the judiciary in transgressing into a forbidden field under the constitutional scheme of separation of powers. However, on facts, we find that Section 3-A was, in fact, enacted by the Kerala Legislature by suitably amending the Kerala Building Tax Act, 1975 on 6-11-1990 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 6-11-1990 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 the Statement of Objects and Reasons for introducing Section 3-A expressly states that the said section was introduced in order to fulfil one of the promises contained in the G.O. dated 11-7-1986. We find that the appellants, having relied on the said G.O. dated 11-7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rants and there was a need to undertake an all round development effort to be at par with other States of the country. Thus, it was felt necessary to identify the priorities and emphasise the significance of the twin objective of speedy industrial development and generation of adequate employment opportunities. It was stated that keeping these objectives in mind, the industrial policy attempts to satisfy the aspirations of the people through economic and industrial development of the State. One of the main strategies for the implementation of the policy of the Industrial Policy, 2003 was to announce attractive package and fiscal objectives. The Respondent No.1 described the current scenario and future prospects in the Industrial Policy, 2003 in the following words:- "2. THE CURRENT SCENARIO AND FUTURE PROSPECTS. 1. 1.80 percent of the population lives in rural Sikkim and agriculture plays a dominant role in the State economy. With the total cultivable land of around 70.000 hectares, the per capita availability of land is a meagre 0.18 hectares. The rugged mountainous terrain, fragmentation of land erosion of the hilly tracts, geographical seclusion of Sikkim from mainland India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and specially handicrafts enjoy a good national and international market but more needs to be done on upgrading quality and design, as well as production and also improvement in the marketing network. 9. The abundant natural beauty of Sikkim offers a good potential to attract foreign and domestic tourists, and is conducive to the setting up of tourist spots, holiday resorts leisure camps of trekking and adventure sports activities. However, to develop and sustain the tourism industry, adequate travel and tourism related infrastructure needs to be created, conference tourism can also be promoted. 10. The state is dependent only on a network of roadways for transportation. At present, no air or water transport facilities are available. During the monsoon period transportation is hampered due to landslides etc. Therefore there is an urgent case for upgrading the road transportation network to and from Sikkim to other parts of India. 11. Accommodation facilities at present only adequate for tourists and must therefore be enhanced. The overall power situation though comfortable must be suitably enhanced to induce more power intensive industries to the State. 12. Human resource ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 year period from the date of notification of the declaration of the Industrial Policy, 2007 i.e. 01.04.2007. The said Industrial Policy, 2007 clearly declared that 100% excise duty exemption would be continued, on finished products made in the North Eastern Region, as was available under the North Eastern Industrial Policy (NEIP), 1997 announced on 24.12.1997. It was by this notification declaring the Industrial Policy, 2007 that the NEIP, 1997 and other concessions in the North Eastern Region seized to operate w.e.f. 01.04.2007. The natural corollary to the declaration of the Industrial Policy, 2007 was the issuance of Notification No. 20/2007 on 25.04.2007 which exempted P & P medicaments manufactured by the Petitioner and cleared from the units located in the State of Sikkim from so much of the duty of excise leviable thereon as is equivalent to the amount of duty paid by the manufacturer of goods other than the amount of duty paid by utilisation of CENVAT credit under the CENVAT Credit Rules, 2004. The said Notification No. 20/2007 clearly stated that the said exemption shall apply to new industrial units which commence commercial production on or after 01.04.2007 but not lat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Additional Solicitor General that, in fact, the impugned Notification No. 20/2008 does not actually digress from the Industrial Policy, 2007 as put into operation by Notification No. 20/2007 as in actuality, as demonstrated by the chart quoted and adverted to above, the Petitioner would still be entitled to the 100% excise duty exemption. The Notification No.20/2007 was amended by the impugned Notification No. 20/2008. Consequently the preamble to the amended Notification No.20/2007 would read thus: "In exercise of the powers. conferred by sub-section (1) of the section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods specified in the First Schedule to the Central Excise Tarrif Act, 1985 (5 of 1986) other than those mentioned in the Annexure and cleared form a unit located in the State of Assam or Tripura or Meghalaya or Mizoram or Manipur or Nagaland or Arunachal Pradesh or Sikkim, as the case may be, from so much of the duty of excise leviable thereon under the said Act as is equivalent to the duty payable on value addition undertaken in the manufacture of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facture of the said goods to the value of the said goods, is more than the rate specified in the table expressed as a percentage. The impugned notification therefore substantially curtails the 100% exemption from the whole of excise duty other than the amount of duty paid by utilisation of CENVAT credit under the CENVAT Credit Rules, 2004. Notification No. 20/2007 provided exemption of full refund of the actual duty paid less CENVAT credit. The impugned Notification No.20/2008 however did away with full refund of the actual duty paid less CENVAT credit and instead the exemption was now to be based on value addition undertaken by the manufacturer made available product wise on varied rates of exemption. The proviso to paragraph 3(6) of the amended Notification No. 20/2007 as amended by impugned Notification No. 20/2008 which reads "Provided that the refund shall not exceed the amount of duty paid on such goods, other than by utilisation of CENVAT credit." perhaps makes it clear that in no case can the exemption of duty as envisaged by the impugned Notification No.20/2008 could actually exceed the exemption granted by Notification No.20/2007. The impugned Notification No.38/2008 whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y estoppel in cases where because of their representation the party claiming estoppel has changed its position and if such an estoppel does not fly in the face of any statutory prohibition, absence of power and authority of the promisor and is otherwise not opposed to public interest, and also when equity in favour of the promisee does not outweigh equity in favour of the promisor entitling the latter to legally get out of the promise. 11. In this connection we may usefully refer to a decision of this Court rendered in the case of State of H.P. v. Ganesh Wood Products [(1995) 6 SCC 363] . B.P. Jeevan Reddy, J. speaking for a Bench of two learned Judges of this Court made the following pertinent observations in this connection in paras 54 and 55 of the Report: (SCC pp. 390-91) "54. The doctrine of promissory estoppel is by now well recognised in this country. Even so it should be noticed that it is an evolving doctrine, the contours of which are not yet fully and finally demarcated. It would be instructive to bear in mind what Viscount Hailsham said in Woodhouse Ltd. v. Nigerian Produce Ltd. [1972 AC 741 : (1972) 2 All ER 271 : (1972) 2 WLR 1090] - "I desire to add that the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormal contract as required by Article 299 of the Constitution'." We may say at this stage that at the time the aforesaid decision was rendered, judgment of this Court in the case of Kasinka Trading v. Union of India [(1995) 1 SCC 274] was pending scrutiny before a larger Bench. Subsequently the said decision came to be confirmed by the decision of a Bench of three learned Judges of this Court speaking through A.M. Ahmadi, C.J. in the case of Shrijee Sales Corpn. v. Union of India [(1997) 3 SCC 398] . We will refer to these decisions in the latter part of this judgment. Suffice it to say at this stage that if a statutory authority or an executive authority of the State functioning on behalf of the State in exercise of its legally permissible powers has held out any promise to a party, who relying on the same has changed its position not necessarily to its detriment, and if this promise does not offend any provision of law or does not fetter any legislative or quasi- legislative power inhering in the promisor, then on the principle of promissory estoppel the promisor can be pinned down to the promise offered by it by way of representation containing such promise for the benefit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oppel is well established in the administrative law of the country. To put it simply, the doctrine represents a principle evolved by equity to avoid injustice. The basis of the doctrine is that where any party has by his word or conduct made to the other party an unequivocal promise or representation by word or conduct, which is intended to create legal relations or effect a legal relationship to arise in the future, knowing as well as intending that the representation, assurance or the promise would be acted upon by the other party to whom it has been made and has in fact been so acted upon by the other party, the promise, assurance or representation should be binding on the party making it and that party should not be permitted to go back upon it, if it would be inequitable to allow him to do so, having regard to the dealings, which have taken place or are intended to take place between the parties. 12. It has been settled by this Court that the doctrine of promissory estoppel is applicable against the Government also particularly where it is necessary to prevent fraud or manifest injustice. The doctrine, however, cannot be pressed into aid to compel the Government or the publi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incentives to be offered to anyone. It was issued in exercise of statutory powers vested in the Government which could be exercised from time to time in public interest. Earlier the public interest might have required issuance of such a notification granting cent per cent exemption from customs duty on import of PVC resin. Under changed circumstances public interest itself required reduction of such an exemption and as no promise was held out that this could not be done at any time the Court on the facts of that case justifiably rejected the plea of promissory estoppel. It is also to be observed that the said notification was issued in exercise of sovereign taxing power and had created no legal relationship between the authority issuing the notification on the one hand and the prospective importers of PVC resin on the other. The said decision is not an authority for the proposition that even if a claim of exemption from import duty was resorted to in public interest by way of an incentive for a class of importers and even though such public interest continued to subsist during the currency of such an exemption notification and that promisees for whose benefit such exemption was gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grant of such rebate by earlier notifications the appellants would not be entitled to succeed. We, therefore, now proceed to examine these twin aspects of the controversy." 71. In re: State of Punjab v. Nestle India Ltd. & Anr. (2004) 6 SCC 465 the Chief Minister of Punjab declared in a State level function of dairy farmers that the State Government had abolished purchased tax on milk and milk products in the State which was widely published in newspapers. The Chief Minister reiterated that declaration in his budget speech also and the Finance Minister stated that such exemption would assist the milk producers and milk cooperatives. The circular issued by the Excise and Taxation Commissioner intimated the field officers that the Government had decided to abolish purchase tax on milk. The representatives of the Respondent companies were also informed of the circular. Finally, the Finance Department formally approved the proposal to abolish purchase tax on milk and the council of Ministers gives his formal approval. Consequently, the Respondent milk producers did not pay the purchase tax for the specific period and this point was clearly stated in the returns of that particular yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the two offending notifications issued subsequently, the basis of the original notification of granting refund of the amount of duty of excise or additional duty of excise leviable on the goods other than the amount of duty paid by utilisation of CENVAT credit was changed. The impugned notifications substituted the previous exemption by the words "to the duty payable on value addition undertaken in the manufacture of the said goods by the said unit", and further provided that the rate of percentage of the total duty payable at which the relief would be available. These notifications impugned therein were challenged before the High Court of Gujarat at Ahmedabad. There was a conflict of opinion in the Division Bench. D.A. Mehta J. held in favour of the Petitioner and set aside the impugned notifications which curtailed/modified/substituted the basis laid down in the original notification declaring it to be bad in law and holding that new industrial units, which have been set up and commenced commercial production within the specified period and by the specified date under the original notification shall be entitled to the benefit of exemption in the form of refund of excise duty pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction, whichever is later. The said notification was amended vide Notification No. 05/2003 dated 13.02.2003 by adding a proviso which read: "provided that such refund shall not exceed the amount of duty paid less the amount of CENVAT credit availed of, in respect of the duty paid on the inputs used in or in relation to the manufacture of goods cleared under this notification." Vide Notification impugned therein No. 19/2008 dated 27.03.2008 and 34/2008 dated 10.06.2008 further amendments were carried out whereby excise duty refund had been restricted to a maximum limit as mention in the tables appended to the said notification in respect of the different goods. The said notifications change the entire scenario by reducing 100% exemption provided by the earlier notifications to a limited percentage in respect of different goods manufactured by the units. Further, the said notifications also restricted the exemption from duty to value addition undertaken in the manufacture of said goods by the units. The said notifications impugned therein also gave liberty to an industrial unit to apply to the Commissioner for determination of actual value addition if the manufacturer does not agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/2003 dated 09.09.2003 by amendments identical to the amendments made in the impugned Notification No.20/2008. The preamble to Notification No. 71/2003 was amended substituting for the words "to the amount of duty paid by the manufacturer of the said goods other than the amount of duty paid by utilisation of CENVAT credit under the CENVAT Credit Rules, 2002", the words "to the duty payable on value addition undertaken in the manufacture of the said goods by the said unit". Identically, as in the impugned Notification No.20/2008, Notification No.23/2008 also provided a table in which for goods falling under chapter 33 a rate of 56% was prescribed. Similarly Notification No.37/2008 is identical to the impugned Notification No.38/2008. After examining the matter in detail this Court would hold that once it is established that the exemption had been granted in public interest the same cannot at any stretch be withdrawn unless there is a larger public interest. This Court would further hold that once power under Section 5A of the Central Excise Act, 1944 had been exercised and exemption granted, a larger/superior public interest has to be shown for curtailing/modifying/withdrawing an e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al on the facts of the present Writ Petitions. In the present cases, as we have seen earlier, a definite scheme of incentives for new industries was put forward vide Industrial Policy, 2007 which held out a promise by the Respondent No.1 for 100% excise duty exemption so that more and more industries could be attracted to State of Sikkim. The Respondent No.1 translated the said promise declared vide Industrial Policy, 2007 into Notification No. 20/2007 for the obvious reason that thereby more and more new industries would be attracted to the North East Region including Sikkim. 77. In re: Kothari Industrial Corporation Limited (supra) relied upon by the learned Additional Solicitor General, the Apex Court would hold that a recipient of a concession has no legally enforceable right against the Government to grant or continue to grant concession except to enjoy benefits of concession during the period of its grant. 78. In the present case the Petitioner seeks to enjoy the benefit promised by the Respondent No.1 for the period of 10 years as declared by the Respondent No.1. 79. In re: R.C. Tobacco (P) Ltd. (supra) relied upon by the learned Additional Solicitor General, the Apex Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k Exports (supra) a challenge to a notification issued by the Respondent No.1 making some notes inserted to EXIM Policy, 2002-2007 on the ground that under the guise of the said notes, some benefits which had already accrued to the exporters under the EXIM policy i.e. their vested rights, had been taken away was repelled by the Apex Court holding that the said notification was only clarificatory in nature and valid and did not amount to amendment. It also held that the incentive scheme under the EXIM Policy is in the nature of concession or incentive which is a privilege of the Respondent No.1 and it is for the Government to take the decision to grant such privilege or not and further where there is withdrawal of such incentive and it is also shown that the same was done in public interest, the Court would not tinker with these policy decision. In the facts of the said case it was held that if the status-holders had achieved 25% incremental growth in exports, they acquired the vested right to receive the benefit under the scheme, which could not be taken away. It was held that the so called targets achieved were only on paper through fraudulent means, and, therefore, it cannot be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing under the Act must, as are in duty bound, protect the interest of the Revenue by levying and collecting the duty in accordance with law - no less and also no more. It is no part of their duty to deprive an assessee of the benefit available to him in law with a view to augment the quantum of duty for the benefit of the Revenue. They must act reasonable and fairly." 85. In re: Share Medical Care (supra), the Appellant society imported certain medical equipments for the use in its charitable hospital. According to the Appellant, under notification in question, exemption were granted to hospital equipments imported by the specified category of hospitals (charitable) subject to certification by Directorate General of Health Services (DGHS). The table in the notification classified hospitals in four categories. According to the Appellant, it fell under Para No. 3 of the table of the said notification. The Appellant, however, along with several other hospitals, had applied for the benefit of exemption notification not under Para 3 but para 2 of the table. The benefit of exemption was granted. Since the Appellant society was also entitled to exemption under para 3 of the table an appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r must be extended to the appellant. The Court held that the authorities as well as the Tribunal were not right in holding that the appellant ought to have claimed the benefit of the notification at the time of filing of classification lists and not at a subsequent stage. The Court then stated: (SCC p. 150, para 12) "There can be no doubt that the authorities functioning under the Act must, as are duty-bound, protect the interest of the Revenue by levying and collecting the duty in accordance with law-no less and also no more. It is no part of their duty to deprive an assessee of the benefit available to him in law with a view to augment the quantum of duty for the benefit of the Revenue. They must act reasonably and fairly." (Emphasis supplied) 14. In Kerala State Coop. Marketing Federation Ltd. v. CIT [(1998) 5 SCC 48: JT (1998) 4 SC 145], interpreting Section 80-P(2)(a) of the Income Tax Act, 1961, this Court said: (SCC p. 52, para 7) "7. We may notice that the provision is introduced with a view to encouraging and promoting growth of cooperative sector in the economic life of the country and in pursuance of the declared policy of the Government. The correct way of reading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustrial policy however, did not change. In 2007 the Respondent No.1 declared the Industrial Policy, 2007 by which identical 100% excise duty exemption was once again promised. This Industrial Policy, 2007 was put into operation vide Notification No.20/2007. The Petitioner‟s subsequent investments were obviously intended to reap the benefit of the said Notification No.20/2007. The Petitioner having commenced commercial production on and from 20.04.2009 for the first unit and from 14.04.2014 for the second unit were well within the period notified therein. The policy of the Respondent No.1 was clear and cogent. It was intended to draw investors to Sikkim which was industrially backward. Having acted on the said promise made by the Respondent No.1, the Petitioner made huge investments and altered its position to its detriment. Having issued the said Notification No.20/2007 in public interest it was incumbent upon the Respondent No.1 to place before this Court all materials available to establish a superior public interest which the Respondent No.1 has failed to do. The facts and circumstances of the present writ petitions, therefore, squarely falls within the parameters of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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