TMI Blog2008 (12) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... oral care products, such as tooth-brushes. They have been manufacturing the aforesaid products since the year 1993, at Bhiwadi, District Alwar of Rajasthan State. On and with effect from 1st March, 2003, definition of "manufacture", appearing in Section 2(f)(iii) of Central Excise Act, 1944, was amended, by virtue of Section 135 of Finance Act, 2003 (Act No. 32 of 2003), read with clause 127 of Finance Bill, 2003 (8 of 2003). The amended definition read as follows: "2(f) "manufacture" includes any process,- (i) xxx xxx xxx (ii) xxx xxx xxx (iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the products marketable to the consumer, and the word "manufacture" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account;" Razors and razor blades, etc., which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epresentation Annexure P-13, claiming that notification Annexure P-11 did not affect their status as exemptee from payment of excise duty, by virtue of their having commenced commercial production of their items prior to the issuance of notification Annexure P-11, which had prospective operation, and it also did not affect the right, which had accrued to them, under notification Annexure P-1. Probably, there was no response from the respondents and, therefore, the petitioners filed the present writ petition, under Article 226 of the Constitution of India, seeking the following reliefs: "(i) Issue of writ of certiorari or a writ order or direction in the nature of certiorari quashing the communication dated 23-1-2008; (ii) Issue of writ of certiorari or a writ order or direction in the nature of certiorari quashing the Notification No. 1 of 2008 dated 18-1-2008, insofar it denies the benefit of the Notification No. 50 of 2003 to the Petitioner-Company; (iii) Issue a writ of mandamus or a writ order or direction in the nature of mandamus declaring that the Petitioner-Company is entitled to the benefits of the exemption Notification No. 50 of 2003 and that Notification No. 1 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s had been set up to claim exemption, notification Annexure P-11 was issued to withdraw the exemption, in respect of the goods, which were only being packed, repacked, labelled or re-labelled, etc., and not actually manufactured in such States. It was stated that the notification was prospective, it did not have retrospective effect and so exemptions already available, before the issuance of notification Annexure P-11 were not affected by the notification. It was stated that notification Annexure P-1 had been issued in public interest and when it was found that it was not serving any public interest, exemption, in respect of packing, repacking, labelling, re-labelling units, was withdrawn, again in the public interest, vide notification Annexure P-11. 5. Placing reliance upon judgment of the Hon'ble Supreme Court in Kashinka Trading v. Union of India, 1994 (74) E.L.T. 782 (S.C.) = (1995) 1 SCC 274 it was pleaded that grant of exemption from duty amounted to suspending the operation of provision regarding levy of charge and duty and that the very fact that such an exemption amounted to suspension of the charging provision implied that the suspension was liable to be revoked. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. - Where any rule, notification or order made or issued under this Act or any notification or order issued under such rule, is amended, repealed, superseded or rescinded, then, unless a different intention appears, such amendment, repeal, supersession or rescinding shall not - (a) xxx xxx xxx (b) xxx xxx xxx (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any rule notification or order so amended repealed superseded or rescinded; It was submitted that the right that had accrued to the petitioners, by virtue of notification Annexure P-1, was to avail exemption of whole of excise duty, for a period often years, in respect of the goods, packing, repacking or labelling or re-labelling of which had commenced on commercial basis, prior to the issuance of notification dated 18th January, 2008, Annexure P-11. It was submitted that Annexure P-11 was to affect those industrial units, which had not commenced packing, repacking, labelling, re-labelling, etc., of their goods on commercial basis, prior to 18th January, 2008, the date of issue of notification Annexure P-11. 10. Learned Assistant Solicitor General of India, while counteri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) The manufacturer shall, while exercising the option under condition (i), inform in writing to the jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be, with a copy to the Superintendent of Central Excise giving the following particulars, namely: (a) name and address of the manufacturer; (b) location/locations of factory/factories; (c) description of inputs used in manufacture of specified goods; (d) description of the specified goods produced; (e) date on which option under this notification has been exercised; (iii) The manufacturer may, for the current financial year, submit his option in writing on or before the 30th day of November, 2003. 2. The exemption contained in this notification shall apply only to the following kinds of units, namely :- (i) new industrial units which have commenced commercial production on or after the 7th day of January, 2003, but not later than the 31st day of March, 2007 (substituted as 31st day of March, 2010, vide notification dated 2nd August, 2006, Annexure P-4); (ii) industrial units existing before the 7th day of January, 2003, but which have undertaken substa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... area, are granted, under an order, and a person complying with the requirement of the order granting such exemption, becomes eligible for such exemption, a right accrues to him to avail the exemption, in terms of that order and any modification, change, supersession or cancellation of such an order, by a subsequent order, will not affect his right and such subsequent notification affects those units, which do not become entitled to exemption, prior to the date of issue of such subsequent notification. The citations are: Union of India and others v. Asian Food Industries, 2006 (204) E.L.T. 8 (S.C.) = (2006) 13 SCC 542, and MRF Ltd. v. Assistant Commissioner (Assessment) Sale Tax, (2006) 8 SCC 702. 15. In Asian Food Industries' case (supra), it was held that by reason of a policy, a vested or accrued right cannot be taken away. Such a right, therefore, cannot a fortiori be taken away by an amendment. 16. In MRF's case (supra), it was held that the settled position in law is that where a right has already accrued, for instance, the right to exemption of tax for a fixed period and the conditions for that exemption have been fulfilled, then the withd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the precedent [Kashinka Trading case (supra)], relied upon on behalf of the respondents is not an authority, on the point that doctrine of Promissory Estoppel is not available against the State. He cited a number of judgments, in which not only that it has been held that principle of Promissory Estoppel can be invoked against the State even in fiscal matters, but also that Kashinka Trading case does not lay down absolute rule that doctrine of Promissory Estoppel cannot be pressed into service against the State. He submitted that only exception to the enforcement of Promissory Estoppel against the State is that the promise made by the State should not have been against the statute, under which it purports to have been made or it is in the public interest that the doctrine should not be pressed into service. Judgments relied upon in this behalf are: M/s. Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh and others, (1979) 2 SCC 408; MRF Ltd., Kottayam v. Asstt. Commissioner (Assessment) Sales Tax and others, (2006) 8 SCC 702; Shrijee Sales Corporation and another v. Union of India, 1997 (89) E.L.T. 452 (S.C.) = (1997) 3 SCC 398; U.P. Power Corporati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the Government offers benefits and entrepreneurs acting on such offer make investments, the pre-withdrawal of such benefits affects the credibility of the Government. It has further been held that in order to keep the faith and maintain good governance, it is necessary that where a representation is made by the Government, which induces the other party to act, the Government should not be permitted to withdraw from that, as this is a matter of faith. 27. In Pawan Alloys case (supra), distinguishing Kashinka Trading case, it was held that the notification, which had been withdrawn in that case, was not intended to offer any incentive for the import of PVC resin and, therefore, that notification could not be said to have extended any representation, muchless a promise to a party getting the benefit of it to enable it to invoke the doctrine of Promissory Estoppel, against the State. The said notification was held to have been issued in the public interest, without making any representation or promise and so it could be withdrawn any time, if the public interest so required or the public interest, which existed, at the time of the issuance of the withdrawn notification, ceased t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate of Rajasthan, attracted by notification Annexure P-1, set up their industrial unit for packing and labelling of blades, etc., at Baddi in Himachal Pradesh, to get the benefit of exemption from central excise duty. They have invested Rs. 32.00 crores and employed about 400 persons. Thus, acting upon the representation/promise held out, by means of notification Annexure P-1, they have made huge investment and if the benefit of exemption is unilaterally withdrawn, their financial interests will be adversely affected. So, this factual position, when seen in the light of the above referred to judgments of the Hon'ble Supreme Court, establishes the plea of Promissory Estoppel, raised by the petitioners. 31. Respondents have pleaded that notification Annexure P-1 has been modified, vide notification Annexure P-1, in superior public interest and so the plea of Promissory Estoppel cannot be allowed. 32. Public interest, which prompted the respondents to issue the initial notification, offering incentives to entrepreneurs, is spelt out in the written reply. In para-2 of the preliminary submissions, it is stated that notification Annexure P-1 was issued, pursuant to Office Memora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Annexure P-1, was to make use of local resources and to generate employment for local people. Petitioners have made huge investment and have also generated employment and, therefore, it cannot be said that the public interest, which existed at the time of the issuance of notification Annexure P-1, at least in the case of the industrial unit of the petitioners, had ceased to exist, when notification Annexure P-11 was issued and, therefore, it cannot be said that notification Annexure P-11 is in the superior public interest and so it affects even the industrial unit of the petitioners, which had come into operation, before the issuance of notification Annexure P-11. In our considered view, notification Annexure P-11 is prospective, in the sense that the benefit of notification Annexure P-1 will not be available to those industrial units, engaging only in so-called peripheral or incidental activities, which come into operation and comply with the terms and conditions of notification Annexure P-1, after the issuance of notification Annexure P-11. Point (iii) 35. It was submitted that issuance of notices to the petitioners, for registration of their unit at Baddi, for the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said right cannot be affected by amending notification Annexure P-11, because of the saving clause (c) of Section 38A of the Central Excise Act, 1944, and also that by virtue of doctrine of Promissory Estoppel, the respondents are estopped to levy and charge duty upon the petitioners, we are of the considered view that the action of the respondents in seeking to enforce notification Annexure P-11 against the petitioners, is arbitrary, unfair and unreasonable, and, in this view of the matter, we find support from Hon'ble Supreme Court's judgment in MRF Ltd. case (supra) (para-39). 37. Another submission that was made on behalf of the petitioners was that amending notification Annexure P-11 is violative of Article 301 of the Constitution of India. We do not find any merit in the submission. Notification Annexure P-1 has granted certain incentives, in the form of exemption from payment of excise duty for a certain period to promote industrial development of industrially backward States of Himachal Pradesh and Uttarakhand and if the concessions are withdrawn by amending the said notification, in respect of some of the processes, which are included in the definition of "manufacture" ..... X X X X Extracts X X X X X X X X Extracts X X X X
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