2011 (8) TMI 795 - HC - Central Excise

Area bases exemption - Notification No. 50/2003 dated 10th June, 2003 - New Industrial Policy dated 7th January, 2003 - the submission of the learned Counsel for the Petitioner is, that as per the policy dated 7th January, 2003 and the notification dated 10th June, 2003, the Petitioner established a new industrial unit in the area specified in Annexure-II and was entitled for central excise exemption on the goods cleared from its unit - The notification dated 10th June, 2003 clearly indicates that a new unit would be entitled for exemption if it commences production after 7th January, 2003 established in an area specified in Annexure-II - In so far as the notification dated 19th May, 2005 is concerned, the court is of the opinion that the said notification only removes certain anomalies which had crept in the notification dated 10th June, 2003 - Decided in favor of the assessee

Summary

Issues Involved:
1. Eligibility for Central Excise Duty exemption under Notification No. 50/2003.
2. Interpretation of categories in Annexure-II of the notification.
3. Authority and jurisdiction of SIDCUL in interpreting the notification.
4. Impact of subsequent Notification No. 27/2005 on the eligibility for exemption.
5. Application of principles of legitimate expectation and promissory estoppel.

Detailed Analysis:

1. Eligibility for Central Excise Duty exemption under Notification No. 50/2003:
The primary issue was whether the petitioner was entitled to central excise exemption under Notification No. 50/2003 dated 10th June 2003. The notification indicated that new industrial units commencing production after 7th January 2003, and located in areas specified in Annexure-II, were eligible for exemption. The petitioner's unit, located in Khasra No. 54, village Behedeki, Tehsil Roorkee, District Haridwar, fell within the specified area. The court concluded that the petitioner met these criteria and was thus entitled to the exemption.

2. Interpretation of categories in Annexure-II of the notification:
The respondents argued that the petitioner's unit was in a non-industrial area specified under category "C" in Annexure-II, which they claimed applied only to existing units. The court found this interpretation erroneous, stating that the categories in Annexure-II did not distinguish between new and existing units. The court held that the notification dated 10th June 2003 did not limit the exemption to existing units only and that the petitioner's new unit was eligible for the exemption.

3. Authority and jurisdiction of SIDCUL in interpreting the notification:
SIDCUL had issued a clarification suggesting that the exemption under category "C" applied only to existing units. The court ruled that SIDCUL, being a nodal agency, did not have the authority to interpret the notification in a manner that contradicted its clear terms. The court emphasized that SIDCUL's opinion could not override the notification dated 10th June 2003, which should prevail.

4. Impact of subsequent Notification No. 27/2005 on the eligibility for exemption:
The subsequent Notification No. 27/2005 dated 19th May 2005 amended the earlier notification by changing the heading under category "C" to "existing industrial activity in non-industrial area." The court held that this amendment did not affect the petitioner's entitlement to the exemption, as the original notification already provided sufficient grounds for the exemption. The court viewed the amendment as merely removing anomalies without altering the eligibility criteria.

5. Application of principles of legitimate expectation and promissory estoppel:
While the petitioner argued that there was a legitimate expectation to avail the exemption and that the respondents were bound by promissory estoppel, the court found it unnecessary to address these principles. The court's decision was based on the clear terms of the notification and the petitioner's compliance with those terms, rendering further discussion on legitimate expectation and promissory estoppel moot.

Conclusion:
The writ petition was allowed, and the order by the Deputy Commissioner dated 21st March 2005 was quashed. The court held that the petitioner was entitled to the central excise exemption under Notification No. 50/2003 dated 10th June 2003. A mandamus was issued directing the respondents to grant the exemption to the petitioner's unit. Each party was ordered to bear its own costs.