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2017 (3) TMI 781 - HC - Central ExciseNCCD - 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 for interest also - Held that - the Notification does not extend the benefit of exemption from NCCD. This interpretation flows from the plain words used and there is no room for ambiguity or construction - The appellant has no case that it has changed its position relying upon the policy decision dated 07.01.2003. The policy decision dated 07.01.2003 is followed up by the Notification 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. The appellant cannot be permitted to raise a plea of promissory estoppel in the facts of this case based on the policy decision dated 07.01.2003 as there is neither pleading nor materials placed to support a finding that the appellant 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? - Held that - there is no challenge to the Notification. The justification for the omission to challenge is stated to be that if the appellant 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 mischief and advance the remedy without doing violence to the language - The language of the Notification in question does not permit us to read 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. 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 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 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 under Section 5-A, it must be treated as having also impliedly granted exemption from payment of NCCD. Interest - Held that - Having regard to Section 136(3) of the Finance Act, 2001, prima facie provisions of the Act were available to the Authorities for all purposes would come to the rescue of the respondent if 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 imposed, we direct that it is open for the appellant to raise the contentions in a duly constituted proceeding. Appeal dismissed - decided against appellant.
Issues Involved:
1. Entitlement to Exemption under Notification No. 50/2003. 2. Promissory Estoppel. 3. Interpretation of Exemption Notification. 4. Applicability of National Calamity Contingent Duty (NCCD). 5. Demand for Interest and Penalty. Detailed Analysis: 1. Entitlement to Exemption under Notification No. 50/2003: The appellant sought relief declaring entitlement to exemption under Notification No. 50/2003 dated 10th June 2003, which provided 100% excise duty exemption for ten years from the commencement of commercial production. The appellant argued that this exemption should include the National Calamity Contingent Duty (NCCD) and related cesses. However, the court noted that the Notification specifically exempted excise duties under the Central Excise Act, 1944, and two other Acts, but not NCCD, which is levied under the Finance Act, 2001. Thus, the court concluded that the Notification did not extend to NCCD. 2. Promissory Estoppel: The appellant contended that the government’s policy, as articulated in the Office Memorandum dated 07.01.2003, promised 100% excise duty exemption, inducing them to invest in the state. They argued that the government should be estopped from retracting this promise. The court examined the doctrine of promissory estoppel, noting that it requires a clear and unequivocal promise and a change of position based on that promise. The court found the appellant’s pleadings inadequate to establish that they altered their position based on a promise that included NCCD exemption. The Notification issued six months after the policy decision did not include NCCD, and the appellant set up the unit four years later, by which time they should have been aware of the Notification’s terms. 3. Interpretation of Exemption Notification: The appellant argued for a liberal interpretation of the Notification, claiming it should cover NCCD as a duty of excise. The court referred to established principles that while exemption notifications should be construed strictly, those promoting economic activities should be interpreted liberally. However, the court emphasized that such liberal interpretation should not do violence to the language of the Notification. Given the clear terms of the Notification, which did not include NCCD, the court rejected the appellant’s argument for a broader interpretation. 4. Applicability of National Calamity Contingent Duty (NCCD): The appellant argued that NCCD, being treated as a duty of excise under the Finance Act, 2001, should fall within the exemption. The court noted that while NCCD is termed a duty of excise, it is levied under a different statute (Finance Act, 2001) and not under the Central Excise Act, 1944, or the other Acts mentioned in the Notification. The court concluded that the Notification’s specific reference to duties under certain Acts did not include NCCD, thus the exemption did not apply to NCCD. 5. Demand for Interest and Penalty: The appellant challenged the demand for interest and the imposition of a 100% penalty. The court noted that while the appellant could contest the quantum of interest and the imposition of penalty in a statutory proceeding, the provisions of the Finance Act, 2001, and the Central Excise Act, 1944, did provide for the imposition of interest and penalties. The court left open the appellant’s right to challenge these aspects before the appropriate authority. Conclusion: The court dismissed the appeal, finding no merit in the appellant’s claims for exemption from NCCD under the Notification, the application of promissory estoppel, or a liberal interpretation of the Notification to include NCCD. The court also allowed the appellant to contest the interest and penalty in a statutory proceeding.
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