2017 (3) TMI 1003 - AT - Central Excise

Benefit of N/N. 50/2003 dated 10.06.2003 - area based exemption - The claim of the appellant is under the latter N/N. 50/2003-CE was amended vide No/N. 27/2005 dated 19.05.2005 to the effect that Khasra no. 164H in Mohebwala Industrial Region was deleted from Annexure II. Since, the appellant s unit is situated within the said Khasra; Revenue has taken the view that the appellant will not be eligible for the benefit of the area based exemption - Held that - It is clear on fact that the area where the appellant s unit is located is no more covered under the relevant notification - The area based exemption benefit is extended to units situated in designated backward areas listed out in the relevant notification but the area in which the appellants unit is situated has been deleted from the relevant notification, the appellant will ceaze to enjoy the benefit of the notification from the date of such amendment - benefit rightly denied - appeal dismissed - decided against Appellant.

Summary

Issues:
- Eligibility for exemption under Notification No. 50/2003-CE dated 10.06.2003
- Interpretation of substantial expansion and manufacturing criteria
- Impact of amendment in Notification No. 27/2005 dated 19.05.2005 on exemption eligibility
- Application of the doctrine of promissory estoppel in tax disputes

Analysis:

Eligibility for Exemption under Notification No. 50/2003-CE:
The appellant, a manufacturer of Carbon paper & Stencil Paper, claimed exemption under Notification No. 50/2003-CE for substantial expansion in their unit. The Commissioner (Appeals) denied the exemption based on doubts regarding the expansion and manufacturing criteria. The appellant argued that they fulfilled the conditions for exemption as per the notification and cited legal precedents to support their claim.

Interpretation of Substantial Expansion and Manufacturing Criteria:
The appellant contended that they had undertaken substantial expansion as required by the notification and were eligible for the exemption. They highlighted changes made in their factory and production processes to avail the benefits. The Commissioner (Appeals) upheld the duty demand and interest but dropped the penalty, considering the appellant's arguments on substantial expansion.

Impact of Amendment in Notification No. 27/2005 on Exemption Eligibility:
The dispute arose due to an amendment in Notification No. 27/2005, which deleted the Khasra number of the appellant's unit from the exemption list. The appellant argued that the amendment should not apply retrospectively to units that had already undertaken substantial expansion before the amendment date. They invoked the doctrine of promissory estoppel to support their claim.

Application of the Doctrine of Promissory Estoppel in Tax Disputes:
The appellant relied on the doctrine of promissory estoppel, claiming that they had acted on the government's promise of exemption and made changes in their operations accordingly. They argued that the amendment should not affect units that had already fulfilled the conditions for exemption. However, the Tribunal held that it lacked the authority to enforce equitable doctrines and had to decide based on statutory provisions and government notifications. As the appellant's unit was no longer covered under the relevant notification post-amendment, the demand for excise duty was upheld.

In conclusion, the Tribunal upheld the impugned order, dismissing the appeal based on the interpretation of the relevant notifications and the limitations of the Tribunal's jurisdiction in enforcing equitable doctrines like promissory estoppel in tax disputes.