1986 (8) TMI 66 - HC - Central Excise

Summary

Issues Involved:
1. Withdrawal of Excise Duty Relief
2. Application of Promissory Estoppel
3. Legislative vs. Executive Actions
4. Retrospective Withdrawal of Notification

Issue-wise Detailed Analysis:

1. Withdrawal of Excise Duty Relief:
The petitioner challenged Notification No. 150/85-CE dated 15th July 1985, which rescinded earlier notifications granting excise duty relief. The petitioner argued that the withdrawal of excise relief, initially provided to encourage new investments in the tyre industry, was unjust as substantial investments were made based on the promise of such relief.

2. Application of Promissory Estoppel:
The petitioner contended that the government was estopped from revoking the excise exemption due to the principle of promissory estoppel. The petitioner relied on the Supreme Court's judgment in Union of India v. Godfrey Philips India Ltd., which stated that the doctrine of promissory estoppel binds the government in its executive functions. The court noted that the petitioner made significant investments based on the government's promise of excise relief, and it would be inequitable for the government to revoke such relief.

3. Legislative vs. Executive Actions:
The respondent argued that the power to grant or revoke exemptions was a legislative function, and thus, the principle of promissory estoppel did not apply. However, the court distinguished between primary legislation and subordinate legislation, holding that notifications issued under Rule 8 of the Central Excise Rules constituted subordinate legislation. Therefore, the government was bound by its promises made through such notifications.

4. Retrospective Withdrawal of Notification:
The petitioner argued that the notification rescinding the excise relief had a retrospective effect, which was impermissible. The court, however, did not delve deeply into this issue, as it had already concluded that the government was bound by promissory estoppel and could not revoke the relief granted.

Conclusion:
The court allowed the writ petition, quashing Notification No. 159/85-CE dated 15th July 1985. It held that the government could not revoke the excise relief granted by earlier notifications due to the principles of promissory estoppel. The parties were directed to bear their own costs.