1990 (1) TMI 85 - HC - Central Excise

Summary

Issues Involved:
1. Excise Duty Concession Scheme
2. Rescission of Notification
3. Principle of Promissory Estoppel
4. Legislative and Executive Powers
5. Public Interest and Judicial Review

Detailed Analysis:

1. Excise Duty Concession Scheme:
The petitioners, manufacturers of Vanaspati, utilized non-traditional oils, which were subject to an excise duty concession under a scheme introduced on March 1, 1987. This scheme aimed to encourage the use of indigenously available non-traditional oils by offering financial incentives. Under the scheme, manufacturers earned credit for the excise duty concession, which could be used to offset the excise duty on the final product, Vanaspati. The credit was subject to conditions such as the timing of hydrogenation and monthly accounting periods.

2. Rescission of Notification:
On August 25, 1989, the Central Government rescinded the earlier notification granting excise duty concessions. This rescission was challenged by the petitioners, who argued that they had already earned credit under the previous scheme and should be allowed to utilize it. The respondents countered that the excise duty and taxation are not vested rights and that the rescission of the notification ended the petitioners' entitlement to the credit.

3. Principle of Promissory Estoppel:
The petitioners invoked the principle of promissory estoppel, arguing that the government could not deny them the utilization of the earned credit. They contended that they had acted in good faith based on the government's promise and notification, changing their position to their detriment. The respondents argued that promissory estoppel does not apply to government actions in taxation matters.

4. Legislative and Executive Powers:
The court examined whether the rescission of the notification was a legislative or executive act. It was noted that the Central Government, as a delegate of the Union of India, has the power to grant and withdraw excise duty concessions. However, the court emphasized that such powers must be exercised reasonably and not arbitrarily. The court found no evidence of public interest or necessity for the rescission between August 25, 1989, and October 11, 1989, when the concession was reinstated.

5. Public Interest and Judicial Review:
The court held that executive actions, including the rescission of notifications, are subject to judicial review to ensure they are not arbitrary and are in the public interest. The court found that the rescission of the notification without proper justification was unreasonable and deprived the petitioners of their earned credit. The court emphasized the need for the government to act fairly and justly towards its citizens.

Judgment:
The court directed the respondents to permit the petitioners to utilize the credit earned under the notification dated March 1, 1987. If any excess excise duty had been recovered, it was to be refunded to the petitioners. However, the petitioners were not entitled to any concession or credit for the period between August 25, 1989, and October 11, 1989. The writ petition was allowed with no order as to costs.