1991 (4) TMI 147 - HC - Central Excise

Summary

Issues Involved:
1. Validity of Notification No. 159/85 rescinding Notification No. 88/84.
2. Application of the principle of promissory estoppel against the Central Government.
3. Nature of statutory notifications issued under Rule 8(1) of the Central Excise Rules, 1944.

Detailed Analysis:

1. Validity of Notification No. 159/85 Rescinding Notification No. 88/84:
The petitioner-company, engaged in manufacturing tyres, tubes, and flaps, was initially granted excise duty exemptions under Notification No. 88/84, which extended benefits to units licensed under Section 13 of the Industries (Development and Regulation) Act, 1951. The petitioner-company had made substantial investments and was certified by the DGTD, making it eligible for significant excise duty rebates. However, Notification No. 159/85 rescinded Notification No. 88/84, leading to the cessation of these benefits and resulting in the petitioner paying excess duty. The court found that the rescission of Notification No. 88/84 by Notification No. 159/85 was unenforceable and void as it deprived the petitioner of accrued benefits without a valid justification.

2. Application of the Principle of Promissory Estoppel Against the Central Government:
The petitioner argued that the rescission of Notification No. 88/84 should be declared ultra vires based on the doctrine of promissory estoppel. The court examined several precedents, including the Supreme Court's decisions in Motilal Padampath Sugar Mills Co. Ltd. v. State of Uttar Pradesh and others, Pournami Oil Mill v. State of Kerala, and Dharanendra Trading Company v. A.C.C.T., which upheld the principle of promissory estoppel against the State. The court concluded that the petitioner-company, having acted upon the representation made by the government and invested substantially, was entitled to the benefits promised under Notification No. 88/84 for the full period of seven years. The court held that the principle of promissory estoppel applied, making the rescission of the notification unjust, unreasonable, and arbitrary.

3. Nature of Statutory Notifications Issued Under Rule 8(1) of the Central Excise Rules, 1944:
The Central Government contended that the principle of promissory estoppel could not be applied to legislative functions, including subordinate legislation under Rule 8 of the Central Excise Rules. The court reviewed various decisions, including those of the Supreme Court and High Courts, which discussed the legislative nature of such notifications. The court distinguished between plenary legislative functions and subordinate legislation, concluding that statutory notifications, while legislative in character, are subject to judicial review and the doctrine of promissory estoppel. The court cited the Bombay High Court's decision in Bharat Commerce Industries v. Union of India, which upheld the application of promissory estoppel against notifications issued under Section 25 of the Customs Act.

Conclusion:
The court allowed the writ petition, quashing Notification No. 159/85 as it applied to the petitioner and ordered the Union of India to refund the excess duty of Rs. 34,36,487.10 to the petitioner-company within eight weeks. The judgment reinforced the application of promissory estoppel to statutory notifications and protected the petitioner's accrued benefits under the earlier notification.