2000 (3) TMI 64 - HC - Central Excise

Summary

Issues Involved:
1. Whether the amending Notification No. 142/89 dated 16-5-1989, withdrawing the concession granted under Notification No. 175/86 dated 1-3-1986, is improper, arbitrary, discriminatory, or in violation of the rules of promissory estoppel.

Detailed Analysis:

Issue 1: Impropriety and Arbitrariness of Notification No. 142/89

The petitioners argued that the withdrawal of the exemption for Potassium Chlorate under Notification No. 142/89 was arbitrary and lacked valid reasons. They contended that the sudden withdrawal caused significant financial loss and hardship, as they had established their industries based on the earlier exemption.

The respondents countered that the decision to withdraw the exemption was a policy decision based on various factors, including the proliferation of Small Scale Industries (SSI) units manufacturing Potassium Chlorate, leading to revenue loss and safety concerns due to the hazardous nature of the chemical. The Government's decision was deemed necessary to control the excessive production and ensure public safety.

The court found that the Government had valid reasons for the withdrawal, including the recommendations from the Department of Chemicals and Petro-chemicals and the need to manage the economy and public safety. The decision was not arbitrary but a considered policy change.

Issue 2: Discrimination in Withdrawal of Exemption

The petitioners claimed that the withdrawal of the exemption for Potassium Chlorate alone, among all items under Notification No. 175/86, was discriminatory.

The respondents explained that the withdrawal was specific to Potassium Chlorate due to its hazardous nature and the proliferation of SSI units producing it, which was not the case for other exempted items. The court found this explanation reasonable and held that the withdrawal was not discriminatory, as it applied uniformly to all SSI units manufacturing Potassium Chlorate.

Issue 3: Violation of Promissory Estoppel

The petitioners argued that the withdrawal of the exemption violated the rules of promissory estoppel, as they had made significant investments based on the earlier notification.

The respondents argued that the petitioners applied for licenses after the amended notification was issued, and any commitments made by the petitioners were speculative. The Government had not promised a fixed period for the exemption, and it was within its rights to withdraw the exemption as part of its policy change.

The court held that there was no violation of promissory estoppel, as the Government had not made any promise regarding the duration of the exemption, and the petitioners' actions were based on their own anticipation.

Conclusion:

The court concluded that the amending Notification No. 142/89 was within the competence of the Government, based on valid and convincing reasons. The withdrawal of the exemption for Potassium Chlorate was neither arbitrary nor discriminatory and did not violate the rules of promissory estoppel. Consequently, the writ petitions were dismissed.