2021 (9) TMI 1046 - HC - Central Excise

Area Based exemption - Requirement to refund 50% of amount that was refunded - exemption that was made available to the petitioner under the North Eastern Industrial Policy - validity and vires of N/N. 17/2008-CE dated 27.03.2008 and No.31/2008-CE dated 10.06.2008 - fixation of a special rate for the value addition on the manufactured goods - principle of constructive res-judicata - HELD THAT - In the instant case, it is the case of the petitioner that the requirement of requesting for fixation of a special rate in respect of the value addition to the manufactured goods had arisen only after the final judgment of the Supreme Court in UNION OF INDIA ANOTHER ETC. ETC. VERSUS M/S V.V.F LIMITED ANOTHER ETC. ETC. 2020 (4) TMI 669 - SUPREME COURT , inasmuch, as long as the matter was pending before the Supreme Court and the interim order dated 07.12.2015 was in operation requiring a refund of 50% of the amount involved, no occasion had arisen for the assessee to claim for the fixation of a special rate in respect of the value addition to the manufactured goods. The dominant purpose of the two notifications i.e. amended notification No.32/99-CE dated 18.07.1999 and the notification No. 31/2008-CE dated 10.06.2008, is the bestowing of a legal right to the assessee to opt for the fixation of a special rate in respect of the value addition to a manufactured goods. The requirement that such applications are to be made not later than 30th day of September of the given financial year is a provision for streamlining the procedure for making such application and to avoid the situation where the process of making such applications would be a never ending matter. Without going into the aspect whether the requirement to submit such application within 30th September of the given financial year is a mandatory requirement or a directory requirement, what we take note of is that such a provision has been incorporated to streamline the process for submission of the application seeking for the fixation of a special rate to the value addition to manufactured goods - it cannot be wholly said that the petitioner would now be prevented from claiming their legal right for fixation of a special rate to the value addition to the manufactured goods merely because such application was not made within 30th September of that given financial year to which the claim for fixation of the said rate pertains to. On the principle of constructive res-judicata, the ground for rejecting such application for the reason that it was not submitted within 30th September of the given financial year would perhaps be not available for the respondent authorities for rejecting the application - the Principal Commissioner, GST, Guwahati is directed to consider the application of the petitioner dated 28.09.2020 seeking for fixation of a special rate to the value addition to the manufactured goods of the given financial year and decide the same as per law. Petition allowed.

Issues Involved:
1. Validity of notifications modifying excise duty exemptions.
2. Application of the doctrine of promissory estoppel.
3. Interim orders and their implications on excise duty refunds.
4. Legal right to request fixation of a special rate for value addition to manufactured goods.
5. Timeliness of applications for special rate fixation.
6. Constructive res judicata in the context of application rejection.

Issue-wise Detailed Analysis:

1. Validity of Notifications Modifying Excise Duty Exemptions:
The petitioner, a public limited company, challenged the validity and vires of notifications No.17/2008-CE dated 27.03.2008 and No.31/2008-CE dated 10.06.2008, which modified the excise duty exemptions under the Northeastern Industrial Policy. The High Court initially set aside these notifications, but the Supreme Court eventually upheld them, thereby dismissing the writ petitions challenging the notifications.

2. Application of the Doctrine of Promissory Estoppel:
The petitioner argued against the notifications based on the doctrine of promissory estoppel, claiming they had a legitimate expectation of continued benefits under the original policy. However, this argument was not upheld by the Supreme Court, which restored the notifications.

3. Interim Orders and Their Implications on Excise Duty Refunds:
During the pendency of the appeal, the Supreme Court issued an interim order on 07.12.2015, directing the release of 50% of the amount due to the respondent, subject to certain conditions. This interim order was applicable to all similarly situated assessees, as clarified by the Division Bench of the High Court in Raj Coke Industries –vs- Union of India.

4. Legal Right to Request Fixation of a Special Rate for Value Addition to Manufactured Goods:
The petitioner invoked notifications No.32/99-CE dated 18.07.1999 and No.31/2008-CE dated 10.06.2008, which allowed manufacturers to apply for a special rate representing actual value addition. The court recognized the legal right of the petitioner to request such a rate, noting that the application must be considered on its merits.

5. Timeliness of Applications for Special Rate Fixation:
The petitioner submitted an application on 28.09.2020 for the financial years 2014-2015, 2015-2016, and 2016-2017. The Principal Commissioner of GST, Guwahati, rejected the application as time-barred, stating it should have been filed by 30th September of the respective financial year. However, the court noted that the necessity for such a request arose only after the Supreme Court's final judgment on 22.04.2020, and thus, the application was timely under the circumstances.

6. Constructive Res Judicata in the Context of Application Rejection:
The court highlighted that the earlier order dated 03.03.2021 in WP(C) No.617/2021 did not raise the issue of timeliness. Therefore, rejecting the application on this ground would not be appropriate. The principle of constructive res judicata was applied, preventing the respondent authorities from rejecting the application based on its submission date.

Conclusion:
The court directed the Principal Commissioner, GST, Guwahati, to consider the petitioner's application dated 28.09.2020 on its merits, without rejecting it on the ground of timeliness. The writ petition was allowed, ensuring the petitioner's legal right to request a special rate for value addition to manufactured goods was upheld.

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