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TMI Blog2006 (9) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... solution containing a package of incentives and concessions for the entire North East Region was announced by the Government of India with the floating of Notification dated 24.12.1997 with a view to boost the industrial growth, development and activities in North East Region. It was announced and promised by the Government of India that all industrial activities for such area would be free from, inter-alia, income tax, central excise for a period of 10 years from the date of commencement of the production and also that State Government would be requested for exemption in respect of sale tax, municipal tax-and other such local taxes on industrial activities in the said areas. 4. In pursuance of the assurance given by Government of India in terms of Notification dated 24.12.1997 above, the Secretariat to the Government of India, Ministry of Finance, Department of Revenue, North Block, New Delhi issued Notifications No. 32/99-CE and 33/99-CE both on 8.7.99 in exercise of powers conferred by Section 5(4)(1) of the Central Excise Act, 1944 (for short, 'the Act') and thereby all excisable goods as specified in the said Notifications cleared from a unit located in the Growth o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturer of goods from the account current maintained under Rule 9 read with Rule 173G of the Central Excise Rules, 1944. 2. The Exemption contained in this notification shall be given effect to in the following manner, namely: a. The manufacturer shall submit a statement of the duty paid from the said account current to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, by the 7th of the next month in which the duty has been paid from the account current. b. The Assistant Commissioner or Deputy Commissioner of Central Excise, as the case may be, after such verification, as may be deemed necessary, shall refund the amount of duty paid from the account current during the month under consideration to the manufacturer by the 15th of the next month. c. If there is likely to be any delay in the verification, the Assistant Commissioner or Deputy Commissioner of Central Excise, as the case may be, shall refund the amount on provisional basis by the 5th of the next month to the month under consideration and thereafter may adjust the amount of the refund by such amount as may be necessary in the subsequent refunds admissible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he manufacturer by the 15th of the next month. (c) If there is likely to be any delay in the verification, the Assistant Commissioner or Deputy Commissioner of Central Excise, as the case may be shall refund the amount on provisional basis by the 15th of the next month to the month under consideration, and thereafter may adjust the amount of refund by such amount as may be necessary in the subsequent refunds admissible to the manufacturer. 3. The exemption contained in this notification shall apply only to the following kind of units namely: (a) New Industrial unit which have commenced their commercial production on or after 24th day of December, 1997. (b) Industrial units existing before the 24th day of December, 1997 but which have undertaken substantial expansion by way of increase in installed capacity by not less than twenty five percent on or after the 24th day of December, 1997. 4. The exemption contained in this notification shall apply to any of the said units for a period not exceeding ten years from the date of publication of this notification in the official Gazette or from the date of commencement of commercial production whichever is later. 7. All th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 32/99-CE and No. 33/99-CE dated 08.07.1999 were amended by the Notification No. 61/2002-CE : MANU/EXCT/0064/2002 dated 23.12.2002. By the said amendment a proviso was inserted in the Second paragraph in Clause (b) to the effect that the refund was not to exceed the amount of duty paid less the amount of CENVAT Credit availed of in respect to the duty paid on the inputs used in or in relation to the manufacture of goods cleared under the respective Notifications dated 08.07.1999. 12. The Notification No. 61/2002-CE : MANU/EXCT/0064/2002 dated 23.12.2002 reads as under: NOTIFICATION No. 61/2002-CENTRAL EXCISE : MANU/EXCT/0064/2002, DATED DEC. 23, 2002 In exercise of the powers conferred by Section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby directs that each of the notifications of the Government of India, in the erstwhile Ministry of Finance (Department of Revenue), specified in column (2) of the Table hereto annexed shall be further amended, except as respects things done or omitted to be done before such amendment, in the manner specified in the corresponding entry in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ications for payment of excise duty on other products not covered under exemption so as to avoid unintended benefit of higher amount of refund. By virtue of Notifications No. 61/2002 : MANU/EXCT/0064/2002 and 42/2002 : MANU/EXNT/0016/2002 dated 23.12.2002, the Government made it compulsory for Assessee not to utilize the CENVAT for payment of a non-specified item and to utilize the same for the payment of duty and not to carry forward by way of piling up. 15. By the Finance Bill, 2003 which received the assent of the President on 14.05.2003 to become an Act namely the Finance Act, 2003 (No. 32 of in its 2003) (for short, the 'Finance Act') the Government in its Budget 2003-2004, effected drastic changes by making those amendments retrospective with effect from 08.07.1999 by inserting Sections 150, 151 and 153 including Sixth, Seventh and particularly Eighth Schedule. It would, therefore, be clear that by the Finance Act the Legislature amended Notifications No. 32/99 and 33/99 and Rule 3(3) of the CENVAT Rules by giving retrospective effect. 16. Consequent upon such amendment of Rule 3(3) of the CENVAT Rules and in terms of the amended provisions of Sections 150, 151 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b), as substituted by Rule 5 of the Central Excise (Second Amendment) Rules, 2000, published in the Official Gazette vide notification of the Government of India in the Ministry of Finance (Department of Revenue), No. G.S.R. 203 (E), dated the 1st March, 2000 shall stand amended and shall be deemed to have been amended retrospectively in the manner as specified in column (3) of the Sixth Schedule, on and from the corresponding date specified in column (4) of that Schedule against each of the said sub-rules specified in column (2) of that Schedule till the date on which those sub-rules, were superseded. (2) Any action taken or anything done or purported to have been taken or done at any time during the period commencing on and from the 8th day of July, 1999 and ending with the day on which the Finance Bill, 2003 receives the assent of the President under the Central Excise Act or any rules made thereunder for not allowing the credit of specified duty or the CENVAT Credit, as the case may be, to be taken or utilized which would have been allowed to be taken or utilized but for the amendments made by Sub-section (1), shall be deemed to be and to always have been, for all purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powers conferred by Section 37 of the Central Excise Act, Sub-rule (3) of Rule 3 thereof as published in the Official Gazette vide notification of the Government of India in the Ministry of Finance (Department of Revenue), No. G.S.R. 445(E), dated the 21st June, 2001 shall stand amended and shall be deemed to have been amended retrospectively in the manner as specified in column (2) of the Seventh Schedule, on and from the corresponding date specified in column (3) of that Schedule till the date on which the said CENVAT Credit Rules were superseded. (2) Any action taken or anything done or purported to have been taken or done at any time during the period commencing on and from the 1st day of July, 2001 and ending with the day on which the Finance Bill, 2003 receives the assent of the President, under the Central Excise Act or any rules made thereunder for not allowing the CENVAT Credit to be taken or utilized which would have been allowed to be taken or utilized, but for the amendment made by Sub-section (1), shall be deemed to be, and to always have been, for all purposes, as validly and effectively taken or done as if the amendment made by Sub-section (1) had been in force at al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Importance) Act, 1957 (58 of 1957) and Sub-section (3) of Section 3 of the Additional Duties of Excise (Textiles and Textiles Articles) Act, 1978 (40 of 1978) by the Central Government shall stand amended and shall be deemed to have been amended in the manner as specified in the Eight Schedule, on and from the 8th day of July, 1999 to the 22nd day of December, 2002 (both days inclusive) retrospectively, and accordingly, notwithstanding anything contained in any judgment, decree or order of any Court, tribunal or other authority, any action taken or anything done or purported to have been taken or done under the said notifications, shall be deemed to be and always to have been, for all purposes, as validly and effectively taken or done as if the notifications as amended by this sub-section had been in force at all material times. (2) For the purpose of Sub-section (1), the Central Government shall have and shall be deemed to have the power to amend the notifications referred to in the said sub-section with retrospective effect as if the Central Government had the power to amend the said notifications under Sub-section (1) of Section 5A of the Central Excise Act read with Sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied items and to utilized the same for the payment of duty and not to carry forward. By means of the amendment in question, it has been laid down that the Assistant Commissioner or Deputy Commissioner of Central Excise, as the case may be, after such verification, as may be deemed necessary, shall refund the amount of duty paid from the account current during the month under consideration to the manufacturer by the 15th of next month provided that such refund shall not exceed the amount of duty paid less the amount of the CENVAT Credit availed of, in respect of duty paid on the inputs used in, or in relation to the manufacture of goods cleared under those Notifications. Admitted Fact: 21. Admittedly though the Petitioners had merely recorded CENVAT Credit in their respective RG-23 A Registers, the said credit had not been utilized to pay the excise duty payable on the goods manufactured by them. Findings of Revenue: 22. The impugned orders, as it transpires, passed in the respective writ petitions herein either by the Assistant Commissioner or Deputy Commissioner, raised a demand from the Petitioners on various amounts pursuant to the above mentioned retrospective amendme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were founded on glaring erroneous paraphrase and mistaken analysis of the provisions of relevant sections of the Finance Act. Contentions of the Department: 25. The Department has strongly contested and objected to the averments including the prayer made in the writ petitions by filing response. Its stand is that the amendment of Finance Act categorically authorised the Central Excise to raise a demand on the Assessee only if and to the extent that the Assessee availed of the benefit of CENVAT Credit of duty paid on inputs used of the manufacture of finished excisable goods and as such CENVAT Credit thus taken/availed of needs to be utilized for payment of any duty of excise on any final products. The revenue has further contended that a huge amount of CENVAT Credit availed of by the Petitioners was being sought to be carried forward and/or piled up for reasons best known to the assesses whereas the very purpose of CENVAT Credit Scheme for North East was that the manufacturers first utilized the CENVAT Credit 'availed of for payment of duty and only thereafter the remaining amount of duty be paid in cash which was subsequently to be refunded. Furthermore, though the CE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eported in MANU/SC/0603/1989 : (1989) 4 SCC 541 (para 6) (ii) Chandrpur Magnet Wires Pvt. Ltd., Nagpur v. Collector of Central Excise, Nagpur reported in MANU/SC/1061/1996 : (1996) 2 SCC 159 and (iii) Collector of Custom, Bombay v. M.J. Exports Ltd. reported in MANU/SC/0458/2001 : (2001) 6 SCC 756. 31. In such premises, Sections 150, 151 and 153 gave retrospective effect to those amendments so as to ensure that deliberate diversion of credit or accumulation of credit by the manufacturer in the past did not result in excess unintended refund to them and hence those sections are not ultra vires to the provisions of Articles 14, 19(1)(g), 21 and 300A of the Constitution of India. Submissions on behalf of the Petitioners: 32. The learned Counsel representating the Petitioners has strongly argued that raising demands on the Petitioners by the impugned orders pursuant to retrospective amendments made to the Notifications No. 32/99 and 33/ 99 through the Finance Act were rested on incorrect reading and mis-interpretation of the amended. Notifications as in those Notifications nowhere made it compulsory for the manufacturers to utilize CENVAT credit amount recorded by them in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioners accordingly paid the excise duty on their manufactured products and were granted exemptions under Notifications No. 32/99 and 33/99 and the amounts of duty paid were duly refunded to them. According to the Petitioners' counsel, it was permissible to the manufacturers to pay the excise duty in cash instead of utilizing CENVAT Credit amount and for this reason only the Petitioners were earlier permitted by the Excise authorities throughout the period in question, i.e., 1999 to 2002 to pay the excise duty on the finished product in cash without utilizing the CENVAT Credit amount on the inputs for payment of excise duty. Now by the retrospective amendments on 23.12.02 in question, such vested rights of the Petitioners could not be taken away. That being so, the basic word availment in passing the impugned orders were wholly misinterpreted. 37. It is also contended that revenue's contention based on the principle of purposive interpretation was wholly misconceived as there was no specific statement and object made available to indicate the purpose of the amended Notifications. However, even if the doctrine of purposive interpretation was applied, there would be no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case. Because the said authority has been decided in a different factual matrix. Rather the said citation supports the case of the revenue in the context of Eight Schedule to the Finance Act. According to the revenue, no distinction can be made between the words 'taken' or 'availed of. 41. It is contended that from a perusal of Rule 3(3) of the CENVAT Rules it would reveal that CENVAT Credit thus 'taken or availed of is to be utilized for payment of any duty of excise on any final products and a manufacturer is accordingly allowed to take CENVAT Credit which is to be utilized towards such payment. It is stated that though the words 'taken or availed of has been loosely used in the Rules, the purport of the Rule is that the credit 'taken' has to be 'utilized'. Hence the meaning to be assigned to the words 'taken/availed of used in Notifications No. 61/02 CE : MANU/EXCT/0064/2002 and No. 42/02 : MANU/EXNT/0016/2002 dated 23.12.2002 and the Eight Schedule to the Finance Act, has to be consistent with the legislative intent. It is also urged that Rule 12 of the CENVAT Rules, does not make any distinction between the words 'taken' or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of paragraph 3(a) and 3(b) of the above mentioned Notifications to the extent of duty paid during the current account. However, by Notification No. 61/2002-CE : MANU/EXCT/0064/2002 dated 23.12.2002, the Notification No. 32/99-CE and No. 33/99-CE dated 08.07.1999 was amended providing that refund of duty so availed by way of exemption should not exceed the amount of duty paid less then the amount of the CENVAT Credit availed of in respect of duty paid on the inputs used in or in relation to manufacture of goods cleared under the said Notification, as already noticed herein above. 46. Later on, Clause 145(1) of the Finance Bill, 2003 which was given effect under Section 153 of the Finance Act, 2003 as indicated above, enacted on 14.05.2003, amended Notification No. 32/99-CE and 33/ 99-CE both dated 08.07.1999 issued under Section 5A of the Central Excise Act, 1944 read with other relevant provisions of law as already noticed above in the manner specified in Eighth Schedule on and from 08.07.1999 to 22.12.2002 (both date inclusive) retrospectively. Section 153(4) of the Finance Act amongst Ors. provisions of said Clause 2 and 3 contemplate that notwithstanding cessation of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have accrued certain vested rights is concerned, it is observed that the New Industrial Policy and other concessions for North Eastern Region extended 100% excise duty exemption and those did not in any manner include the benefits of CENVAT Credit for the manufacturers. It was only because of the exemption allowed to be permitted through the refund mechanism, the manufacturers in North Eastern Region got entitled to CENVAT Credit which could be used to pay duty. The provision of scheme was for refund of that portion of duty which was paid in cash. The manufacturer was undoubtedly, expected to pay only that portion of duty in cash which could not be paid by utilization of CENVAT Credit. Exemption permissible under those Notifications i.e., Nos. 32/99 and 33/99 was only from duty which was paid by way of other than utilization of the CENVAT Credit and refund of the same was prescribed therein. The amendment effected through Section 153 of the Act retrospectively only to ensure that the manufacturer utilize the CENVAT Credit availed of on the inputs on the manufacture of final products on which exemption was availed of, for payment of duty and pay only the balance of duty in cash. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and (iii) the decree of any unforeseen or unforeseeable financial burden for the past period. Moreso, if the executive, vested with the power of subordinate legislation, has failed to carry out the object of Parliament, such control may be exercised by retrospectively enacting what the executive ought to have achieved. (See R.C. Tobacco (P) Ltd. and Anr. v. Union of India reported in (2006) 7 SCC 725, paragraphs 20, 21 and 22). This Court is, accordingly, of the considered view that Sections 150 , 151 and 153 of the Finance Act cannot be held to be unreasonable, arbitrary, unconstitutional and violative of Articles 14, 19(1)(g), 21 and 300A of the Constitution of India. 51. Having regard to Shree Hari Chemicals Export's case (supra) so relied upon on behalf of the Petitioners, this Court is of the opinion that the ratio of the same is not applicable to the facts and circumstances of the present case. In the said authority, the issue raised therein was as to whether the Central Excise authority was justified in disallowing credit to the Assessee therein under Rule 56A(8) of the Rules on the plea that the Assessee availed MODVAT Credit in terms of Rules 57A of the Rules. A c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... synonymous with benefit 'profit', 'used' and 'utility'. A person can be stated to have availed himself of something only if he had taken advantage or profited by that thing or utilizes it to his benefit Applying the above interpretation of the words availed of in the case in hand, it manifestly transpires that the meaning assigned to the word 'availed of occurred in Notifications No. 61/2002 CE : MANU/EXCT/0064/2002 and 42/2002 CE : MANU/EXNT/0016/2002 dated 23.12.2002 and the Eighth Schedule of the Finance Act is that the manufacturer must utilize the CENVAT Credit 'availed of for payment of Central Excise duty on the final products and pay the balance in cash which alone is the refund component. 53. On perusal of the materials available on record especially Notification No. 42/02 : MANU/EXNT/0016/2002 dated 23.12.2002 by which a proviso has been added to Rule 3(3) of CENVAT Rules wherein it is provided that the CENVAT Credit of the duty paid on the inputs used by the manufacturer of final products cleared after availing of all the exemptions under Notifications No. 32/99 and 33/99 both dated 08.07.1999 shall be utilized only for payment of du ..... X X X X Extracts X X X X X X X X Extracts X X X X
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