9911796707
TMI Blog2022 (5) TMI 1041X X X X Extracts X X X X X X X X Extracts X X X X ..... case of the petitioner in brief is that the Petitioner firm is an industrial unit carrying on manufacturing of M.S. Ingot falling under CETSH-72 of the Central Excise Tariff Act, 1985. The Government of India, Ministry of Commerce and Industry, Department of Industrial Policy and Promotion vide the Office Memorandum dated 1/4/2007 announced the North East Industrial and Investment Promotion Policy (NEIIPP), 2007. In terms with the said industrial policy of the year 2007, various exemptions were assured to all new units as well as existing units which go in for substantial expansion, unless otherwise specified and which commence commercial production within the 10 years period from the date of the notification of the industrial policy, i.e. NEIIPP, 2007 for a period of 10 years from the date of commercial production. The location of the new as well as the existing industrial units carrying out a substantial expansion had to be in the North Eastern Region. The said industrial policy also stipulated that incentives on substantial expansion will be given to units effecting "an increase by not less than 25% in the value of the fixed capital investment in the plant and machinery for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods under Area based Exemption Notification was introduced. In terms with Para 2A of the Notification No.20/2008-CE dated 27/03/2008, the Assessee availing the benefit under the said Notification was entitled for refund of the Central Excise Duty paid on the value addition undertaken in the manufacture of goods which shall be equivalent to the amount calculated as percentage of the duty payable on the said excisable goods of the description specified in column (3) of the Table annexed to the said Notification. Taking into account that the goods manufactured by the Petitioners fall within Chapter 72 of the Central Excise Tariff Act, 1985, the Petitioner exemption was limited to 39%. Another Notification being Notification No. 38/2008-CE dated 10/6/2008 was also issued whereby the Notification No.20/2007-CE dated 25/4/2007 was further amended by substituting sub-para (1) of Paragraph 3 with the following :- "(1) Notwithstanding anything contained in paragraph 2A, the manufacturer shall have the option not to avail the rates specified in the said Table and apply to the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, having juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoppel. Further to that, this Court also declared that the Petitioners who had filed the writ petition were entitled to receive 100% exemption from payment of excise duty as were available to them in terms with the relevant Notification Nos. 32/1999-CE and 33/1999-CE dated 8/7/1999 and Notification Nos.20/2007-CE dated 25/4/2007 as the case may be. 6. Being aggrieved by the judgment and order passed by this Court dated 24/6/2009, the Union of India filed Writ Appeal No 243/2009 alongwith other writ appeals. The Division Bench of this Court initially passed an order on 11/8/2009 whereby the refund in terms with the verdict in the writ petition was directed to be limited, to the amount offered by the Excise Authorities or in other words the judgment of this Court dated 24/6/2009 was rendered inoperative. While the said writ appeal continued to be pending before the Division Bench of this Court, similar litigations emanating from the Gujarat High Court were taken up by the Supreme Court on 13/1/2012 in SLP(C) Nos.28194-28201/2010 wherein the Supreme Court vide an order dated 13/1/2012 stayed the judgment passed by the Gujarat High Court till further orders subject to the Petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the petitioners releasing 50% of the amount due to the respondent in terms of the impugned judgment on the respondents' furnishing solvent surety to the satisfaction of the jurisdictional commissioner, the operation of the impugned judgment shall remain stayed. We further direct that contempt proceedings initiated against the petitioners shall remain subject to their releasing 50% of the amount as stated above remain stayed. The needful shall be done within four weeks from today. I.A. No. 3 of 2015 is accordingly allowed and disposed of." 9. The Petitioner herein in terms with the above quoted interim order passed by the Supreme Court, continued to get refund upon furnishing the security bonds executed by the partners of the Petitioner. The Supreme Court thereafter vide a common judgment and order dated 22/4/2020 held that the respective High Courts including this Court had committed a grave error in quashing and setting aside the subsequent notifications/industrial policies impugned before the respective High Courts on the ground that they were hit by the doctrine of promissory estoppel and that they are retrospective and not retroactive. The said judgment is Union of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upheld by this Court, the present appeals deserve to be dismissed and are accordingly dismissed. NO COSTS." 10. A perusal of the above quoted portion of the judgment of the Supreme Court V.V. F. Ltd (supra) would show that the judgments and orders passed by the respective High Courts including this Court dated 20/11/2014 in Writ Appeal No. 243/2009 were set aside and quashed. The writ petitions filed by the various petitioners in the respective High Courts challenging the respective subsequent notifications/industrial policies including the various writ petitions filed before this Court were dismissed and the challenge to the respective subsequent notifications/industrial policies impugned before the respective High Courts including this Court was declared to have failed. It was, however, clarified that the judgment and order dated 22/4/2020 shall not affect the amount of excise duty already refunded prior to the subsequent notifications/industrial policies impugned before the respective High Courts and they are not to be reopened, meaning thereby that those refunds so made prior to the Notification No. 20/2008-CE dated 27/3/2008 and Notification No. 38/2008-CE dated 10/6/2008 we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P.(C) No.822/2021. The said order is quoted herein below :- "Mr. D.Sahu, the learned counsel for the petitioner gives an undertaking that the application for fixing a special rate including the ad-on would be filed within a period of new week from today. In the event, such application is filed before the Assistant Commissioner, GST, Dibrugarh, the authorities including the Principal Commissioner of GST may pass any order as may be advisable under the law. In the event, the application is not filed, no further requirement of the authorities. By requiring the petitioner to make a representation and the respondents to pass a reasoned order thereon, we clarify that we are not making any observation on the merit of the claim of the petitioner, nor on the maintainability of the representation and it would be up to the Principal Commissioner, GST or any authority of the Department, who may take up the representation to pass any reasoned order as may be advisable under the law. Based upon such statement from the learned counsel for the petitioner, the writ petition stands closed." 12. A perusal of the said order would show that the counsel appearing for the Petitioner gave un undertaki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material or components are used in the production or manufacture of goods. The first proviso stipulates that the Commissioner of the Central Excise or the Commissioner of Customs and Central Excise, as the case may be, may if he is satisfied that the manufacturer was prevented by sufficient cause from making the application within the aforesaid time, allow such manufacturer to make the application within a further period of 30 days. Therefore, it would be seen that if the manufacturer wants fixation of a special rate by not availing the option as available in the rates specified in the table, the manufacturer has to file an application in writing to the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be not later than 30th day of September in a financial year for determination of such special rate. The Commissioner of Central Excise or the Commissioner of Customs and Central Excise has been empowered to condone the delay upon sufficient cause being shown, which prevented the manufacturer from filing the application within the aforesaid time by a further period of 30 days. This Court at the cost of prolixity reiterates the said Sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has filed the instant writ petition on 2/2/2022. At this stage, it may also be relevant herein to mention that pursuant to the passing of the impugned order on 5/8/2021, the Petitioner submitted its reply to the show cause notice dated 28th of November, 2020. 16. This Court vide an order dated 9/2/2022 issued notice returnable by six weeks. Subsequent thereto, on 16/2/2022, the Assistant Commissioner , Central GST Division, Tinsukia had passed the Order in Original No. 11/ Asst.COM/ADJ/CE/ACT/2021-22 whereby the demand of Rs. 99,82,752/- was confirmed along with applicable interest at the appropriate rate in terms with Section 11 A A of the Central Excise Act, 1944 was confirmed. However, the said authority did not impose any penalty upon the Petitioner. On the passing of the said order, the Petitioner filed an Interlocutory Application on 10/03/2022 which was registered and numbered as IA (C) No.940/2022, whereby the Petitioner sought for stay of the said Order in Original No. 11/Asst.COM/ADJ/CE/ACT/2021-22 dated 16/2/2022 on the ground that the order dated 5/8/2021 whereby the Petitioner's application for fixation of the special rate was rejected was pending adjudication before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21 filed the said application. The learned counsel for the Petitioner referring to the judgment of this Court rendered in the case of Jyothy Labs Ltd. Vs. Union of India and 2 Ors. reported in (2021) SCC Online Gau 1602 submits that the Petitioner herein is similarly situated and as such similar directions as was passed in the said judgment dated 12/8/2021 in Jyothy Labs Ltd. (supra) needs to be passed in the instant case. He further submitted that in terms with the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (in short, "the Act of 2020") there were certain relaxations being granted in respect to completion of any proceedings or passing of any order or issuance of any notice, intimation, notification, sanction or approval or such other action by whatever name called by any authority, Commission or Tribunal by whatever name called under the provision of the specified Act or filing of an appeal, reply or application or furnishing of any report, document returned or statement or such other record by whatever name may be called under the provisions of the specified Act and as such the Petitioners should be granted the benefit under the said Act of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forgoing paragraphs of the instant judgment, this Court had explained the scope and ambit of Paragraph 3(1) as was inserted by the Notification No. 38/2008-CE. In terms with the said provision, the manufacturer shall have the option not to avail the rates specified in the table and apply to the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, having jurisdiction over the manufacturing unit of the manufacturer for fixation of a special rate representing the actual value addition in respect to any goods, manufactured and cleared under the said Notification, if the manufacturer finds that the actual value addition in the production or manufacture of the goods is at least 115% of the rates specified in the table and for that purpose, the manufacturer may make an application in writing to the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, not later than 30th day of September in a given financial year for determination of such special rate, stating all relevant facts including the proportion in which the material or components are used in the production or manufacture of goods. To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere shall be refund of excise duty which are manufactured on paper. Therefore, it can be said that the object of the subsequent notifications/industrial policies was the prevention policies, the only rationalize the quantum of exemption and proposing rate of refund on the total duty payable on the genuine manufactured goods. At the time when the earlier notifications were issued, the Government did not visualize that such a modus operandi would be followed by the unscrupulous manufacturers who indulge in different types of tax evasion tactics. It is only by experience and on analysis of cases detected by excise department that the Government came to know about such tax evasion tactics being followed by the unscrupulous manufacturers which prompted the Government to come out with the subsequent notifications which, as observed herein above, was to clarify the refund mechanism so as to provide that excise duty refund would be allowed only to the extent of duty payable on actual value addition made by the manufacturer undertaking manufacturing activities in the areas concerned. The entire genesis of the policy manifesting the intention of the Government to grant excise duty exemption/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent notifications/industrial policies are hit by the doctrine of promissory estoppels. The respective High Courts have committed grave error in holding that the subsequent notifications/industrial polices impugned before the respective High Courts were hit by the doctrine of promissory estoppels. As observed and held herein above, the subsequent notifications/industrial policies which were impugned before the respective High Courts can be said to be clarificatory in nature and the same have been issued in larger public interest and in the interest of the Revenue, the same can be made applicable retrospectively, otherwise the object and purpose and the intention of the Government to provide excise duty exemption only in aspect of genuine manufacturing activities carried out in the areas concerned shall be frustrated. As the subsequent notifications/industrial policies are "to explain" the earlier notifications/industrial polices, it would be without object unless construed retrospectively. The subsequent notifications impugned before the respective High Courts as such provide the manner and method of calculating the amount of refund of excise duty paid on actual manufacturing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not manufactured at all. The Supreme Court had further observed that the purpose of the original notifications/incentives schemes were being frustrated by such unscrupulous manufacturer who had indulged in different types of tax evasion tactics. The subsequent notifications/industrial policies had been issued allowing refund of excise duty only to the extent of duty payable on actual value additions made by the manufacturers undertaking manufacturing activities in those areas which is absolutely in consonance with the incentives scheme and the intention of the Government to provide the excise duty exemption only in respect to genuine manufacturing activities carried out in those areas. The said observations made by the Supreme Court in the above quoted Paragraphs throws further light into the option so given vide Sub-Paragraph (1) of Paragarph 3 of the Notification No.38/2008-CE whereby the Notification No.20/2007-CE was amended in as much as the manufacturing assessee has been granted an option either to get refund in terms with the table specified in Clause 2A or opt for the special rate representing the actual value addition. Paragraph Nos. 24 and 25 stipulates that the notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icies and it was also clarified that the authorities shall decide on the basis of the subsequent notification/industrial policies in accordance with law and on merits. 24. The above observations so made by this Court is based upon a literal reading of Paragraph 26 of the judgment of the Supreme Court in V.V.F.Ltd.(supra) and also on the basis till 22/4/2020 the judgment and order dated 20/11/2014 passed in Writ Appeal No. 243/2009 whereby the Notifications Nos. 20/2008-CE and 38/2008-CE were quashed but not wiped out from existence till the date of the said judgment passed by the Supreme Court and as such with effect from 22/4/2020 the necessity arose for compliance with the requirements of the impugned notifications No. 20/2008-CE and 38/2008-CE. The Supreme Court had only stayed the judgment passed by the Division Bench of this Court on 7/12/2015. The effect of a stay of a judgment is well settled by a judgment of the Supreme Court in the case of Sri Chamundi Mopeds Ltd Vs. Church of South India Trust Association, CSI Cinod Secretariat Madras reported in (1992) 3 SCC 1 wherein the Supreme Court observed at Paragraph 10 the difference between a stay of an order and quashing of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intended to avail the special rate ought to file its application within the specific time frame and as such, the Petitioner was not entitled to do so now. It was also observed that the Act of 2020 or the Supreme Court's order in respect to the Suo Moto Writ Petition No. 3/2020 cannot be applied to the facts of the instant case. A perusal of the impugned order shows that on the ground of the stay of the judgment and order dated 20/11/2014 and taking into account that the stay of the order dated 20/11/2014 had wiped out the judgment and order dated 20/11/2014, the Respondent Authority had come to a finding that the application so filed by the Petitioner was barred by limitation. The said Respondent/Adjudicating Authority did not go into the question as regards the impact of the Act of 2020 as well as the orders passed by the Supreme Court in the Suo Moto Writ Petition No. 3/2020 on the ground that the time limit for filing the application for fixation of special rate did not fall during the period as mentioned in the order dated 23/3/2020 or the period mentioned in the Ordinance No. 2/2020 which subsequently became the Act of 2020. This approach of the Respondent/Adjudicating Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a determination of such rate, the same would have remained ineffective and unimplemented till the Supreme Court had finally decided the issue which was done as per the judgment dated 20.4.2020 in V.V. F. Ltd.(supra) and further the relevance of such determination would again depend on the outcome of an appeal that was pending before the Supreme Court. It was also observed that the Petitioner therein would not be prevented from claiming their legal right for fixation of a special rate to value addition to the manufactured goods merely because such applications was not made within 30th day of September of that given financial year to which the claim for fixation of the said rate pertains to. Paragraph 16,17 and 18 of the said judgment is quoted herein below :- "16. 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 on 20.04.2020, 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose of payment of the excise duty, the application for such request was made within a period of one month, which is on 18.05.2020. From such point of view, 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." 28. On a specific query being made to the counsel for the GST Department as to whether any challenge has been made to the judgment rendered by the Coordinate Bench in Jothy Labs Ltd.(Supra), the learned counsel for the GST Department submits that to his knowledge no such challenge has been made to the said judgment. Consequently the observations made to the effect that 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 a situation where process of making such application would be a never ending effect is binding upon this Court. 29. The lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all that can reasonably be expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the "essence" or the "substance" of the requirements. Like the concept of "reasonableness", the acceptance or otherwise of a plea of "substantial compliance" depends upon the facts and circumstances of each case and the purpose and object to be achieved and the context of the prerequisites which are essential to achieve the object and purpose of the rule or the regulation. Such a defence cannot be pleaded if a clear statutory prerequisite which effectuates the object and the purpose of the statute has not been met. Certainly, it means that the Court should determine whether the statute has been followed sufficiently so as to carry out the intent for which the statute was enacted and not a mirror image type of strict compliance. Substantial compliance means "actual compliance in respect to the substance essential to every reasonable objective of the statute" and the Court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derly conduct of business, they may be fulfilled by substantial, if not strict compliance. In the instant case, the Petitioner pursuant to the judgment of the Supreme Court in V.V.S. Ltd.(supra) had filed its application for special rate. Filing of the application was the substance/essence in terms with the exemption notification but the filing within the period from 30th day of September of a financial year which obviously elapsed during the pendency of the proceedings before the Supreme Court within which period the Petitioner could not have been reasonably be expected to file the said application cannot be described as the essence or the substance of the requirement. 31. It is also relevant to take note of another aspect of the matter. The judgment and order passed in V.V. F. Ltd.(supra) was delivered on 22/4/2020 when the entire country was under a national lockdown. On 23/3/2020, the Supreme Court in Suo Moto W.P.(C) No. 3/2020 directed extension of the period of limitation in all proceedings before the Court and Tribunals w.e.f. 15/3/2020 until further orders. Subsequent thereto vide an order dated 8/3/2021, the period from 15/3/2021 till 14/3/2021 as regards computation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e would apply. It also needs to be taken note of that the High Court of the Judicature at Madras in M/S GNC Infra LLP Vs. Assistant Commissioner (Circle) in W.P.(C) Nos. 18165 and 18168/2021 by a judgment and order dated 28/9/2021 as well as the High Court of the Judicature at Bombay in Writ Petition (L) No. 1275/2011 in the case of Saiher of Supply Chain Consulting Ltd. Vs. Union of India and Ors. by judgment and order dated 10/1/2022 on the basis of the order passed by the Supreme Court in Suo Moto Writ Petition No. 3/2020 set aside and quashed the orders of the rejection of the applications for refund on the ground of limitation by the authority under the GST. 32. At this stage, it would be further relevant to mention that vide an order dated 10th of January, 2022, the Supreme Court had again restored the order dated 23/3/2020 and in continuation of the subsequent orders dated 8/3/2021, 27/4/2021 and 23/9/2021, it was directed that the period from 15/3/2020 till 28/2/2022 shall stand excluded for the purpose of limitation as may be prescribed under any general or special laws in respect to judicial or quasi judicial proceedings. It was further observed that where the limitation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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