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TMI Blog2022 (5) TMI 1041X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. It is relevant to take note of the judgment of the Supreme Court in V.V.F. Ltd. In Paragraph No. 24, the Supreme Court held that the impugned Notifications therein including the Notification No. 20/2008-CE and 38/2008-CE were clarificatory in nature and it can be defined as an Act to remove doubts. It is in that perspective, the Supreme Court observed that the subsequent Notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 purpose of expansion of the capacity/modernization and diversification as against an increase of 33 % which was prescribed in the earlier North East Industrial Policy, 1997. As regards excise duty exemption, it was stipulated that 100% excise duty exemption will be continued, on finished products manufactured in the North Eastern Region, as was available under the North East Industrial Policy,1997. However, in the cases where the CENVAT paid on the raw materials and intermediate products going into the production of finished products(other than the products which are otherwise exempt or subject to nil rate of duty) is higher than the excise duties payable on the finished products, ways and means to refund su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication 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 jurisdiction over the manufacturing unit of the manufacturer for fixation of a special rate representing the actual value addition in respect of any goods manufactured and cleared under this notification, if the manufacturer finds that the actual value addition in the production or manufacture of the said goods is at least 115 per cent of the rate specified in the said Table and for the said 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 the 30th day of September in a financial year for determination of such special rate, stating all relevant facts including the proportion in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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 therein (The Excise Authorities) releasing to the Respondents (the writ petitioners therein) 50% of the amount due to them in terms with the judgment assailed before the Supreme Court and subject to furnishing solvent surety to the satisfaction of the jurisdictional Commissioner within four weeks of their furnishing the said security. 7. Taking a cue from the interim order passed by the Supreme Court in the Gujarat cases, an interlocutory application being registered and numbered as Misc. Case No. 1999/2012 was filed in the pending Writ Appeal No.243/2009 and the Division Bench of this Court after referring to the order of the Supreme Court dated 13/1/2012 (in the Gujarat cases) modified the earlier or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 India Vs. V.V. F. Limited reported in (2020) 20 SCC 57 The relevant directions of the Supreme Court at paragraph 26 26.1 of the said judgment being pertinent for the purpose of the instant dispute is quoted herein below : - 26. Under the circumstances, the respective High Courts have 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 are hit by the doctrine of promissory estoppel and that they are retrospective and not retroactive. Consequently, all these appeals are ALLOWED. The impugned Judgments and Orders passed by the respective High Courts, which are impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies 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 were not to be reopened. It was also clarified that pending refund applications shall be decided as per the subsequent notifications/industrial policies which were impugned before the respective High Courts and they shall be decided in accordance with law and on merits as per the subsequent notifications/industrial policies impugned before the respective High Courts. In order words, for the North Eastern Region, the pending refund applications were to be processed in terms with Notification No. 20/2008-CE dated 27/3/2008 and Notification No. 38/2008-CE dated 10/6/2008 respectively. 11. In the backdrop of the above, it is relevant to take note of that vide a Communication dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking 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 undertaking that the application for fixing a special rate including the ad-on would be filed within a period of 1 week from 15/3/2021 and this Court on the basis of the said undertaking observed that, if such an application is filed before the Assistant Commissioner, GST Department, Dibrugarh, the authorities including the Principal Commissioner of GST may pass any order as may be advisable under the law. It was also clarified that by requiring the Petitioner to make a representation and the Respondent to pass a reasoned order thereon this Court was neither making any observation on the merit of the claim of the Petitioner nor on the maintainability of the representation and it wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral 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- Paragraph (1) of Paragraph No. 3 of the Notification No. 20/2007-CE dated 25/4/2007 after amendment by the Notification Nos. 20/2008-CE and 38/2008-CE stipulates that for each financial year the manufacturer has to file an application before 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 of the financial year for determination of such special rate and this period as per the first proviso, the Commissioner of Central Excise or the Commissioner of Customs and Central Excise could be extended by a further period of 30 days upon being satisfied that the manufacturer was prevented ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44 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 this Court in the instant writ petition. 17. I have heard Mr. D. Sahu, the learned counsel for the Petitioner as well as Mr. S. C. Keyal, the learned counsel appearing on behalf of the GST Department. 18. Mr. Sahu submits that the order impugned in the instant proceedings i.e. the order dated 5/8/2021 has been passed without proper application of mind and without taking into consideration that during the period when the Petitioner ought to have filed the application i.e. by 30th day of September of each financial year, the Notification No. 20/2008-CE and Notification No. 38/2008-CE dated 20/7/2008 and 10/6/2008 respectively were pending adjudication before v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs 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 2020. 19. Mr. D. Sahu, the learned counsel for the petitioner further referring to the order passed by the Supreme Court in the Suo Motto Writ Petition No. 3/2020, whereby the Supreme Court had directed extension of the period of limitation in all proceedings before the Courts, Tribunals and the freezing of the limitation period vide the order dated 10/1/2022 was continued beyond 28/2/2022 for a period of 90 days from 15/3/2020. He therefore submits that taking into consideration that the petitioner had filed the application on 18/3/2021 the order dated 5/8/2021 ought to be interfered with thereby directing the Respondent No. 2 to decide the applications fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 understand the reason behind the said amendment, whereby the option was granted to the manufacturer, it would be relevant to take note of the judgment of the Supreme Court in V.V.F. Ltd(supra). In Paragraph No. 24, the Supreme Court held that the impugned Notifications therein including the Notification No. 20/2008-CE and 38/2008-CE were clarificatory in nature and it can be defined as an Act to remove doubts. It is in that perspective, the Supreme Court observed that the subsequent Notification/industrial policies cannot be said to have taken away the benefits which were accrued/granted under the earlier Notifications. In Paragraph 24 . 1 to 24.1.4 the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w 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/refund of excise duty paid was to provide such exemption only to actual value addition made in the respective areas. As it was found that there was misuse of excise duty exemption it was considered expedient in the public interest and with a laudable object of having genuine industrialization in backward areas or the areas concerned, the subsequent notifications/industrial policies have been issued by the Government. Therefore, the subsequent notifications/industrial polices impugned before the respective High Courts were in the public interest and even issued after thorough analysis of tax evasion and even after receipt of the reports. The earlier noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 goods. The notification impugned before the respective High Courts can be said to be providing mode on determination of the refund of excise duty to achieve the object and purpose providing incentive/exemption. As observed herein above, they do not take away any vested right under the earlier notifications. The subsequent notifications therefore, are clarifactory in nature since it declares the refund of excise duty paid genuinely and paid on actual manufacturing of goods and not on the duty paid on the goods manufactured only on paper and without undertaking any manufacturing activities of such goods. 25. In view of the above and for the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturing 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 notifications impugned which were the Notification Nos. 20/2008-CE and 38/2008-CE were clarificatory in nature and the same is to be applied retrospectively. In the backdrop of the same, it would be relevant to understand the directions of the Supreme Court in Paragraph 26 of the judgment in V.V.P. Ltd(supra) wherein specifically the Supreme Court dealt with the question as to how the refund were to be dealt with. 23. Paragraph 26 has already been quoted herein above. A reading of the said Paragraph No. 26 for the purpose of refund applications shows that the Supreme Court had clarified that the judgment shall not affect the amount of excise dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 order. The relevant portion of the Paragraph 10 is quoted herein below:- 10. While considering the effect of an interim order staying the operation of the order under challenge, a distinction has to be made between quashing of an order and stay of operation of an order. Quashing of an order results in the restoration of the position as it stood on the date of the passing of the order which has been quashed. The stay of operation of an order does not, however, lead to such a result. It only means that the order which has been stayed would not be operative from the date of the passing of the stay order and it does not mean that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led 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 Authority in rejecting the application for special rate on the ground of being barred by limitation, in the opinion of this Court, is not in consonance to the observations of the Supreme Court in Paragraph No. 26 of the judgment in the case of V.V.F. Ltd.(supra) wherein the Supreme Court had clarified that all pending refund applications shall be decided as per the subsequent notifications/industrial policies which were impugned before the respective High Courts and they shall be decided in accordance with law and on merits as per the subsequent notifications/industrial policies. This Court further observes that the impugned order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 learned counsel for the GST Department upon being asked by this Court as to whether the directions given in Jothy Labs Ltd.(supra) can be applied to the case of the Petitioner, he specifically submitted that had the Petitioner submitted his application prior to September, 2020 his application could have been considered for special rate as has been done in the case of Jyothy Labs (supra) as they filed their application prior to September,2020. This Court finds it difficult to appreciate the said stand of the GST Department in as much as the learned counsel for the GST Department failed to place on record any material as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 33. A fiscal statute generally seeks to preserve the need to comply strictly with regulatory requirements that are important, especially when a party seeks the benefits of an exemption clause that are important. Substantial compliance with an enactment is insisted, where mandatory and directory requirements are lumped together, for in such a case, if mandatory requirements are complied with, it will be proper to say that the enactment has been substantially complied with notwithstanding the non-compliance of directory requirements. In cases where substantial compliance has been found, there has been actual compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 limitation in any suit, application or proceedings was directed to stand excluded and an additional limitation of 90 days or such longer period from 15/3/2021 to all persons. Thereafter vide another order dated 27/4/2021, the Supreme Court restored the order dated 23/3/2020 and in continuation of the order dated 8/3/2021 directed the period of limitation as prescribed in general or special laws in respect to all judicial or quasi judicial proceedings whether condonable or not shall extended till further orders. It was also clarified that from the period from 14th March,2021 till further orders shall als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 would have expired during the period between 15/3/2020 till 28/2/2022, notwithstanding the actual balance period of limitation remaining all persons shall have the limitation period of 90 days from 1/3/2022. 33. In view of the above, taking into consideration the judgment of the Supreme Court in the case of V.V. F. Ltd. (supra), the judgment of this Court in Joythy Labs Ltd. (supra), the various orders passed by the Supreme Court in Suo Moto Writ Petition No. 3/2020 and the benefits thereof being given to the tax payers by the GST council, the Circular so issued from time to time and also the judg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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