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TMI Blog1986 (8) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... Government and on that basis the petitioner Company acted and made an investment then the Government cannot be allowed to revoke this excise exemption because they are estopped from doing so because of promissory estoppal. Secondly it has been submitted that once a Notification has been issued then same cannot be retrospectively withdrawn so as to divest the vested right created under the Notification. 3. Mr. Chandrashekhran, appearing for the Union of India submitted that there is no question of estoppal applicable in the matter because the power of exemption was exercised by the Government in the exercise of its legislative function and same have been revoked therefore there cannot be any estoppal against the legislative Act. The learned Counsel further submits that the Notification specially canceling the Notification No. 88/84 dated 6th April, 1984 is not applicable to the petitioner as it has been decided by the authorities and for which a writ petition is already pending before the Delhi High Court. The learned Counsel further submits that since the Notification No. 88/84 dated 6th April, 1984 is not applicable to the petitioner, therefore we need not go into the question o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty relief was given in the form of exemption from excise duty to the extent of 25% of the duty leviable on clearances in excess of base clearance with reference to base periods. This scheme was discontinued on 14th July, 1978, and was replaced by a new scheme. The main features of the new scheme were as follows : (i) Tyre units were divided into two categories namely, those established before 1st April, 1976, and those established after that date. For the pre-1976 units, excise duty relief at 12.5% of the duty leviable was provided, while for the post - 1976 units, the relief was at 25%. (ii) The excise relief was admissible upto a level of 75% of the licenced capacity. Only those tyre units were eligible for excise relief whose licensed or installed capacity did not exceed 5 lakh tyres and tubes. The new scheme introduced in July, 1978 was continued upto March, 1980, but was not extended during the year 1980-81. The whole question of giving excise relief to tyre industries has been reviewed. It is felt that it is necessary to formulate an excise duty relief scheme for tyre units as a means to neutralise the comparatively higher capital cost of the newer plants as well as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n No. 88/84-CE dated 6.4.84 as applicable to tyres falling under Tariff Item 16 of the C.E.T." By this notification new tyre factories which commenced production between 1-4-1976 and 31-3-1984 were granted an exemption from 25% of the duty of excise already payable on tyres. This exemption was available for a period of five years from the first clearances and was subject to a maximum of 30% of the investment made in plant and machinery by the said units. The Notification granted relief for a specified period of 5 years from the date of first clearance. In pursuance of this exemption by the Notification No. 107/81.dated 24th April, 1981 the petitioner company encouraged to set up a new company for manufacture of tyres. The petitioner company made huge investment approximately of Rs. 49.03 crores on plant and machinery. After this notification the petitioner company also made a loan application to the Financial Institutions of Central Government for a long term learn for financing the new factory. It also took necessary steps towards the establishment of factory and incurred investment of approximately Rs. 32 crores of the loan granted by the financial institutions. This loan is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in force for the time being : Provided that such tyres are manufactured in a factory which is a new industrial undertaking licensed under Section 11 of the Industries (Development and Regulation) Act, 1951 (65 of 1951) and from which the clearances of tyres are effected for the first time during the period commencing on the 1st day of April, 1976, and ending with the 31st day of March, 1984: Provided further that the exemption contained in this notification shall not apply to clearances of tyres effected after the expiry of a period of seven years from the date of the first clearance of tyres from any factory: Provided also that the exemption contained in this notification shall apply to first clearances of tyres for home consumption during any financial year only upto a total quantity not exceeding seventy-five per cent. Of the initial annual licensed capacity of tyres as certified by the Development Officer of the Directorate-General of Technical Development: Provided also that the exemption contained in this notification shall not apply to such of the clearances of tyres as are in excess of the clearances of tyres in respect of which the aggregate of the amount of ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-Central Excises, as the case may be, to the assessable value of tyres as approved by the proper officer for the purposes of this notification or the aforesaid notification No. 198/76-Central Excises, or No. 142/78-Central Excises, or No. 107/81-Central Excises, as the case may be, respectively. Explanation V. - The expression "assessable value" in Explanation IV means the value as determined in accordance with the provisions of section 4 of the said Act. Explanation VI. - For the purposes of computing the sum-total of the value of the capital investment made on plant and machinery for the manufacture of tyres, the face value of the capital investment at the time when such investment was made only shall be taken into account, but the value of the investment made on plant and machinery which have been removed permanently from the said factory or rendered unfit for use prior to the date of the first clearance of tyres, shall be excluded. Sd/- (V. LAKSHMI KUMARAN) UNDER SECRETARY TO THE GOVERNMENT OF INDIA F.No. 331/1/82-TRU". 7. By the Notification No. 267/82-CE dated 13th November, 1982 the Central Government rescinded the Notification No. 105/81 dated 24th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 13th November, 1982. Sd/- (K.S. VENKATAGIRI) UNDER SECRETARY TO THE GOVERNMENT OF INDIA F.No-331/7/82-TRU." "TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (i) OF THE GAZETTE OF INDIA EXTRAORDINARY DATED THE 6TH APRIL, 1984 17TH CHAITRA, 1906 (SAKA) GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) New Delhi , the 6th April, 1984 . 17th Chaitra, 1906 (Saka) NOTIFICATION No. 88/84-Central Excises GSR. In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts tyres (excluding tubes and flaps) falling under item No.76 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from so much of the duty of excise leviable thereon under Section 3 of the said Act as is in excess of the amount calculated at the rate of eighty per cent of the rate of duty leviable on such tyres under the said First Schedule, read with any notification issued under sub-rule (1) of rule 8 of the said rules and in force for the time being : Provided that such tyres are manufactured in a factory which is an industrial undertaking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are manufactured in a factory which is an industrial undertaking licensed under Section 13 of the Industries (Development and Regulation) Act, 1951 (65 of 1951) (hereinafter referred to in this proviso as such factory), the exemption contained in this notification shall not apply to such of the clearances of tyres - (i) as are in excess of the clearances of tyres in respect of which the aggregate of the amount of exemption under this notification and the amount of exemption, if any,' availed in respect of clearances of tyres, under all or any of the notifications of the Government of India in the Department of Revenue and Banking No. 198/76-Central Excises, dated the 16th June, 1976, or in the Ministry of Finance (Department of Revenue) No. 142/78-Central Excises, dated the 14th July, 1978 or in the Ministry of Finance (Department of Revenue) No. 107/81-Central Excises, dated the 24th April, 1981, or in the Ministry of Finance (Department of Revenue) No.268/82-Central Excises, dated the 13th November, 1982, equals thirty per cent of the sum-total of the value of capital investment made on plant and machinery in such factory for the manufacture of tyres prior to the date of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hargeable under the Central Excises and Salt Act, 1944 (1 of 1944) not with reference to value, shall be the amount calculated by applying such rate, but for this notification. Explanation IV. - The expression "assessable value" in Explanation III means the value as determined in accordance with the provisions of Section 4 of the Central Excises and Salt Act, 1944 (1 of 1944). Explanation V. - For the purposes of computing the sum-total of the value of the capital investment made on plant and machinery for the manufacture of tyres, the face value of the capital investment at the time when such investment was made only shall be taken into account, but the value of the investment made on plant and machinery which have been removed permanently or rendered unfit for use shall be excluded. 2. Nothing contained in this notification shall apply to tyres cleared by or on behalf of a manufacturer by whom or on whose behalf clearance of tyres from any one or more factories was effected for the first time before the 1st day of April, 1976. Sd/- (K.S. VENKATAGIRI) UNDER SECRETARY TO THE GOVERNMENT OF INDIA F.N0.331/7/82-TRU." 9. On account of the original Notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r strenuously urged that on account of the Notification No. 107/81 dated April 24, 1981 and Notification. No. 87/84 and 88/84-CE dated 6th April, 1984 the petitioner company has acted on the positive assertion of Central Government and made huge investment in establishing tyre factory, therefore the respondents cannot be allowed to withdraw this excise relief, as it is going to operate harshly, they are estopped on the basis of principles of promissory estoppel. I have already narrated the fact that after the Notification dated 107/81 the petitioner company took the exercise of expansion their unit in the hope that the excise relief will be given. After having undertaken all the exercise in the hope of getting the excise relief it is not fair for the Central Government to revoke the same and leave the citizen high and dry. Mr. Desai, learned Counsel for the petitioner in this connection placed for my consideration the latest judgment of their Lordships of the Supreme Court where they have laid down the principles of promissory estoppel and urged that present case is squarely covered by this case. I need not go into judicial history of the principles of promissory estoppel as thos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, they could have referred Jit Ram case to a larger Bench." 12. In this background it would be relevant to mention here that Motilal Sugar Mills Case - 1979 (2) S.C.C. 109 made a significant development in law relating to doctrine of the promissory estoppel. It was debated that to what extent the doctrine of promissory estoppel is applicable against the Government. It was held in that case as under :- "Public bodies are as much bound as private individuals to carry out representations of facts and promises made by them, relying on which other persons have altered their position to their prejudice." Thus, after discussing all the cases on the subject it was laid down in Motilal Sugar Mills case (Supra) the doctrine of promissory estoppel is applicable to all executive actions of the Government. This was in order to avoid injustice being perpetrated to the other party. The defence of executive necessity by the Government was negatived and it was laid down that the Government is not released from its obligation. It was held in the Motilal Sugar Mills case (supra) that party acted on the basis of the promise/representation made by the Government and altered its position is entit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s citizen that certain excise concession will be given to the units which commenced the production within the time stipulated in the notifications. In pursuance of this the petitioner company had made all its efforts and obtained the licence, make arrangement for huge sum of money in establishing the factory and kept the schedule of its production so as to come within the four corners of both the notifications i.e. 107/81 and 88/84-CE. Thus having acted positively in response to the exemption of excise concession it is not open for the Government to revoke the excise relief suddenly to the prejudice of citizen. Such action of the Government is absolutely illegal because of the principles of promissory estoppel. 16. There is although more reason that if Government is allowed to revoke its promises made so lightly then people will lose faith in the institution. In democrate set of our country it is not permissible that bona fide promises made by Government should be observed in breach. It is irrelevant whether it is petitioner company or poor citizen if promises made are breached then people will lose faith and it is not compatible with democratic social set up. 17. Learned Couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own that excise exemption notifications are legislative in character or not. 20. So far as the case of Bikram Industry v. State of Jammu and Kashmir - 1985 S.T.C. 25 is concerned, suffice it to say that in this case the case of Godfrey Philips India Ltd. (supra) was not placed for :consideration. The Hon'ble Judges had no occasion to go through the latest decision of their Lordships of the Supreme Court Godfrey Philips (supra) and the Hon'ble Court decided the matter on the basis of Jit Ram's case (supra). The principles enunciated in Godfrey Philips (supra) were not placed or consideration in the case of Bikram Industry's case (supra), therefore, his case cannot provide any assistance to the respondents. 21. Now, the question is whether the Notification issued by the Central Government in exercise of the powers under rule 8 of the Excise Rules whether such notifications can be equated with the legislative function or not. My answer to this question is in negative. The clear distinction as to be borne in mind between primary legislation and sub-ordinate legislation and if the legislature passed any Act or laying down any law which is contrary to any earlier notifications then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f promissory estoppel is fully applicable and the respondent cannot revoke the benefits which have been given by the notification being 88/84. Therefore, the Notification being No. 159/85-CE is bad and in violation of the principles of promissory estoppel and same deserves to be quashed. It will be open for the respondent that if the Notification No. 88/84 does not benefit the petitioner then this judgment will not make it beneficial to the petitioner, as I am not called upon to decide whether the Notification No. 88/84 is applicable to the petitioner or not or is applicable to some extent. 25. Mr. Desai, learned Counsel for the petitioner very candidly submitted before me that since this issue is subject matter before the Delhi High Court therefore he does not want to argue on this issue at all. Thus, this submission of Mr. Chandrashekharan also does not change the position. 26. It was contended by Mr. Desai that the notification being No. 159/85, it will have a retrospective operation and it will divest or withdraw the benefits which have been confirmed on the petitioner by virtue of the earlier notification No.88/8^, I am not going into this question for the reason . that si ..... X X X X Extracts X X X X X X X X Extracts X X X X
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