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TMI Blog1989 (4) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... ted its Managing Director. According to the petitioners, on the representation, assurances and promises made by the respondents, the cement manufactured by the petitioner Company's mini Cement plant is entitled to rebate in the payment of excise duty upto 50 per cent for a period of five years from the commencement of its production. As the mini cement plant has commenced its production from 1-2-1985, the company is entitled to the rebate in excise duty upto January, 1990. However, the respondents have arbitrarily restricted the grant of the said rebate to the period upto 31-3-1984 by a notification issued in May, 1979. Against the said notification all the manufacturers of cement through mini cement plants throughout the country made representations to the respondents. The Government of India made a statement in the Parliament in December, 1981 that the mini cement plants in the country have been exempted from the operation of distribution control under the cement Control Order 1967 and a rebate in the payment of excise duty upto 50 per cent from the date of commencement of the production has been provided to the mini cement plants. By this public statement solemnly made in Parlia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asures considered by the Government of India for achieving a rapid increase in production of cement was the establishment of a large number of mini cement plants. Accordingly, in or about the year 1978, two working groups were set up by the Government of India for making recommendations in this behalf. One of the working groups was set up for considering the incentives to the mini cement plants. One of the recommendations of the said working group was exempting the mini cement plants from the operation of distribuation control under the cement Control Order, 1967 and by providing a rebate in the payment of excise duty upto 50 per cent. The Government of India considered the report of the working group and took a decision to encourage expeditious establishment of mini cement plants in the country. Accordingly, a Press Note dated 4-1-1979 was issued by the Government of India in the Ministry of Industry (Department of Industrial Development). Relevent dicisions Nos. (iv), (v), (vii) and (ix) taken by the Government of India are as under :- "(iv) The ex-works price of cement produced by the mini cement plants would be the same as the price admissible to new large sized plants viz. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relief against the respondents on the ground of the representations, promise and assurances made by them, acting on which the petitioners established the present mini cement plant. 7. The petitioners further aver that in 1981 again the Government of India reiterated its position by making a statement in the Parliament on 23-12-1981 through the Minister of Industry as under: "One of the main conclusion of the working group on incentives of Mini Cement Plants was that the cost of production in the case of mini cement plants works out of about Rs. 50/- to Rs. 60/- per tonne over the price per tonne admissible to a new large cement plant. The additional cost is neutralised by exempting mini cement plants from the operation of distribution control order, the Cement Control Order 1967 and by providing a rebate in the payment of excise duty upto 50 per cent for a period of five years from the date of commencement of production." A reference has also been made in the petition that acting on the assurances given by the respondents, the Company's prospectus also stated inter alia that the Company is exempted from distribution control under Cement Control Order and eligible for exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. The petitioners now actually want to avail the benefit of rebate in the central excise duty on the basis of certain persumptions and assumptions. The petitioners did not correctly interpret the notification exempting the mini cement plants from the payment of excise duty upto 50 per cent for a period of five years. In the Notification itself it has been clearly laid down that upto that date the rebate shall be permissible. In the Press Note also it was clearly stated that the rebate shall be allowed in the payment of Central Excise duty upto 50 per cent for a period of 5 years. Now, the petitioners want to add the words 'from the date of commencement of the production' which neither appeared in the Press Note nor in the Notification allowing the rebate to the mini cement plants. Regarding the speech of the Minister as stated by the petitioners it has been averred that it is not a subordinate or delegated legislation by which exemption can be granted. An exemption/rebate can be granted only by Notification. 10. The petitioner Company had applied for the issuance of the Central Excise Licence on 18-10-1984 and the said licence was issued to the petitioner on 29-10-1984. As su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully applicable to the facts of the instant case and, therefore, the Government is bound by its commitment as made in the Press Note declaring incentives to the mini cement plants and reiterating the same policy in the Parliament in reply to an unstarred question. Therefore, the Union of India being bound by the promise which it had made through the Press Note and in the Parliament leading the petitioners to spend huge amounts on the installation of their mini plant producing cement. As such, the petitioners having altered their position on the promise made by Union of India, now the Union of India cannot be heard to say that no such policy was formulated to grant rebate in the tax from the date of the production in the plant for a period of five years or that in view of the Notification No. 194 of 79 dated 30th May, 1979 the petitioners are not entitled for any rebate after 31-3-1984. 14. On the other hand Shri Nema, learned standing counsel for the Union of India, vehemently argued that the policy formulated by the Government of India nowhere laid down that the rebate in the tax shall be available to the mini cement plants for a period of five years from the date of production. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mport Trade Policy was general in terms and dealt with the grant of licences for import of goods and related matters, that it was statutory in character. The Imports and Exports (Control) Act, 1947, authorised the Central Government to make provisions prohibiting, restricting or otherwise controlling import, export, carriage etc. of the goods and by the Imports (Control) Order, 1955, dated December 7, 1955, and by the provisions which were sought to be repealed, restrictions were already imposed. The order was clearly legislative in character. The Import Trade Policy was evolved to facilitate the mechanism of the Act and the orders issued thereunder. Even granting that the Import Trade Policy notifications were issued in exercise of the power under Section 3 of the Imports and Exports (Control) Act, 1947, the order authorised the making of executive or administrative instructions as well as legislative directions. It is not the form of the order, the method of its publication or the source of its authority, but its substance, which determines its true character. Granting that it was executive in character the Courts have the power in appropriate cases to compel performance of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to facilitate the mechanism of the Act and the orders were thus issued thereunder. Even if the order may be treated as an executive order, then also the Courts have power, in appropriate cases, to compel performance of the obligations imposed by the Scheme upon the Departmental Authorities. If a citizen has acted to his detriment, relying on a Government policy, then the Government has to honour its commitment. In such a case the Court is bound to protect the rights of the aggrieved citizen. The Union Government and its officers are not entitled merely on their whims to ignore the promises made by the Government. If the executive authority dealing with a matter in relation of which a promise is made by the Government in a manner which is consonent with the basic concept of justice and fair play and if the executive does not act in accordance with the basic concept and justice and fair play, then the proceedings of the executive are open to scrutiny and rectification by the Courts. 17. In the case of M/s. Motilal Padampat Sugar Mills Co. Ltd. v. The State of Uttar Pradesh and others [AIR 1979 SC, 621] the Supreme Court has very elaborately discussed the doctrine of promissory e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould consider it inequitable to allow the promiser to go back upon his promise. In India not only has the doctrine of promissory estoppel been adopted in its fullness but it has been recognized as affording a cause of action to the person to whom the promise is made. The requirement of consideration has not been allowed to stand in the way of enforcement of such promise. The doctrine of promissory estoppel has also been applied against the Government and the defence based on executive necessity has been categorically negatived. Where the Government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is consideration for the promise and the promise is not recorded in the form of a formal contract as required by Art. 299 of the Constitution. It is elementary that in a republic governed by the rule of law, no one, howsoever high or low, is above the law. Every one is subject to the law as fully and completely as any ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry out the promise on some indefinite and undisclosed ground of necessity or expediency, nor can the Government claim to be the sole judge of its liability and repudiate it on an ex parte appraisement of the circumstances. If the Government wants to resist the liability, it will have to disclose to the Court what are the subsequent events on account of which the Government claims to be exempt from the liability and it would be for the Court to decide whether those events are such as to render it inequitable to enforce the liability against the Government. Mere claim of change of policy would not be sufficient to exonerate the Government from the liability, the Government would have to show what precisely is the changed policy and also its reason and justification so that the Court can judge for itself which way the public interest lies and what the equity of the case demands. It is only if the court is satisfied, on proper and adequate material placed by the Government, that overriding public interest requires that the Government should not be held bound by the promise but should be free to act unfettered by it, that the court would refuse to enforce the promise against the Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the factual position again addressed a letter to the Chief Secretary of the Government, and the Chief Secretary of the U.P. Government confirmed that the tax exemption shall be available for a period of three years from the date of the production. In the aforesaid circumstances, it was held that from the letters of the Director of Industries and the Chief Secretary of the U.P. Government it was clearly represented to the appellant on behalf of the Government that it shall be entitled for the sales tax exemption for a period of three years from the date of production and acting upon that representation the appellant borrowed money from various financial institutions and set up a Vanaspati factory at Kanpur. Therefore, it was held that the Government was bound to carry out the representation and exempt the appellant from sales tax for a period of three years from the date of production, because the Government was bound on the principle of promissory estoppel to make good the representation made by it. 19. Before the judgment in the M/s. M.P. Sugar Factory case (supra) was given and after the decision in the Anglo Afghan Agencies case (supra) a Bench of four Judges of the Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e doctrine of promissory estoppel is not available against the exercise of legislative functions of the State and it cannot be invoked for preventing the Government from discharging its functions under the law and when the Officer of the Government acts outside the scope of the Authority, the plea of promissory estoppel is not available to one who has acted upon these unauthorised promise. But when the officer acts within the scope of the authority under a scheme and makes a representation acting on which a citizen puts himself in a disadvantageous position, the Court is entitled to require the officer to act according to the scheme and the agreement or representation. But the officer would be justified in changing the terms of the agreement to the prejudice of the other party on special considerations such as difficult foreign exchange position or other matters which have a bearing on general interest of the State. As such, it would be open to the authority to plead and prove that there were special considerations which necessitated his not being able to comply with his obligations in public interest. 22. In another case of Bhim Singh v. State of Haryana (AIR 1980 SC, 768) it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Industries Ltd. v. Addl. Supdt. of Commercial Taxes [1984 (55) Sales Tax Cases, 380] the State Government of Bihar resolved to offer incentives to new large and medium industries for 10 years from date of starting of production. However, the gazette notification gave incentives only for a period of five years. Therefore, the petitioner wrote to the Director of Industries to confirm whether it was entitled to incentives for 10 years and the Director confirmed that the petitioner was entitled to incentives for 10 years. On the basis of that representation, the petitioner started production. But he was not given the exemption by the Government according to the resolution of the Government. Therefore, he filed a writ petition. During the pendency of the writ petition also it was confirmed by the Director of Industries that the petitioner was entitled to exemption in terms of the resolution of the Government. A Division Bench of the Patna High Court, in the circumstances held that as the Director of Industries assured the petitioner that it would get incentive according to the Government resolution dated 29th September, 1973 and even during the pendency of the petition, the Director o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a nature where the individual interest of a citizen can be subordinated to the public interest, then the court shall direct the Government to act in accordance with the promise. However, the doctrine cannot be invoked in the legislative functions or for compelling the State to do any act which is prohibited by law or which is contrary to the statutory obligation of the State. 28. Shri Rao, learned Counsel for the petitioners has placed heavy reliance on the judgment of the Supreme Court in M/s. M.P. Sugar Mill's case and Ushal Martin Industries's case. According to Shri Rao in those two cases even though in the policy intially declared by the Government there was no mention of the words 'from the date of production', still the court came to a conclusion that the petitioners were entitled to get the benefit for the number of years as declared in the policy from the date of going into production. After going through the aforesaid judgments and having given our anxious considerations, we are unable to agree with the learned counsel for the simple reason that in Usha Martin's case the petitioners had written to the Director of Industries asking whether they are entitled to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification by the Government of India, Ministry of Finance (Department of Revenue) was issued on 30th May, 1979. The Notification reads as under : GOVERNMENT OF INDIA Ministry of Finance (Department of Revenue) NOTIFICATION Central Excise G.S.R. (E) In exercise of the powers conferred by sub-rule (i) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts cement, falling under item No. 23 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) and manufactured in a mini cement plant from so much of the duty of excise as in excess of rupees thirty two and paise Fifty per metric tonne. 2. Nothing contained in this notification shall apply to: (i) Cement manufactured by a company which is registered or registerable under Section 26 of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) or to which Section 29 of the Foreign Exchange Regulation Act, 1973 (46 of 1973) is applicable; (ii) Cement manufactured in a unit operated by a large cement plant either as a separate plant or as a part of the main plaint; (iii) White cement or other varieties of cement, the price of which is not controlle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upto 50 per cent for a period of five years from the date of commencement of production. According to Shri Rao, if both the Press Note and the statement of the Honourable Minister for Industries in the Parliament are read together, they will lead to only one inference that the rebate in excise duty upto 50 per cent for a period of five years was from the date of commencement of production and not for a particular time. 31. It is true that the words, 'from the date of commencement of production' have been added in relation to the rebate in the payment of excise duty upto 50 per cent for a period of 5 years in the statement of the Minister given in the Lok Sabha. But, in our opinion, the statement so made in the Parliament by the Minister would not in any way help the case of the petitioners. As discussed earlier, the Press Note issued by the Government of India containing the policy decision of the Government in respect of the mini cement plants was in clear and unequivocal terms. It had announced an incentive of a relief of 50 per cent rebate in the excise duty for a period of five years and that decision of the Government was translated into action by issuance of a notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for holding that a promise was made in unequivocal terms to the petitioners that a rebate in the payment of excise duty to the extent of 50 per cent shall be available to the petitioners for a period of five years from the date of the production of cement in their mini cement plant. 32. During the course of the arguments, we repeatedly asked the learned Counsel appearing on behalf of the petitioners as to whether after the issuance of the Press Note and the Notification under sub-rule (i) of Rule 8 of the Central Excise Rules, did the petitioners make any enquiry from the concerned authorities pertaining to eligibility of their unit for rebate in the excise duty to the extent of 50 per cent even beyond the period of 31-3-1984? The learned Counsel has not been able to place before us any material to show that before the installation of the plant the petitioners made any attempt to approach the concerned authorities to find out whether they were eligible for the concession in the excise duty even after the expiry of the date contained in the notification. It appears that the petitioners all though have been labouring under the idea that they will get the benefit of rebate for a pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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