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TMI Blog2005 (3) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, it will be impermissible being beyond the scope of the powers conferred upon it. We, therefore, have to reject the submission on behalf of the petitioner that as power has been conferred upon high-ranking authorities to issue the certificates, it must be assumed that the conditions specified in the Exemption Notification have been satisfied. Once it is held, as it must be that the petitioner does not qualify for exemption under Notification No. 108/95, the position in law becomes clear that a certificate issued in terms of para (c)(ii) by the implementing authority can be of no avail or assistance to the petitioner claiming exemption. The implementing authority (A.P. TRANSCO) is only empowered or authorised to issue a certificate, as already noticed, if the project being implementing is financed by an international organisation. A certificate in terms of para (c)(ii) by the implementing authority cannot by itself confer exemption as it is not the implementing authority that is empowered to grant exemption. The implementing authority is merely empowered to issue certificates certifying the facts to the extent specified in para (c)(ii). It is not the certificate by the implement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation cannot be defeated by resort to the provisions of Act 46 of 1947 which have not been incorporated. The petitioner having failed to establish its entitlement to the exemption in terms of the Exemption Notification, cannot press into effect the doctrine of promissory estoppel against the Central Government or the Excise authorities. The liability to pay tax arising out of the cancellation of incentives, it was directed, would start from the date on which the orders of cancellation became effective. Similar directions, as was pleaded, cannot be issued in the case on hand. Therein, the matter was with respect to sales tax, a subject within the domain of the State of A.P. Pursuant to the policy framed by the State of A.P. (Target 2000 Scheme) being the representation held out by the State, eligibility certificates having been issued for availing of exemption from sales tax/deferment of tax, all such acts were within the province of the State of A.P. In the case on hand, as already noticed supra, the case is one relating to payment of excise duty within the province of the Central Government. There being no such representation made by the Central Government for granting exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of enquiry in the case on hand, are extracted hereunder. 2.1.1. Excise Duty: Excise Duty is not payable by A.P. TRANSCO. However this is reimbursable by Government of India as supplementary cash assistance and you should claim the cash assistance directly from Government of India. 2.2. Deemed Export Benefits : You are solely responsible for obtaining any deemed export benefits which you have considered in your offer. In case of failure to receive any such benefits for any reason including statutory variation or change in the policy of Government of India or JBIC, Japan during performance of the contract, A.P. TRANSCO will not compensate. Refer clause 15.2.A(e) in Section ITD of Volume-I. 4. Clause 15.2A(e) of the Tender documents referred to in Clause 2.2 reads as under. (i) Clause 15.2A(e), ITB, Vol.-I of bidding documents : Bidders offering goods from within the purchaser's country shall consider their bid price taking into account deemed export benefits, if any. The details regarding availability of such benefits may please be obtained from the address given below. Director General (Foreign Trade), Government of India, Udyog Bhavan, NEW DELHI-110001. The bidder must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Andhra Pradesh. The certificate is being issued in pursuance of the requirement under Govt. of India (Ministry of Finance, Department of Revenue) notification No. 108/95, dated 28-08-1995 amended vide Notification No. 7/98-C.E., dated 2-6-1998, No. 33/98, dated 13-10-1998 and 4/99-C.E. dated 11-2-1999 for exemption of Central Excise duty or additional excise duty on the goods covered by the above referred contract . Similar certificates were issued by A.P. TRANSCO with respect to second and third purchase orders. Copies of such certificates have been filed as Annexures P6 and P7. 6. The petitioner, on the strength of the certificates issued by A.P. TRANSCO claimed exemption from excise duty and it is the case of the petitioner that the Department of Central Excise after being satisfied of the fulfilment of the conditions in the Exemption Notification No. 108/95 had acted upon such certificates and granted relief vide their letters dated 8-1-2001 and 14-3-2001 (filed with the additional affidavit affirmed by the petitioner). It is to be noticed that in his letter dated 8-10-2001, the Deputy Commissioner, Central Excise, Division III stated that the permission is granted in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and issuing of summons. Various other contentions have also been raised assailing the impugned orders of cancellation of the exemption certificates, reference to which would be made at appropriate stage. 8. As certificates were issued purportedly under para (c)(ii) of the Exemption Notification No. 108/95 by the A.P. TRANSCO, the question that would arise for consideration is whether the petitioner is eligible for exemption from excise duty in terms of the said Notification No. 108 of 1995. The answer to that question is dependant upon the construction to be placed upon Notification No. 108/95 and fulfilment of the conditions specified therein. A further question that would require consideration is whether A.P. TRANSCO is authorized/empowered to issue the certificates, which it did and which were subsequently cancelled by it. The validity of the action of A.P. TRANSCO in cancelling the certificates is thus dependent upon the answers to the said questions. 9. It would be appropriate at this juncture to extract the relevant portion of the Exemption Notification No. 108/95, dated 28-8-1995. Exemption to goods supplied to UN or an International Organisation.- In exercise of the pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... implementation by the concerned State Government. Explanation. - For the purposes of this notification - (a) international organization means an international organisation to which the Central Government has declared, in pursuance of section 3 of the United Nations (Privileges and Immunities) Act, 1947, that the provisions of the Schedule to the said Act shall apply; (b) Line Ministry means a Ministry in the Government of India, which has been so nominated with respect to a project, by the Government of India, in the Ministry of Finance (Department of Economic Affairs) . 10. A plain reading of the above exemption notification would show that it has been issued by the Central Government in exercise of the powers conferred on it by sub-section (1) of Section 5A of the Central Excise and Salt Act, 1944. Such power has been delegated, to the Central Government under Section 5A of the Central Excise Act. Neither the legality nor validity of the notification is in question nor the conditions stipulated therein are in issue. On the contrary, reliance has been placed upon clause (c) extracted supra in the notification for justifying the issue of the certificates, which by the impugned ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on fulfilment of which the implementing authority is empowered to issue a certificate. In other words, the authority empowered to issue certificate cannot travel beyond the four corners of the Notification. The scope of the exemption under Notification No. 108/95 is restricted. Unless eligible for exemption in terms of the notification, a certificate by the implementing authority can be of no avail. The goods which do not qualify for exemption in terms of Notification No. 108/95 cannot be held entitled to such exemption by mere issuance of a certificate by the implementing authority. There is force in the submission of Shri A. Rajasekhara Reddy, learned Senior Standing Counsel for Central Government that if the statutory notification is construed as permitting the implementing authority to prescribe its own conditions for exemption, it will be impermissible being beyond the scope of the powers conferred upon it. We, therefore, have to reject the submission on behalf of the petitioner that as power has been conferred upon high-ranking authorities to issue the certificates, it must be assumed that the conditions specified in the Exemption Notification have been satisfied. 11. Any exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n acted upon even by the Excise authorities and the question is one of reimbursement of excise duty in terms of the deemed export benefits. As the excise duty now demanded is reimbursable to the petitioner, there is no bar for issuing a notification declaring JBIC as international organisation. The provisions of the United Nations (Privileges and Immunities) Act, 1947 having been incorporated in the Exemption Notification by reference, by an executive action, such a declaration can be made. There is no unjust enrichment, in that, the petitioner has not collected excise duty. Lastly, reliance is placed upon the Full Bench judgment of this Court in Panchalingal Carbonic Gas Pvt. Ltd., Kurnool v. State of A.P. 14. On the other hand, it is the case of A.P. TRANSCO that there was no representation made to the petitioner with regard to exemption of excise duty on the goods supplied by it. Sri M. Sreeramulu Reddy, learned Standing Counsel for A.P. TRANSCO drew the attention of this Court to the clauses in the bidding documents which have been extracted in the earlier part of this judgment. Learned Standing Counsel reiterated that the certificates issued by A.P. TRANSCO were issued under a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to allow the promisor to go back on the promise. 17. In Nestle India case (supra), Justice Ruma Pal speaking for the Division Bench of the Supreme Court listed the 'strengths' and 'limitations' of the doctrine. As for the strengths, it was laid down that the Government is susceptible to the operation of the doctrine in whatever area or field the promise is made - contractual, administrative or statutory . One of the 'limitations' of the said doctrine, which is relevant for the purpose of enquiry on hand and for that reason, the same needs to be extracted is as under : No representation can be enforced which is prohibited by law in the sense that the person or authority making representation or promise must have the power to carry out the promise. If the power is there, then subject to the preconditions and limitations noted earlier, it must be exercised. Thus, if the statute does not contain a provision enabling the Government to grant exemption, it would not be possible to enforce the representation against the Government, because the Government cannot be compelled to act contrary to the statute. But if the statute confers power on the Government to gran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the bid documents. Even in the purchase orders placed upon the petitioner by A.P. TRANSCO, it was clearly stipulated in paragraphs 2.1.1 and 2.2 that excise duty is not payable by A.P. TRANSCO. There is no representation made as to exemption from payment of excise duty with respect to the goods supplied to A.P. TRANSCO. It cannot, therefore, be said that the petitioner altered his position to his detriment on any representation made by A.P. TRANSCO to attract the doctrine of promissory estoppel. The certificates relied upon by the petitioner and issued by A.P. TRANSCO are matters subsequent to the award of contract in favour of the petitioner to supply the goods. It cannot, therefore, be said that there was any representation made prior to entering into contract with the petitioner by A.P. TRANSO as to the exemption of goods from excise duty. 19. The plea of promissory estoppel pressed against Excise authorities is misconceived. There is no material brought on record to establish that any promise was made by the Central Government or the Excise authorities with respect to the exemption of goods supplied by the petitioner to A.P. TRANSCO. The letter of Excise Superintendent relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitlement to the exemption in terms of the Exemption Notification, cannot press into effect the doctrine of promissory estoppel against the Central Government or the Excise authorities. 22. The reliance of the petitioner upon the Full Bench judgment of this Court in Panchalingal Carbonic Gas case (supra) is misplaced. In that case, pursuant to the policy known as Target 2000, sales tax exemption incentives were provided. The petitioners, in that case, were granted eligibility certificate whereby sales tax exemption was available in terms of the scheme for industries set up for manufacturing purposes. Based upon the eligibility certificates, sales tax exemption was availed of by the petitioners. However, when it was found that the eligibility certificates had been wrongly granted, as there was no manufacturing activity involved in the industry set up by the petitioners in that case, the eligibility certificates were cancelled. A Full Bench of this Court having upheld the contention of the State that the activity of the petitioners in that case did not involve the process of manufacture, the incentives in terms of the scheme being thus not available to the petitioners, held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edule 'C' itself and thereby remove the goods from imposition of tax altogether. In addition, the promisor - State Government had the power to exempt the payment of tax under Section 30. It was held that a citizen may and can bind the Government to its promise if the factors necessary for founding a plea of promissory estoppel are established. Such is not the case on hand. As already held, there was no representation made, much less an unequivocal representation nor the State Government or A.P. TRANSCO is competent to make such representation or to carry out the same. The factors necessary for founding the plea of promissory estoppel are not established in the case on hand. 24. For the reasons afore-stated, it must be held that the action impugned in the instant writ petition suffers from no legal infirmity. The certificates issued by A.P. TRANSCO, on a misconception of its authority, have been corrected by cancelling the same. Admittedly, the condition precedent for issuing such certificates by A.P. TRANSCO in terms of Notification No. 108/95 not having been satisfied, the question of applicability of principles of natural justice is also not attracted as it would be a fut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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