Tripura High Court
Wp(C) No.354/2014 vs Union Of India on 9 October, 2018
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HIGH COURT OF TRIPURA
AGARTALA
1. WP(C) No.354/2014
M/S. Dharampal Satyapal Ltd., Headquarters at-C 7-10,
Dharampal Satyapal (DS) Road, Sector-67, Noida-201301, U.P.,
India.
A company incorporated under the provisions of the Companies
Act, 1956 and having its Registered Office at 1711, S.P.
Mukherjee Marg, Delhi-110006.
Through Shri Pramod Sharma, Authorised by Board Resolution
dated 14.11.2013.
---- Petitioner(s).
Versus
1. Union of India, Through Under-Secretary, Government of
India, Ministry of Finance (Department of Revenue), North Block,
New Delhi.
2. The Chief Commissioner, Central Excise, Customs and Service
Tax, Shillong Zone, North Eastern Region, 3rd Floor, Crescent
Building, MG Road, Shillong-793001.
3. Secretary, Department of Industries & Commerce,
Government of Tripura, Shilpodyog Bhavan, Pandit Nehru
Complex, P.O.-Kunjaban, Agartala-799006, Tripura.
4. Secretary, Department of Industries & Commerce, D-Block, 2nd
Floor, Assam Secretariat, GS Road, Guwahati-781006, Assam.
---- Respondent(s).
Connected with 2. WP(C) No.355/2014 M/S. Dharampal Premchand Ltd., Corporate Office at-A-34 & 35, Sector-60, Noida-201301, Uttar Pradesh, India. A company incorporated under the provisions of the Companies Act, 1956 and having its Registered Office at 4873, Chandni Chowk, Delhi-110006, India.
Through Shri Rudra Sekhar Roy duly authorised by Board Resolution No.R(5)(B) dated 25.06.2014.
---- Petitioner(s).
Versus
1. Union of India, Through Under-Secretary, Government of India, Ministry of Finance (Department of Revenue), North Block, New Delhi.
2. The Chief Commissioner, Central Excise, Customs and Service Tax, Shillong Zone, North Eastern Region, 3rd Floor, Crescent Building, MG Road, Shillong-793001.
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3. Secretary, Department of Industries & Commerce, Government of Tripura, Shilpodyog Bhavan, Pandit Nehru Complex, P.O.-Kunjaban, Agartala-799006, Tripura.
4. Secretary, Department of Industries & Commerce, D-Block, 2nd Floor, Assam Secretariat, GS Road, Guwahati-781006, Assam.
---- Respondent(s).
3. WP(C) No.356/2014 M/S. Satyapal Shivkumar, A partnership firm registered under the provisions of Partnership Act, 1932, and having its Registered Office at 7/355, Naya Bans, Delhi-110006.
Through Shri Rudra Sekhar Roy, Authorized by Letter dated 25.06.2014 from Managing Partner, Mr. Rakesh Kumar.
---- Petitioner(s).
Versus
1. Union of India, Through Under-Secretary, Government of India, Ministry of Finance (Department of Revenue), North Block, New Delhi.
2. The Chief Commissioner, Central Excise, Customs and Service Tax, Shillong Zone, North Eastern Region, 3rd Floor, Crescent Building, MG Road, Shillong-793001.
3. Secretary, Department of Industries & Commerce, Government of Tripura, Shilpodyog Bhavan, Pandit Nehru Complex, P.O.-Kunjaban, Agartala-799006, Tripura.
---- Respondent(s).
For Petitioner(s) : Dr. Ashok Saraf, Sr. Advocate, Mr. S. Tyagi, Advocate, Mr. P. Baruah, Advocate, Mr. K. Roy, Advocate.
For Respondent(s) : Mr. Bidyut Majumder, CGC, Mr. M. Debbarma, Addl. G.A., Mr. Paramartha Datta, Advocate, Mr. T. Debbarma, Advocate.
HON'BLE THE CHIEF JUSTICE MR. AJAY RASTOGI HON'BLE MR. JUSTICE ARINDAM LODH Judgment Judgment reserved on : 26th September, 2018.
Date of Judgment : 9th October, 2018.
Whether fit for reporting: YES.
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By the Court (Per Hon'ble Mr. Justice Ajay Rastogi):
Since a common question of law and facts have been raised in the present batch of writ petitions, the same are being decided by the present order.
2. Petitioner is primarily aggrieved by the unilateral decision of the Investment Appraisal Committee (hereinafter referred to as "Committee") held in its meeting dt.04.4.2014 and 17.4.2014 disallowing certain investments which were made by the petitioner with prior approval of the Jurisdictional Commissioner of Central Excise under notification dt.25.8.2003 & 21.01.2004 followed with 09.7.2004. In consequence and in furtherance thereof demand notices were issued dt.28.7.2014, 15.9.2014 & 12.10.2015 under the seal and signature of Assistant Commissioner of Central Excise and Service Tax, Agartala for recovery of the said investment amount which was disallowed with interest in the instant proceedings.
3. With consent of the parties facts have been noticed from WP(C) No. 354/2014 in brief, which may be relevant for the purpose are that the petitioner Dharampal Satyapal Ltd. is a company incorporated under the Companies Act, 1956 having its Registered office at 1711, S.P. Mukherjee Marg, Delhi-110006 and its manufacturing units in the State of Tripura and also in the State of Assam in addition to other places. The petitioner is engaged in the manufacture of Scented Chewing Tobacco/Pan Page - 4 of 48 Masala containing tobacco falling under tariff heading 2403 99 30 and 2403 99 10 of the First Schedule to the Central Excise Tariff Act, 1985 (hereinafter referred to as the Act of 1985) in addition to other products.
4. The Government of India pursuant to North Eastern Industrial Policy dt.24.12.1997 issued notification No.32/1999-CE and notification No.33/1999-CE dt.08.7.1999 u/Sec.5A of the Central Excise Act, 1999 granting exemption in respect of excise duty as well as additional excise duty in respect of certain goods manufactured in the specified areas in the North Eastern region of India. The exemptions from payment of excise duty or additional duty of excise were made applicable to such manufacturing units which are located in any of the seven North Eastern States namely the State of Assam, Nagaland, Manipur, Mizoram, Meghalaya, Arunachal Pradesh including Tripura.
5. In furtherance thereof, by notification No.45/99-CE dt.31.12.1999 the Central Government amended earlier notifications dt.08.7.1999 and excluded all tobacco related products including Pan masala from the purview of exemption from payment of excise duty and additional duty of excise. By notification dt.17.01.2000, Central Government restored the exemption but later on, the exemptions granted were once again withdrawn by the Central Government under notifications dt.22.01.2000 and 01.3.2001.
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6. Thereafter, the Parliament enacted Sec.154 of Finance Act, 2003 stipulating therein that the Central Government in exercise of powers amended the two notifications dt.08.7.1999 aforementioned with retrospective effect. Though the exemptions granted under the aforesaid two notifications dt.08.7.1999 at one stage indicated above withdrawn the above exemptions which had been earlier withdrawn once again restored in respect of certain exigible goods including Pan masala vide notification dt.25.8.2003 was a partial but conditional restoration of the exemption of Central excise duty to the extent of 50% of the duty payable.
7. It was stipulated that the exemption would be subject to certain conditions and would be available only in respect of units that are located in the seven North Eastern States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland or Tripura and for those units where commercial production commenced on or after 24.12.1997 but not later than 28.02.2001 further the unit should have continued its manufacturing activities after 28.02.2001 and should have availed of the benefit under notification Nos.32/99-CE and 33/99- CE.
8. It was further stipulated under the notification No.69/2003-CE dt.25.8.2003 that a sum of duty payable for exemption was to be utilized by the manufacturer only for investment in plant and machinery in a manufacturing unit which Page - 6 of 48 is located in the seven North Eastern States including Tripura and the said investment had to be made before the expiry of six months from the end of each quarter. Further, the manufacturer was under an obligation to furnish details of investments made within one month of the expiry of the six months period indicated under the notification dt.25.8.2003 to a committee consisting of Chief Commissioner of Central Excise, Shillong, Principal Secretary of the Department of Industry of the State concerned in which the unit is located and the Principal Secretary of the Department of Industry of the State (hereinafter called Committee) where the investment was made. It was also incumbent upon the manufacturer to prove to the satisfaction of the committee that the investment has been made for plant and machinery in a manufacturing unit located in the North Eastern States including Tripura and only after the committee recorded its satisfaction that the investment has been made in the identified sector in a manufacturing unit, was to issue a certificate to this effect to the manufacturer within a time bound framework of three weeks after the period of one month described above and on production of a certificate by a manufacturer within two weeks from the date of issue of such certificate to the Jurisdictional Central Excise Officer with a proviso that the investment so made could not be withdrawn before the expiry of ten years from the date of investment.
9. The notification dt.25.8.2003 of which a reference has been made is reproduced ad-infra:-
Page - 7 of 48 "25th August, 2003.
Notification No.69/2003-Central Excise In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance), Act, 1957 ( 58 of 1957), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in column (3) of the Table below and falling within the sub-heading No. of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), as specified in the corresponding entry in column (2) of the said Table-
(a) from so much of the duty of excise specified thereon under the First Schedule to the said Central Excise Tariff Act, (hereinafter referred to as the basic excise duty ), as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table;
(b) from so much of the special duty of excise specified thereon under the Second Schedule to the said Central Excise Tariff Act, (hereinafter referred to as the special excise duty ), as is in excess of the amount calculated at the rate specified in the corresponding entry in column (5) of the said Table;
(c) from so much of the duty of excise specified thereon under the First Schedule to the said Additional Duties of Excise Act, (hereinafter referred to as the additional excise duty ), as is in excess of the amount calculated at the rate specified in the corresponding entry in column (6) of the said Table;
subject to the following conditions, namely,- (A) the exemption under this notification shall be available only in respect of a unit which,-
(i) is located in the State of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland or Tripura;
(ii) had commenced commercial production on or after the 24th day of December, 1997, but not later than the 28th day of February, 2001;
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(iii) had availed of the benefit under the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 32/99-Central Excise, dated the 8th July, 1997 [G.S.R. 508 (E) dated the 8th July, 1997] or No.33/99-Central Excise, dated the 8th July, 1997 [G.S.R. 509 (E) dated the 8th July, 1997]; and
(iv) has continued its manufacturing activities after the 28th day of February, 2001;
(B) an amount equal to the difference between the sum of basic excise duty, special excise duty and additional excise duty, payable, but for the exemption in this notification, and the sum of basic excise duty, special excise duty and additional excise duty, paid, shall be utilised by the manufacturer only for investment in plant and machinery in a manufacturing unit which is located in the State of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland or Tripura;
(C) the investment in terms of condition (B), shall be made before the expiry of six months from the end of each quarter;
(D) the manufacturer shall provide all details relating to the investment made in terms of condition (B), within one month after the expiry of the period of six months referred to in condition (C), to a Committee consisting of, the Chief Commissioner of Central Excise, Shillong, the Principal Secretary of the Department of Industry of the State concerned in which the unit is located and the Principal Secretary of the Department of Industry of the State in which the investment is made, and shall have to prove to the satisfaction of the said Committee that the investment has been made for the purpose specified in condition(B); (E) if the Committee referred to in condition (D) is satisfied that the investment as specified in condition (B), has been made, it shall issue a certificate to this effect to the manufacturer within a period of three weeks after the expiry of the one month referred to in condition (D), which shall be produced by the manufacturer, within a period of two weeks from the date of issue of such certificate, to the jurisdictional Central Excise Officer;
(F) the investment made under this notification shall not be allowed to be withdrawn before the expiry of ten years from the date on which the investment is made except in a Page - 9 of 48 case where the investment withdrawn is reinvested in the same manner as specified in this notification, in any one of the States mentioned in condition (A):
Provided that if the investment made under this notification is withdrawn before the expiry of ten years and is not reinvested as mentioned above, the duty which is equal to the amount so withdrawn and not so reinvested, shall be paid by the manufacturer on the date on which the investment is withdrawn.
TABLE
S.No. Sub-heading Description Basic excise Special excise Additional
No. duty duty excise duty
(1) (2) (3) (4) (5) (6)
1. 2401.90 All goods 8% 8% 5%
2. 2402.00 All goods 8% Nil Nil
3. 2404.41 All goods 8% 6% 6%
4. 2404.49 All goods 8% 6% 6%
5. 2404.50 All goods 8% 6% 6%
6. 2404.99 All goods 8% 6% 6%
(G. S. Karki)
Under Secretary to the Government of India
F.No.354/29/2003-TRU"
10. Indisputably, the petitioner‟s unit stood covered by the notification dt.25.8.2003 aforementioned and was eligible to receive benefit of exemption from payment of excise duty or additional duty of excise in terms of the notification in this regard. In furtherance thereof, the Central Government in supersession of the notification dt.25.8.2003 issued another notification No.8/2004-CE dt.21.01.2004 for complete exemption from payment of excise duty or additional duty of excise leviable under the said Central Excise Tariff Act, the Additional Duties of Excise (Goods of Special Importance) Act and National Calamity Contingent duty leviable thereon under sub-section (1) of Page - 10 of 48 Sec.136 of the Finance Act, 2001 to be available to the manufacturers who have established their units in the seven North Eastern States including Tripura and apart from the fact that commercial production commenced on or after 24.12.1997, but not later than 28.02.2001 and had availed the benefit under the notifications of Government of India dt.08.7.1999 and continued its manufacturing activities after 28.02.2001 from an amount equal to the sum of basic excise duty, special excise duty, additional excise duty and National Calamity Contingent duty with a condition that exemption in the notification shall be utilized by the manufacturer for investment in (i) plant and machinery in a manufacturing unit which is located in the seven North Eastern States including Tripura or (ii) infrastructure or civil works or social projects in the seven North Eastern States including Tripura.
11. The notification dt.21.01.2004 is reproduced ad-infra:-
"21st January, 2004.
Notification No. 8/2004-Central Excise In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), and sub-section (3) of section 136 of the Finance Act, 2001 (14 of 2001), and in supersession of the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No 69/2003-
Central Excise, dated the 25th August, 2003, published in Gazette of India, vide, G.S.R. 679(E), dated the 25th August, 2003, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all goods falling under sub-heading 2401.90, Page - 11 of 48 2402.00, 2404.41, 2404.49, 2404.50 or 2404.99 of the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), from the whole of the duties of excise, additional duties of excise leviable under the said Central Excise Tariff Act, the Additional Duties of Excise (Goods of Special Importance) Act and National Calamity Contingent duty leviable thereon under sub-section (1) of section 136 of the said Finance Act, subject to the following conditions, namely,-
(A). the exemption under this notification shall be available only in respect of a unit which,-
(i) is located in the State of Arunachal Pradesh, Assam, Manipur, Meghalaya , Mizoram , Nagaland or Tripura ;
(ii) had commenced commercial production on or after the 24th day of December, 1997, but not later than the 28th day of February, 2001;
(iii) had availed of the benefit under the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 32/99-Central Excise, dated the 8th July, 1999 [G.S.R. 508 (E) dated the 8th July, 1999] or No. 33/99-Central Excise, dated the 8thJuly, 1999 [G.S.R. 509 (E) dated the 8th July, 1999]; and
(iv) has continued its manufacturing activities after the 28th day of February, 2001;
(B). an amount equal to the sum of basic excise duty, special excise duty, additional excise duty and National Calamity Contingent duty, payable, but for the exemption in this notification, shall be utilised by the manufacturer only for investment in,-
(i) plant and machinery in a manufacturing unit which is located in the State of Arunachal Pradesh, Assam, Manipur, Meghalaya , Mizoram , Nagaland or Tripura ; or
(ii) infrastructure or civil works or social projects in the State of Arunachal Pradesh, Assam, Manipur, Meghalaya , Mizoram , Nagaland or Tripura ;
(C). the investment in terms of condition (B) shall be made before the expiry of six months from the end of each quarter;
Page - 12 of 48 (D). the manufacturer shall provide all details relating to the investment made in terms of condition (B), within one month after the expiry of the period of six months referred to in condition (C), to a Committee consisting of, the Chief Commissioner of Central Excise, Shillong , the Principal Secretary of the Department of Industry of the State concerned, in which the unit is located and the Principal Secretary of the Department of Industry of the State in which the investment is made, and shall have to prove to the satisfaction of the said Committee that the investment has been made for the purpose specified in condition (B); (E). if the Committee referred to in condition (D) is satisfied that the investment as specified in condition (B), has been made, it shall issue a certificate to this effect to the manufacturer within a period of three weeks after the expiry of the one month referred to in condition (D), which shall be produced by the manufacturer, within a period of two weeks from the date of issue of such certificate, to the jurisdictional Central Excise Officer;
(F). the investment made under this notification shall not be allowed to be withdrawn before the expiry of ten years from the date on which the investment is made except in a case where the investment withdrawn is reinvested in the same manner as specified in this notification, in any one of the States mentioned in condition (A):
Provided that if the investment made under this notification is withdrawn before the expiry of ten years and is not reinvested as mentioned above, the duty which is equal to the amount so withdrawn and not so reinvested, shall be paid by the manufacturer on the date on which the investment is withdrawn."
12. It may be relevant to note at this stage that under earlier notification dt.25.8.2003 the investment could have been made by the manufacturer only in plant and machinery in manufacturing units located in seven North Eastern States including Tripura but under the subsequent notification dt.21.01.2004 issued in supersession of earlier notification Page - 13 of 48 dt.25.8.2003 the exemption under the notification could be made by the manufacturer for investment in plant and machinery or in infrastructure or civil works or social projects in the seven North Eastern States including Tripura and the procedure for receiving exemption, however, remains the same as embodied under the earlier notification dt.25.8.2003 as being referred to in Conditions-D & E in a time bound phases to the satisfaction of the committee regarding their investments as being specified in Condition-B and on issuance of a certificate to this effect to the manufacturer within a time framework by the Jurisdictional Central Excise Officer with a proviso that investments made under notification dt.21.01.2004 shall not be allowed to be withdrawn before the expiry of 10 years and if any investment is withdrawn prior thereto or is not reinvested as referred to under the notification, the duty which is equal to the amount so withdrawn and not so reinvested shall be paid by the manufacturer on the date on which the investment is withdrawn.
13. In furtherance of the notification dt.21.01.2004 in ease of doing business and to make the system more effective and transparent, the Central Government made certain amendments vide notification dt.09.7.2004 issued in exercise of powers conferred under sub-section (1) of Sec.5A of the Central Excise Act, 1944 read with sub-section (3) of Sec.3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and sub-section (3) of Sec.136 of the Finance Act, 2001 making necessary amendments in Condition Nos. C, D & E of its Page - 14 of 48 notification dt.21.01.2004. Primarily, the sectors for investment by the manufacturer in terms of Condition No.(B) remain the same which is (i) plant and machinery or (ii) infrastructure or civil works or social projects in the seven North Eastern States including the State of Tripura but the procedure for investment has undergone a material change and appears to be introduced with intention to put the reasonable check and balances and to encourage the manufacturer/entrepreneur also to invest hassle free, at the same time, interest of the revenue be safeguarded.
Keeping those prime considerations in mind, the amendments were made by the Central Government under its notification dt.09.7.2004 which is reproduced ad-infra:-
"Notification New Delhi, dated the 9th July, 2004.
No. 28/2004-Central Excise G.S.R. (E).- In exercise of the powers conferred by sub- section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section (3) of section 136 of the Finance Act, 2001 (14 of 2001), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 8/2004-Central Excise, dated the 21st January, 2004 and published in the Gazette of India vide number G.S.R.60 (E), dated the 21st January, 2004, namely:-
In the said notification, in the conditions, for conditions (C), (D) and (E), the following shall be substituted, namely:-
"(C) the investment in terms of condition (B) shall be made in the following manner, namely:-
(i). an amount equal to the sum of basic excise duty, special excise duty, additional excise duty and National Calamity Contingent Duty, payable in a quarter, but for the Page - 15 of 48 exemption under this notification, shall be deposited by the manufacturer, within sixty days from the end of the quarter, in an escrow account opened by the manufacturer, for this purpose, in a bank authorized for excise duty collection;
(ii). operations including withdrawals from and closure of the said escrow account shall be made with the prior approval of the jurisdictional Commissioner of Central Excise, taking into account the conditions specified in this notification and to safeguard the revenue;
(iii). the manufacturer shall, pending investment in the manner specified in condition (B), execute a bond, as may be specified by the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, binding himself to pay on demand an amount equal to the amount referred to in clause (i) along with interest thereon at the rate specified under section 11AB of the Central Excise Act 1944, and not so invested, in terms of condition (B), with the amount lying in balance in said escrow account as security or collateral;
(iv). the amount deposited in the said escrow account, in terms of clause (i), shall be invested, in the manner specified in condition (B), within two years from the date of its deposit in such account;
(v). the amounts withdrawn from the escrow account shall be invested for the purposes specified in condition (B) within sixty days of its withdrawal from such account;
(D) the manufacturer shall,-
(i). submit a quarterly statement, within sixty days from the end of the relevant quarter to a Committee, consisting of the Chief Commissioner of Central Excise, Shillong, the Principal Secretary in the Department of Industry of the State concerned in which the unit is located and the Principal Secretary in the Department of Industry of the State in which the investment is being made, giving details of deposits made in and withdrawal made from, the escrow account, along with details of investment, made during the quarter;
(ii). provide all details relating to the investment made in terms of condition (B), not later than one month after the Page - 16 of 48 expiry of the period of two years referred to in condition (C), to the said Committee;
(iii). prove to the satisfaction of the said Committee that the investment has been made for the purposes specified in condition (B);
(E) if the Committee referred to in condition (D) is satisfied that the investment as specified in condition (B), has been made, it shall issue a certificate to this effect to the manufacturer within a period of one month from the receipt of the details as referred to in condition (D), and on the issuance of which, the liability of the manufacturer shall stand discharged to the extent of investments so certified;
(EA) if the manufacturer fails to make the deposit or does not invest the amount specified in condition (B), within the stipulated period and in the manner, then, the duty which is equivalent to the amount not so deposited or invested shall be recoverable from the manufacture along with interest thereon at the rate specified under section 11AB of the Central Excise Act, 1944, and without prejudice to any action that may be taken under the provisions of the said Act or any other law for the time being in force, by forfeiture of amount in the said escrow account.".
[F.No.334/3/2004-TRU] (G.S.Karki) Under Secretary to the Government of India Note: The principal notification No.8/2004-Central Excise, dated the 21st January, 2004 was published in the Gazette of India, vide number G.S.R.60 (E), dated the 21st January, 2004."
14. The notification dt.09.7.2004 provided further that the manufacturer has to first open the escrow account for collection of excise duty and operation including withdrawal or closer of the account shall be made with the prior approval of the Jurisdictional Commissioner of Central Excise and to execute a Bond to the effect that if the amount not so invested as required Page - 17 of 48 has to repay along with interest as specified u/Sec.11AB of the Central Excise Act, 1944 and thereafter submit a quarterly statement within 60 days from the end of relevant quarter to the committee, giving details of deposits and withdrawals made from the escrow account along with the details of investments made during the quarter, not later than one month after the expiry of the period of two months referred to in Condition-C to prove to the satisfaction of the committee that the investment has been made for the purpose as specified in Condition-B and the committee after recording its satisfaction that the investment has been made as specified in Condition-B issue a certificate to this effect to the manufacturer within a period of one month from the receipt of the details as referred to in Condition-D and on the issuance of which, the liability of the manufacturer shall stand discharged to the extent of investments so certified and in the event of the manufacturer fails to make the deposit or does not invest the amount specified in Condition-B within the stipulated period and in the manner as prescribed the duty which is equivalent to the amount not so deposited or invested shall be recoverable from the manufacturer along with interest thereon at the rate specified u/Sec.11AB of the Central Excise Act, 1944 without prejudice to any action which may be taken by the revenue under the provisions of the Act or any other law for the time being in force including forfeiture of the amount in the said escrow account.
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15. It is pertinent to mention herein that in the meantime, the earlier Notification No.69/2003 and Notification No.8/2004 dealing with the time period for making withdrawal applications and investments, were amended with retrospective effect vide Sec.72 of the Finance Act, 2011, which came into force on 08.4.2011 and the time period of investment to be made within six months, as provided in the Notification No.69/2003 with an increase of time period for two years, provided in Conditions-C & D of the Notification No.8/2004-CE was replaced by four years. The scheme was ended on 31.12.2012 and in terms of the scheme, the committee was to verify the records on or before 31.12.2012 but because of non-constitution of the committee on account of absence of the representatives of the State Government, the committee could not function and in absence of certification the benefit could not be availed by the petitioner- manufacturer.
16. At this stage, the petitioner approached this Court by filing of WP(C) No.111/2013 where the defence of the respondents was that since the scheme came to an end on 31.12.2012, there is no statutory provision for constitution of any committee to make assessment but that indisputably was detrimental to the interest of the manufacturer/petitioner. Taking note thereof, interim order was passed by this court on 09.7.2013 directing the State-respondents to constitute the coram of the committee who may examine the investments to its satisfaction in terms of the notification and in case, it is found Page - 19 of 48 that the assessee has made investments in terms of the notification he will be entitled for full benefits and in case the assessee has not made the investments in terms of the earlier notification or part of the investments are not in accordance with the earlier notification, the State as well as the Central Government would be beneficiaries as per the notification and overruling the objection of the respondents, this court directed that the committee be constituted in terms of the notification shall meet and decide the matter in respect of the investments made by the petitioner earlier latest by 31.10.2013 to examine whether the investment has been made by the assessee in terms of the earlier notifications.
17. The order passed by this court in WP(C) No.111/2013 dt.09.7.2013 came to be challenged by the respondents in SLP(C) No.31756/2013 before the Apex Court and that came to be decided vide order dt.24.01.2014 with a direction to the committee to conclude its work within three months and if the findings of the committee are against the concerned units which have been given the incentives. The amount of incentives so given shall be recovered within six months thereafter in accordance with law and since the same was the grievance of the petitioner in the State of Assam as well similar order was passed by the High Court of Gauhati in terms of the order of this court dt.09.7.2013 which was challenged by the respondents before the Apex Court, that SLP(C) No.191/2014 preferred by the respondents against the order of the High Court of Gauhati in Page - 20 of 48 WP(C) No.1174/2013 dt.07.8.2013 also came to be disposed of by the Apex Court vide order dt.28.03.2014.
18. Indisputably, in the instant case, the withdrawals and investments are being made with the prior approval of the Jurisdictional Commissioner of Central Excise on whom the duty has been casted being a watchdog to safeguard the interest of revenue under notification dt.09.7.2004 but when the quarterly statements are being furnished to the committee with reference to the amount withdrawn from the escrow account and the investments made in either of relevant sectors (i) plant and machinery or (ii) infrastructure or civil works or social projects in the seven North Eastern States including Tripura as specified in Condition-B, to record satisfaction and issue a certificate to this effect to the manufacturer to be discharged from the liability to the extent of investments so certified and if the manufacturer fails to make deposit or does not invest the amount specified in Condition-B before the stipulated period or in the manner prescribed, the duty which is equivalent to the amount not so deposited or invested shall be recoverable from the manufacturer along with interest at the rate specified u/Sec.11AB of the Central Excise Act, 1944 without prejudice to action being taken under the provisions of the Act or any other law for the time being in force by forfeiture of amount in the said escrow account.
19. The petitioners submitted the details of deposits and withdrawals from the escrow account along with the details of Page - 21 of 48 investments made in terms of Condition-B to the committee but the committee on perusal of the details furnished has not recorded satisfaction in reference to the investments made by the petitioner as referred to in terms of Condition-B and unilaterally took decision deleting certain investments without affording opportunity of hearing to the petitioner to justify and to rule out the impression of the committee in failing to record its satisfaction in reference of details of investments made in its meetings held on 04.4.2014 and 17.4.2014 and in consequence thereof, demand notices impugned dt.28.7.2014, 15.9.2014 & 12.10.2015 came to be served upon the petitioner at different intervals by the Assistant Commissioner of Central Excise & Service Tax for depositing of the said amount in reference to which the investments made by the petitioner after prior approval of the Jurisdictional Commissioner of Central Excise being disallowed by the committee has to be deposited with interest which is impugned in the instant proceedings.
20. At this the petitioner filed the instant writ petition and it may be noticed that when the matter initially came at the motion stage, after hearing the parties interim order was passed by this court dt.27.8.2014 with a direction to stay further proceedings provided the petitioner deposits with the Excise Authority 50% of the amount demanded on or before 1st November, 2014 and furnish security for the remaining 50% to the Assessing Officer by 1st November, 2014. The interim order passed by this court dt.27.8.2014 came to be challenged by the Page - 22 of 48 petitioner in Special Leave to Appeal before the Apex Court and the interim order of this court dt.27.8.2014 came to be stayed and Special Leave to Appeal was finally disposed of on 25.4.2017 taking note of the fact that the petitioner had units in Guwahati as well as in Agartala and the writ petition filed for the selfsame cause of action in the High Court of Gauhati has been decided holding that the decision has been taken by the committee without complying the principles of natural justice and not sustainable in law. Taking note thereof, the SLP was disposed of with an observation to keep the interim order of this Court dt.27.08.2014 in abeyance with a direction to the High Court to decide the writ petition as early as possible and preferably within a period of three months.
21. The main thrust of the submission of counsel for the petitioner is that the selfsame controversy and in reference to the three notifications issued by the Central Government dt.25.8.2003 which has been superseded vide later notification dt.21.01.2004 followed with amendments made vide notification dt.09.7.2004 has been examined by the High Court of Gauhati in the case of the present petitioner and the investments were indisputably made under the identified sectors in terms of Condition-B of the notification with prior approval of Jurisdictional Commissioner of Central Excise in the State of Assam and on the investments being disallowed unilaterally by the committee and demand notices in furtherance thereof was assailed in WP(C) No.591, 1048 and 2814 of 2008 in the High Court of Gauhati and Page - 23 of 48 those batch of writ petitions based on the selfsame controversy in reference to the three notifications dt.25.8.2003; 21.01.2004 & 09.7.2004 was examined in detail and came to be decided vide judgment dt.06.01.2010 by a Single Bench of High Court of Gauhati in the case of Dharampal Satyapal Ltd. & others vs. Union of India & others reported in 2010 (1) GLT 744 holding the unilateral decision of the committee and in furtherance thereto Demand Notices are in violation of the principles of natural justice and the writ appeal preferred by the revenue W.A. No.394/2010 came to be dismissed by the Division Bench of High Court of Gauhati vide judgment dt.19.01.2012 and which was later further considered by the Division Bench of the High Court of Gauhati in WP(C) No.1174/2013 where the committee has not recorded satisfaction in reference to the investments made and without any notice to show-cause and affording an opportunity of hearing demand notices were raised came to be challenged in WP(C) No.1174/2013 and taking note of the earlier view in reference to the interpretation of the relevant three notifications indicated considered in the judgment reported in 2010 (1) GLT 744 allowed the writ petitions preferred by the petitioner under judgment dt.07.8.2013.
22. Counsel for the petitioner submits that once the selfsame controversy has been concluded holding that the unilateral decision of the committee in disallowing the investments made in the identified sectors with the prior approval of the Jurisdictional Commissioner of Central Excise and Page - 24 of 48 raising Demand Notices in furtherance thereof without affording an opportunity of hearing to the petitioner is in violation of the principles of natural justice has been quashed and set aside, there is no reason for the respondent to further defend its action which indeed is in violation of the principles of natural justice.
23. Counsel for the petitioner further submits that once the interpretation of the three notifications referred to has been made by the High Court of Gauhati in the case of the petitioner itself, it is expected from the respondents to carry out the procedure as being referred to by the High Court of Gauhati for proper and effective implementation of the three notifications of which reference has been made but despite petitioner‟s persuasion the respondents are not taking precedence of the interpretation made by the High Court of Gauhati and at least in the light of the view expressed by the High Court of Gauhati the minutes of the meetings of committee dt.04.4.2014 and 17.4.2014 and issuance of demand notices in furtherance thereof is indeed a prejudicial action against the petitioner which has been taken without affording opportunity of hearing and is indeed in violation of principles of natural justice and keeping in view the decision of the High Court of Gauhati in the case of the petitioner, at least the minutes of the committee and the consequential demand notices impugned in the instant case is not sustainable in law and deserves to be quashed.
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24. Counter affidavit has been filed by the respondents and the defence of the respondents in substance is that the committee has concluded its business in apprising of the investments made by the petitioner for recording its satisfaction in terms of the notifications dt.25.8.2003, 21.01.2004 and 09.7.2004 and keeping in view the directions of the Apex Court in SLP(C) No.31756/2013 dt.24.01.2014 to the committee to conclude its work within three months and give its findings and consequential action to be taken within six months in accordance with law as such no further opportunity of hearing was required before raising the Demand Notices impugned in the proceedings.
25. The further defence of the respondents in their counter affidavit is that the decision has been taken by the committee in its meetings dt.04.4.2014 and 17.4.2014 based on the report submitted by the Monitoring Committee and the guidelines laid down in past meetings of the committee. The Monitoring Committee examined the investments in the presence of the authorized representative of the petitioner and based on the reports of the Monitoring Committee the decision has been taken by the committee in its meetings dt.04.4.2014 and 17.4.2014 and since cogent reasons have been assigned by the committee disallowing certain investments made by the petitioner which might have been made with the prior approval of the Jurisdictional Commissioner of Central Excise but that is always subject to the final approval of the committee and the committee once has disapproved certain investments in its Page - 26 of 48 meetings held on 04.4.2014 and 17.4.2014 based on the reports of the Monitoring Committee pursuant to which a demand notice has been raised in strict compliance of the notifications relied upon by the petitioner needs no further fact finding enquiry and the decision of the committee is in conformity to the notifications referred to supra needs no further judicial review by this court u/Art.226 of the Constitution of India.
26. Counsel for the respondents further submits that there is no requirement of principles of natural justice as the committee has proceeded in compliance of order of the Apex Court and since reasons have been assigned for disallowing the investments made by the petitioner, even if this court comes to a conclusion that there is a denial of principles of natural justice but in the instant case service of notice and affording opportunity of hearing remains an empty formality and is not going to serve any purpose as held in the case of the petitioner by the Apex Court in its judgment in Dharampal Satyapal Limited vs. Deputy Commissioner of Central Excise, Gauhati & others, reported in (2015) 8 SCC 519 decided on 14.5.2015 that affording opportunity to the petitioner remains a useless formality and not going to serve any purpose and that has not been looked into by the High Court of Gauhati while passing the judgment relied upon by the petitioner.
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27. We have considered submissions made by the counsel for the parties and with their assistance perused the materials on records.
28. The indisputed facts which have come on record are that the withdrawals/closure from the escrow account and investments were made within sixty days of its withdrawal in the sectors which are specified under Condition-B of the notifications;
(i) plant and machinery, or (ii) infrastructure or civil works or social projects in the seven North Eastern States including the State of Tripura in reference to which exemptions are being extended by the Central Government under its notification issued in exercise of powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 dt.25.8.2003 and in its supersession vide further notification dt. 21.01.2004 with certain amendments made under Conditions-C, D & E vide notification dt.09.7.2004 with the prior approval of the Jurisdictional Commissioner of Central Excise.
29. It is also not disputed that the selfsame controversy in reference to three relevant notifications of which a reference has been made supra has been extensively examined by the High Court of Guwahati in the case of the very petitioner Dharampal Satyapal Ltd. regarding the investments made by the petitioner in the State of Assam and other North Eastern States which are covered under the notification with prior approval of the Jurisdictional Commissioner of Central Excise and disallowed by Page - 28 of 48 the committee by its unilateral decision without affording an opportunity of hearing and in violation of the principles of natural justice that came to be quashed and set aside, earlier by a Single Bench of the High Court of Gauhati in the case of Dharampal Satyapal Ltd. & others vs. Union of India & others, reported in 2010 (1) GLT 744 decided on 06.01.2010 and view of the learned Single Judge of the High Court of Gauhati in the case of the very petitioner has been confirmed by a Division Bench of the High Court of Gauhati on dismissal of the writ appeal of the Revenue in detail.
30. We consider appropriate to quote the extract of Para- 30-35 and 168-169 of the judgment of the learned Single Judge of High Court of Gauhati ad-infra:-
"30. What is, now, of prime importance to borne in mind is that the liability of the manufacturer to satisfy the jurisdictional Commissioner that the withdrawal, sought for by the manufacturer, is for such a purpose as is envisaged by the Notification, dated 09.07.2004, imposes a corresponding duty, on the jurisdictional Commissioner, to ensure that he does not permit any withdrawal by a manufacturer from the Escrow Account unless the withdrawal, sought to be made, is for the purpose of making 'investment' on such a project, which is envisaged and permitted by the notification aforementioned, namely, that the 'investment' is in 'plant and machinery', or in 'infrastructure', or 'civil works', or 'social project'.
31. Once the jurisdictional Commissioner has granted the withdrawal, the manufacturer cannot be penalized except when the withdrawal is proved to be fraudulent or is proved to have been allowed by the jurisdictional Commissioner on extraneous considerations or in collusion with the manufacturer for a purpose, which is not envisaged and permitted by the Notifications aforementioned. The reason Page - 29 of 48 is very simple. The Notification, dated 09.07.2004, promises exemption from payment of excise duty if a manufacturer, who is, otherwise, eligible to make 'investment' under the Notification, dated 21.01.2004, invests such sum of money, as he may be liable to pay as excise duty, or additional duty of excise, or special excise duty, etc., in 'plant and machinery', in a manufacturing unit or in "infrastructure", or 'civil works', 'social projects', which are mentioned in the Notification, dated 09.07.2004. Having so invested the money with the permission of the jurisdictional Commissioner, the manufacturer is required to satisfy the IAC that he not only has made the 'investment', as claimed by him, but also that he has invested the money for a purpose, which meets the conditions embodied in Clause (B) of the Notifications. It is easily understandable that a manufacturer, if honest, would be hesitant to make 'investment' freely unless he is satisfied that he would receive refund of the amount, which is invested by him. For this purpose, it was not only necessary that the manufacturer be sure that he was investing money in any of the four categories of specified activities, but he be also sure that the IAC would not reject his 'investment' on the ground that the 'investment', though made, was for a purpose not envisaged or allowable under the Notification aforementioned. In other words, in order to enable a manufacturer make 'investment' without reservation and freely, the scheme, now, embodied in the Notification, dated 09.07.2004, assures that if the investor makes an 'investment', his 'investment' would not be rejected on the ground that his 'investment' is for a purpose, which is not permissible under the Notifications, particularly, in a case, wherein the fact that he has made the 'investment' is not in dispute, for, hesitation, on the part of a person to invest on the ground that his investment may or may not be allowed, could have validly created obstacles in the free flow of investment'.
32. It was, obviously, therefore, that the Central Government deemed it fit that before an 'investment' is made, the scheme of 'investment' is examined by an appropriate authority, to be appointed by the Central Government, so that no 'investment' is made unless it is covered by the purposes, which are specified under the Notifications. At the same time, it was also necessary that the interest of revenue be safeguarded so that a manufacturer, who invests on a project, which is not Page - 30 of 48 covered by the Notifications, does not, having already made such impermissible 'investment', claim exemptions and drags thereby the Central Government into litigation by trying to justify that his 'investment' falls within the scheme of the Notifications.
33. Thus, in order to make the earlier scheme workable, the scheme, introduced later by the Notification, dated 09.07.2004, has brought into picture the jurisdictional Commissioner, who has been vested with the power to allow, or not to allow, withdrawal from the Escrow Account.
This apart, safeguarding the interest of revenue, all such amounts, which would be claimed as exemption, are required, now, to be deposited in the Escrow Account. No withdrawal from such an account can be allowed by a jurisdictional Commissioner unless the 'investment', sought to be made, is for the purposes as envisaged by the Notifications. Once the jurisdictional Commissioner has allowed an amount to be withdrawn from the Escrow Account for the purpose of making 'investment', there is no separate appellate or revisional authority including the IAC under the scheme of exemption, which can sit on the wisdom of the decision of the jurisdictional Commissioner.
34. It needs to be clearly understood that before the scheme, dated 09.07.2004, came into force, the IAC was required to do both, namely, enquire if the 'investment' had, at all, been made, and, if so, whether the 'investment' was for a purpose mentioned in the Notification. If, on such enquiry, it was found that the 'investment' had been made for a purpose other than what the Notifications, dated 21.01.2004, had envisaged, the IAC was not required to undertake any further exercise to determine if the manufacturer had or had not really invested the amount as claimed by him. Thus, the manufacturer was required to make, under the earlier Notification, dated 21.01.2004, 'investment', at his own peril and without knowing as to whether his 'investment' would or would not be allowed as an 'investment' within the meaning of the scheme of the Notification. Howsoever honest may be a manufacturer, the fact remains that any such kind of scheme, which the Notification, dated 21.01.2004, had embodied, could have, many a times, led to a serious controversy and dispute inasmuch as it might have become a matter of mere opinion whether an 'investment', already made, was really covered by the scheme of the Notifications or not. No 'investment' Page - 31 of 48 can be undertaken by a manufacturer on the basis of such an unsure and uncertain scheme.
35. The only way, therefore, to make the scheme workable was that either the Central Government, or some authority, appointed by the Central Government, examines die 'investment', which is sought to be made, and allows 'investment' to be made if and only if the 'investment' is for a purpose mentioned in the Notifications. It is this power, which, now, a jurisdictional Commissioner, apparently, exercises. He can, therefore, by no means, be said to be an authority subordinate to the IAC as far as his role of examining the question, as to whether an 'investment', sought to be made, is for a purpose, as mentioned in the Notification, or not, is concerned. If a manufacturer seeks to make an 'investment' and it is allowed by the jurisdictional Commissioner, the inference would be that the 'investment' is for a purpose covered by the Notification. The Central Government is bound by the permission, which the jurisdictional Commissioner grants, even if he exceeds jurisdiction in granting such permission. When he grants permission to make an 'investment', it would be regarded as a valid 'investment'. Even if he exceeds jurisdiction and allows an 'investment' to be made, which is, otherwise, found to be not covered by scheme, it has to be treated as an 'investment' made with the permission given purportedly in exercise of the powers given to a jurisdictional Commissioner by the Notification, dated 09.07.2004. In such cases, the Central Government would be bound by the decision, which the jurisdictional Commissioner has taken. Such a decision would also be binding on the IAC. The IAC cannot, therefore, if an 'investment' has been made by a manufacturer after withdrawing money from Escrow Account with due permission from the jurisdictional Commissioner, re- examine and determine as to whether 'investment', already made, falls within the scheme of exemption notification or not.
xxx xxx xxx xxx
168. I may say, at the cost of repetition, that if the IAC finds that the "investments" relate to pre-Escrow Account period, as is the case at hand, then, the examination, by the IAC, of the question, as to whether the 'investments', so made, fall under any of the permissible categories of 'investments' or not, would be a valid exercise of power Page - 32 of 48 under the notification, dated 21.01.2004. This exercise of power is subject to a caveat and the caveat is that if the IAC finds that an 'investment' or some of the 'investments' are not covered by any of the categories, mentioned in the Notification, dated 21.01.2004, it cannot straightway reject the 'investments' as not certifiable. The principles of natural justice bind the IAC to give a notice to the manufacturer to show cause, clearly specifying, in the notice, as to why the 'investment' is, in the considered view of the IAC, not an 'investment' made in any of the allowable projects.
169. Coupled with the above, even though the I AC finds, in a given case, that the 'investments', claimed to have been made, are of 'doubtful' quality, it cannot straightway re-ject such 'investment' as an 'investment', which is not certifiable. When the IAC finds that the claim of investment is of 'doubtful quality', the opinion, which it so forms, or the view, which it so takes, must be treated as a tentative finding or opinion of the IAC and the IAC must allow the manufacturer to show cause against such a tentative finding of the IAC. What the IAC has to do, in such a case too, is that it has to issue notice, to the manufacturer concerned, stating therein the reasons, which did not satisfy the IAC that the details of 'investments', are correct. Only upon giving notice to show cause, in every case, as indicated hereinbefore, that necessary decision can be given either allowing the 'investment' as certifiable or disallowing the 'investment' as not certifiable. Whatever decision is, eventually, reached by the IAC, must be communicated, along with the reasons therefor, to the manufacturer so that the manufacturer knows as to why his claim for investment' has been rejected and he can, if required, take recourse to appropriate provisions of law. Extended logically, it would mean, as I have already discussed above, that when the I AC takes a decision refusing to approve an investment', the jurisdictional Excise Officer, in terms of the Notification, dated 21.01.2004, or the jurisdictional Commissioner, in terms of the Notification, dated 09.07.2004, cannot straightway direct 'forfeiture' of the amount, which is not certified by the IAC. In such circumstances too, jurisdictional Commissioner, or the Jurisdictional Excise Officer, as the case may be, is required to issue notice to the manufacturer directing him to show cause as to why the amount, which has not been certified by the I AC, be not recovered from him in terms of the provisions of section 11 aread with the provisions of Page - 33 of 48 section 11b, or be not 'forfeited' from the Escrow Account of the manufacturer in terms of the provisions contained in the notification, dated 09.07.2004, if the amount, sought to be recovered, relates to post Escrow Account period."
31. After going through the judgment of the learned Single Judge of the High Court of Gauhati which has been confirmed by the Division Bench and after we have heard the parties, we are in agreement with the view expressed and in our considered view, it may not be advisable to have a detailed discussion on the selfsame issue which has been once examined in detail in the case of the very petitioner by the High Court of Gauhati.
32. In addition we would further like to observe that the „Seven Rainbow States‟ that makes up the North Eastern part of India can best be described as „Asia in miniature‟. India‟s North East is a part of a great tropical rainforest that stretches from the foot-hills of the Himalayas to the tip of the Malaysian Peninsulas and the mouth of the Mekong River as it flows into the Gulf of Tonkin. It is popularly known as "seven sisters". The region shares international borders with Bangladesh, Burma, Tibet, China and Bhutan. The region is home to multitudinous ethnic groups, numbering more than fifty, with one-fourth of all the languages and dialects spoken in the country. Its peculiar topography-hills, rivers, swamps, dales, and jungles and salubrious climate also demarcate it from the rest of mainland India. In a country with enormous diversity, the North Eastern Page - 34 of 48 region comprising eight States including Sikkim is an important geographical entity. This region‟s development is impeded by certain inherent difficulties such as inadequate infrastructure, adverse climate conditions and mountainous landscape. The region‟s peace and social life is often disturbed by border clashes and ethnic tensions. However, the region is endowed with rich bio-diversity and natural resources.
33. The data reveals that the economic condition of the North East part of India has remained underdeveloped, malnourished and handicapped. Lack of big industries, underdeveloped road and communication system, outdated agrarian economy, natural calamities and terrorism activities which are the few reasons often cited for such backwardness. Although attempts have been made to improve the economic condition but the ground realities are that desired results still have not come forward.
34. Indisputably, economically and industrially, the North East India represents one of the least developed regions of the country and that appears to be one of the reason for which the Central Government has come out with a scheme to encourage entrepreneurs/manufacturers to establish their manufacturing units in the seven North Eastern States in availing exemption from central excise by investing in plant and machinery in the manufacturing units or infrastructure or civil works or social Page - 35 of 48 projects in the seven North Eastern States including Tripura in availing such benefits.
35. The Central Government has come out with various central development projects in the North East sharing 90 per cent of the cost which was later on converted into 100 per cent funding by the Central Government for projects in the region and also introduced "Act East Policy" to enhance the importance of the region in engaging with South East Asian neighbours and to promote North East Special Infrastructure Development Scheme and with this object behind it Central Government has come with a scheme to grant exemption from the excise duty under its notifications dt.25.8.2003, 21.01.2004 followed with dt. 09.7.2004 respectively.
36. It appears that the primary object was to make the North Eastern States economically viable and industrial growth in the manufacturing sectors and development in the Real Estate which indeed may create job opportunities. Keeping such paramount considerations, it appears that the Central Government in exercise of its powers conferred under sub- section (1) of Sec.5A of the Central Excise Act, 1944 read with sub-section (3) of Sec.3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 came with the notification dt. 25th August, 2003 opening investments in plant and machinery in a manufacturing unit which is located in the seven North Eastern States for exemption of central excise to a limited extent, but it Page - 36 of 48 reveals that the Central Government later realize that it is not advisable to remain confined to one sector of plant and machinery and the other sectors also have a potential to cater developments in the States and also the sector of infrastructure or civil works or social projects in the seven North Eastern States to make the manufacturer flexible to claim 100% exemption from central excise subject to fulfillment of other conditions and in supersession of the earlier notification dt. 25 th August, 2003 introduced notification No.08/2004 dt.21st January, 2004 but actions of the manufacturer for claiming exemption on investments remains directly under the aegis to the satisfaction of the committee under Condition-D of the notification. But it appears that further necessity arose that to streamline and to make the scheme effective and more viable, hassle free and convenient with full of transparency protecting the rights of law abiding manufacturers who were willing to make investments under the notified sectors for the purposes of availing exemption from excise duty in the seven North Eastern States including Tripura made amendments under Conditions-C, D & E vide notification dt. 9th July, 2004 for the manufacturer to open the escrow account and for its withdrawal and closure of the said escrow account and all operations including investments shall be made with the prior approval of the Jurisdictional Commissioner of Central Excise who will take into account the conditions specified in the notification and would also safeguard the interest of the revenue.
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37. At the same time, the manufacturer was also called upon to furnish the quarterly statements within a stipulated period including the details of deposits and withdrawals made from the escrow account with details of investments made during the quarter to the committee and the committee has to record satisfaction regarding the investments made under the specified sectors in Condition-B and to issue a certificate to this effect to the manufacturer within a period of one month from the receipt of the details as referred to in Condition-D and on issuance of which the liability of the manufacturer shall stand discharged to the extent of investments so certified.
38. If the manufacturer fails to make the deposit or does not invest the amount as specified in the sectors indicated in Condition-B it will be liable to refund the duty which is equivalent to the amount not so deposited or invested to be recoverable from the manufacturer along with interest at the rate specified u/Sec.11AB of the Central Excise Act, 1944 without prejudice to any other action which would be contemplated by law.
39. Indisputably, in the instant case, the petitioner opened the escrow account and all operations including withdrawals and investments have been made with a prior approval of the Jurisdictional Commissioner of Central Excise who has been introduced as an officer to monitor the functioning of the manufacturers with restrictions and adequate check and balances over withdrawals from the escrow account and to keep Page - 38 of 48 a vigil over the investments which are made by the manufacturer in the two identified sectors identified in Condition-B of the notification being a watchdog to safeguard the interest of the revenue and it was indisputably complied with by the petitioner and it is not the case of the respondents that there was any objection ever raised by the Jurisdictional Commissioner of Central Excise either while withdrawals from the escrow account or in reference to the investments made by the petitioner in the sectors indicated in Condition-B of the notification.
40. As there was an obligation in Condition-D of the notification dt.09.7.2004 to submit quarterly statements to the committee in which details of withdrawal from the escrow account and investments made during the quarter, petitioner complied with the Condition-D and submitted all the documents of the quarterly statements as required to the committee, earlier the committee has not proceeded and for which the petitioner was to approach this court by filing of WP(C) No.111/2013 and after the interim order of this court which came to be further challenged before the Apex Court and only thereafter the committee proceeded to examine the records and since the final benefit of exemption could have been availed by the petitioner only after the certificate being issued by the committee the only option available with the petitioner to adopt the legal recourse in calling upon the committee to examine and record its satisfaction over the records furnished by the petitioner.
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41. The committee disallowed certain investments made in its meetings held on 04.4.2014 and 17.4.2014 respectively which was a unilateral decision of the committee having adverse consequence and no opportunity of hearing was afforded to the petitioner which indeed was in violation of the principles of natural justice and this view which we expressed is supported by the judgment of the High Court of Gauhati where the very notification of which reference has been made was considered in detail in the case of the very petitioner in Dharampal & Satyapal Ltd. reported in 2010 (1) GLT 744 which was finally confirmed by the Division Bench of the High Court of Gauhati of which reference in extract has been made by us.
42. It is true that though we are in conformity with the view expressed by the High Court of Gauhati, but we would further like to observe that power has been vested in the Jurisdictional Commissioner of Central Excise to examine when the application is filed for withdrawal from the escrow account and investments made in the sectors which are identified in Condition-B of the notification seeking prior approval and it presupposes that in the ordinary course of business compliance of the requirement under notification has been made unless it is proved to be contrary.
43. Indisputably, the Jurisdictional Commissioner of Central Excise is not the authority sub-ordinate to the committee or the committee is not the appellate authority to review/revisit Page - 40 of 48 the decisions of the Jurisdictional Commissioner of Central Excise. At least under the notifications, there is no clarity in respect to the jurisdiction of the committee and what is its ambit & scope and to what extent the committee can interfere in the decisions of the Jurisdictional Commissioner of Central Excise with whose prior approval the manufacturer withdrew the money from the escrow account and made investments in the sectors which are identified under Condition-B of the notification, at the same time, at least the committee is not working as an ombudsman over the decisions of the Jurisdictional Commissioner of Central Excise to reopen/review all his actions which indisputably is not permissible under the notification of which reference has been made.
44. Taking note of the submissions made and examining the relevant notifications of which a detailed reference has been made, it appears to be a case of double penalty to a manufacturer being a law-abiding person who withdrew the money from the escrow account and made investments in the identified sectors referred to in Condition-B with prior approval of the Jurisdictional Commissioner of Central Excise and that has been later disallowed by the committee and recovery proceedings are initiated. In the given circumstances, the money which the manufacturer withdrew had already been invested under the sectors which are identified under Condition-B and is not open at his disposal, at the same time after the decision being taken by the committee disallowing such investments, manufacturer has Page - 41 of 48 been called upon to deposit such investments which has been disallowed with interest which could never be the intention of Central Government in extending the exemptions to such of the manufacturers who are investing money in the seven North Eastern States to seek exemption from the excise duty with the prior approval of the Jurisdictional Commissioner of Central Excise.
45. To further clarify that the Central Government intended to call upon the entrepreneurs/manufacturers to invest money in the seven North Eastern States in the sectors identified under the notification for industrial growth and to generate employment opportunities and to prevent the youth to migrate but if such investments once made are being disallowed in such a cryptic manner without due application of mind and denying opportunity of hearing and depriving the manufacturer to justify with the supporting material is indeed in violation of principles of natural justice, it will certainly be a counterproductive and the entrepreneurs/manufacturers will be reluctant to come forward and avail incentive of the benefits which the Central Government wants to promote for the better living conditions and for industrial growth and of utilization of natural resources and to generate employment in the seven North Eastern States.
46. So far as the submission made in reference to opportunity of hearing not being afforded or in violation of principles of natural justice remains an empty formality suffice it Page - 42 of 48 to say that the Apex Court in the judgment reported in (2015) 8 SCC 519 in the case of the very petitioner has examined and finally arrived to a conclusion holding that the principles of natural justice are integral part of Art.14 of the Constitution and no decision prejudicial to a party should be taken without affording an opportunity of hearing or supplying the material which would be the basis for the decision and this is otherwise the settled principle of law that no one should be condemned unheard needs no elaborate discussion since the law of natural justice and its scope has been considered by the Apex Court in the judgment reported in (2015) 8 SCC 519.
47. We find further substance in the submission made by the petitioner‟s counsel that reference has been made of the report of the Monitoring Committee and its report has been relied upon by the committee in taking its decision but we find that neither the report of the Monitoring Committee has been placed on record and under whose authority the Monitoring Committee was constituted, what are its observations and under whose directives the Monitoring Committee has functioned is not on record and indisputably, the committee neither called upon the petitioner nor supplied the material relied upon and straightaway arrived to a conclusion that certain investments are disallowable which is indeed prejudicial to the interest of the petitioner and in violation of the principles of natural justice and since it has been elaborately dealt with by the High Court of Gauhati, we need not consider appropriate to further elaborate and reiterate the same.
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48. We are also of the view that once the withdrawal has been made from the escrow account and investments are made under the identified sectors specified under Condition-B of the notification with the prior approval of the Jurisdictional Commissioner of Central Excise, the committee which has been constituted although is the high power committee of Senior Executives of the Government but that appears to be constituted to keep the overall vigil and to see that the investments must be made by the manufacturers in terms of the approval granted by the Jurisdictional Commissioner of Central Excise in its true spirit and in the relevant identified sectors which are being specified in Condition-B of the notification and if there appears any default or there is any misuse of funds or the investments have not been made in terms of the approval granted by the Jurisdictional Commissioner of Central Excise, or some fraud has been committed or with connivance of the authority funds have been diverted for other purposes the committee holds jurisdiction by examining the records furnished by the manufacturer which includes withdrawal and the investments made during the quarter in question for recording its satisfaction but if the committee is being permitted to play a role of an appellate authority and to revisit/review and to sit over the decisions of the Jurisdictional Commissioner of Central Excise in the capacity of an ombudsman which, in our considered view, is not within the jurisdiction vested with the committee under the notifications dt.25.8.2003, 21.01.2004 and 09.7.2004.
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49. For our satisfaction, we have gone through the reports of the committee which is included in the instant proceedings and we find that the committee has primarily relied upon the report of the Monitoring Committee which was never supplied to the petitioner and under whose authority it was constituted and who are its members to whom the work was entrusted is not available on records and mere presence of the authorized representatives of the petitioner as alleged by the respondents in their counter affidavit would not be construed as approval or consent of the petitioner to the report, if any, being submitted by the Monitoring Committee to the committee. At the same time, we find that the expenses which were incurred by the petitioner with the consultancy firm payment of TDS/service tax in preparation of drawing and design from the engineers, all the consultancy charges under a single stroke are disallowed and the investments which are made in the category of civil works, TDS payments made to the contractors are straightway being disallowed, at the same time, we further find that the investments made in the plant and machinery has been disallowed for the reason that the Monitoring Committee has reported that the investments made in plant and machinery has not been installed and are found to be in packed condition at the moment.
50. We have our prima facie reservation for the reason that if the manufacturer has to invest under the relevant sectors under notification in plant and machinery or in infrastructure or Page - 45 of 48 civil works or social projects in the North Eastern States including Tripura, there are certain ancillary charges which are inevitable and there is no restriction under the notification if such ancillary charges are incurred for the purposes of investment in the identified sectors under the notification, is still available for satisfaction of the committee but could not to be outrightly rejected by a single stroke of pen, at the same time, if a plant & machinery has been purchased by a manufacturing unit located in the seven North Eastern States, merely if could not be installed or put into operation in the given quarter would not disallow the claim of the manufacturer straightaway.
51. At the same time, the investments made either in infrastructure or civil works or social projects are macro projects with no micro details are provided and there are no guidelines available on records which the manufacturer while taking a decision for investments in plant & machinery or infrastructure or civil works or social projects has to be kept in mind still open for the Jurisdictional Commissioner of Central Excise to record its satisfaction prior grant of approval to the manufacturer but not open to the committee which has been constituted for recording its satisfaction to hold appellate jurisdiction in reference to the investments made by the manufacturer in the seven North Eastern States to overreach/overturn the decision of the Jurisdictional Commissioner of Central Excise in absence of any cogent reasons in support thereof.
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52. In our considered view, the procedure adopted by the committee deserves to be reviewed in the light of what has been observed by us and as a word of caution we would like to observe that the Jurisdictional Commissioner of Central Excise or the Committee is supposed to interpret conditions of the notifications liberally to its optimum vitality but implement strictly in true spirit.
53. Before parting with the order, we would further like to observe that the intention of all the stakeholders is to avoid or minimize litigation and this is the spirit which is expected from the bureaucratic approach of the Government officials but the ground realities are quite different. Even in the instant case, we find that the petitioner is under litigation for a sufficient long time in reference to the interpretation of the notifications dt.25.8.2003, 21.01.2004 and 09.7.2004 and he has been at least in three rounds of litigation before the High Court of Gauhati and at least in two rounds of litigation in this Court and despite a clarification being made by the High Court of Gauhati in detail of which we too are in conformity still we find that when the matter is remitted back to the committee, no Government authority because of bureaucratic approach and red-tapism take responsibility on its shoulders and wants to shift the buck from one shoulder to the other and leaving the entrepreneur/ manufacturer in lurch as in the instant case after so many rounds of litigation and a recent judgment of the Single Bench of the High Court of Gauhati in the case of the present petitioner which Page - 47 of 48 appears to be the third round of litigation in WP(C) No.5353/2014 decided on 27.7.2018 which again has remitted the petitioner back to square one with no positive results coming forward.
54. It is expected from the respondents that it is high time that the Central Government may revisit the relevant notifications dt. 25.8.2003, 21.01.2004 and 09.7.2004 and come out with a guidelines and separation of powers and jurisdiction of the Jurisdictional Commissioner of Central Excise and that of the committee which the authorities have to discharge keeping in view the observations made by the High Court of Gauhati and further by this Court in making the task of the authorities easier in taking action in furtherance of deciding the matters in reference to the instant notifications with a possibility and hope to avoid further litigation.
55. There could be a situation where we could have directed the petitioner to be afforded a post-decisional hearing but in the instant case, that may not be possible for the reason that the committee has expressed its view without affording an opportunity of hearing and in violation of the principles of natural justice and after the view has been expressed by this court it has to be revisited by the committee in the first instance and affording a post-decisional hearing to the petitioner may not be advisable and in our considered view, the petitioner has made out a case not only for setting aside the demand notices but the Page - 48 of 48 minutes of the meetings of the committee dt.08.4.2014 and 01.5.2014 which was made to be the basis for raising demand against the petitioner impugned in the instant proceedings.
56. The writ petitions accordingly succeed and are allowed. The minutes of the meetings of the committee dt.08.4.2014 and 01.5.2014 held pursuant to meetings of the committee dt.04.4.2014 & 17.4.2014 respectively and consequential Demand Notices dt.28.7.2014, 15.9.2014 & 12.10.2015 and any other demand notice, if raised pursuant to the minutes of the meeting referred to supra are hereby quashed and set aside. The committee may revisit the investments made by the petitioner afresh keeping in view the observations made by this Court and if at all arrive to a conclusion that certain investments are disallowable and are not in conformity with Condition-B of the notifications dt.25.8.2003 and 21.01.2004, read with 09.07.2004 the petitioner be afforded an opportunity of hearing and with due compliance of the principles of natural justice, further action be taken in accordance with law. No costs.
(ARINDAM LODH), J (AJAY RASTOGI), CJ Certificate:- All corrections made in the judgment have been incorporated in the judgment.
Pulak