The petitioners “Kutch Chamber of Commerce and Industry, a Voluntary Association of Industrial Units, and other Industrial Units operating in the Kutch District of State of Gujarat, have challenged the Notifications issued by respondent No. 1 bearing No. 16/2008-C.E dated 27.3.2008 as well as Notification No. 33/2008-C.E dated 10.6.2008 on the ground that they have effect of depriving the petitioners and other similarly situated industries and industrial units, set up pursuant to the Notification No. 39/2001-C.E dated 31.7.2001, providing for the exemption from payment of excise duty for five years from the date of commencement of commercial production, to the newly set up industrial units with specific minimum investments as an incentive to set up new industries in Kutch region after the devastating earthquake.
In the first instance it can be said that by impugned notification dated 27.3.2008 as well as 10.6.2008 no drastic change affecting the basis objective of notification dated 31.7.2001 is said to have been made so as to give any reason for grievances to the petitioners. At this stage, it is essential to note that the possibility of creating anomaly voiced by the petitioner in the representation to the central Government has been taken care of, as could be seen from the amendments. The economic legislation therefore as stated by the Apex court has to be viewed from its proper prospective.
The petitions therefore, being bereft of merits, deserves dismissal and accordingly they are dismissed.
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION No. 5909 of 2008
SPECIAL CIVIL APPLICATION No. 6300 of 2008
SPECIAL CIVIL APPLICATION No. 6298 of 2008
SPECIAL CIVIL APPLICATION No. 6299 of 2008
SPECIAL CIVIL APPLICATION No. 5907 of 2008
SPECIAL CIVIL APPLICATION No. 8468 of 2008
SPECIAL CIVIL APPLICATION No. 6334 of 2008
SPECIAL CIVIL APPLICATION No. 6562 of 2008
VVF Ltd. & 1
Versus
Union of India & 1
Date of Judgment: 28/10/2009
J U D G M E N T
(Per : HONOURABLE MR.JUSTICE S.R.BRAHMBHATT)
As I am unable to agree with the views of Hon’ble Justice D. A. Mehta in this group of petitions I have to set out my views, and conclusion separately as under:
1. In these group of petitions, the petitioners “Kutch Chamber of Commerce and Industry, a Voluntary Association of Industrial Units, and other Industrial Units operating in the Kutch District of State of Gujarat, have challenged the Notifications issued by respondent No. 1 bearing No. 16/2008-C.E dated 27.3.2008 as well as Notification No. 33/2008-C.E dated 10.6.2008 on the ground that they have effect of depriving the petitioners and other similarly situated industries and industrial units, set up pursuant to the Notification No. 39/2001-C.E dated 31.7.2001, providing for the exemption from payment of excise duty for five years from the date of commencement of commercial production, to the newly set up industrial units with specific minimum investments as an incentive to set up new industries in Kutch region after the devastating earthquake. The Government of India in exercise of power conferred upon it under the 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 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978, issued Notification No. 39/2001-C.E dated 31.7.2001 providing incentives in form of exemption from payment of excise duty for period of five years from the date of commencement of commercial production to newly set up industrial units with minimum specific investments, in the Kutch district so as to help the entire Kutch region to over come untold miseries and hardships befallen it in wake of devastating earth quake of 2001. The incentives of exemption from payment of excise duty to newly set up industries was for bringing about some succor to the people of region in helping them rehabilitating themselves on securing employment in and on account of newly set up industries. The nature of total exemption from payment of duty to Industrial units set up after 31.7.2001 up to 31.7.2003 and thereafter extended up to 2005 came to be substantially changed as the respondent no. 1 issued impugned notifications dated 27.3.2008 and 10.6.2008, where under, the existing exemption from payment of excise duty came to be substantially withdrawn. Being aggrieved and dissatisfied with these notifications, the petitioners and other similarly situated, have approached this Court under Article 226 of the Constitution of India seeking appropriate writ in the nature of mandamus, prohibition or any other writ, order or direction for quashing and setting aside the notifications dated 27.3.2008 and 10.6.2008 being contrary to establish principles of law, arbitrary and discriminatory and also violative of Article 14 of the Constitution of India. All these petitions were heard together and are being disposed of by common judgment as they involved identical question of law and almost similar facts.
2. The facts in brief deserve to be set out as under.
3. In the year 2001, to be more precise, on 26.1.2001 a calamity of devastating earthquake had befallen the State of Gujarat, particularly the district of Kutch. The entire country was under deep shock on seeing the plight that it brought about of the people of the district and surrounding areas. The Union of India had to take appropriate measures for ameliorating plight of people of Kutch. In order to revive the economy in Kutch district, it was essential to encourage the entrepreneurs to put up new industries in the district so as to generate more employments and opportunity of employment which in turn would help Kutch district and its people to be brought back in the main stream with the nation.
4. The respondent no. 1 in exercise of 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 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978, issued Notification No. 39/2001 (hereinafter referred to as the ‘Exemption Notification’) dated 31.7.2001 on being satisfied that it was necessary in the public interest so to do exempting the goods specified in the First Schedule to the Central Excise Tariff Act, 1985 and other than the goods specified in the Annexure appended to the Notification and cleared from a unit located in the Kutch District of Gujarat from so much of the duty of excise or the additional duty of excise, as the case may be, leviable under provisions of the said Acts as is equivalent to the amount of duty paid by manufacturing of goods till then the amount of duty paid by the manufacturer of goods others than the amount of duty paid by utilization of CENVAT credit under the CENVAT Credit Rules, 2001 on certain terms and conditions mentioned therein.
5. Under the said Notification, eligible industrial units were entitled to exemption of so much of the duty leviable on the goods cleared, as was actually paid, i.e in cash, by such unit. The said exemption was made available by way of refund as provided in Paragraph No. 2(b) of the said Notification. The refund was granted on the basis of a statement furnished by the unit under Paragraph No.2(c) of the said Notification. Paragraph No.3(i) of the said Notification provides that the exemption would be available to New Industrial Units, which are set up on or before 31.7.2003. Compliance with the said condition was to be certified under Paragraph No.3(ii) by the Chief Commissioner of Central Excise, Vadodara and the Principal Secretary to the Government of Gujarat, Department of Industry (hereinafter referred to as the ‘said Committee’). The unit interested in availing of the exemption was also required to furnish a declaration as to the original value of investment in plant and machinery installed in the factory, as on the date of commencement of commercial production, in order to show that the requirement of minimum specific investment on or before specified date was fully complied with. The exemption was available for a period not exceeding five years from the date of commencement of Commercial Production. The said Notification came to be amended from time to time vide a series of Notifications, bearing Nos. 42/2001, 45/2002, 60/2002, 5/2003, 16/2003, 65/2003, 9/2004 and 55/2004. Pursuant to said exemption notification, the petitioner and other similarly situated persons have set up their industrial units for availing the benefits of exemption from payment of excise duty. The details of the units have been stated in the memo of petition and need no elaborate dwelling upon at this stage, as by and large there is no dispute with regard to the factum of putting up the industrial units as per the notification and terms and conditions of the Notifications. It is also required to be noted that all the petitioners have mentioned with regard to their action and investment pursuant to the exemption notifications. By and large, they have remained undisputed and therefore, the same also need not detain the Court for dealing with the same in more elaboration. Of course the respondent Central Government has not accepted the contention of the petitioners that they have put industries only for and on account of excise exemption. Suffice it say that it was the say of the petitioners in these petitions that all the petitioners set up their units and made investment of huge amount of money for putting up the units in Kutch so as to seek benefit of excise duty exemption as envisaged under the Exemption Notification.
6. As submitted by the petitioner, the respondent no. 1 issued the impugned notifications, which is made effective from 1.4.2008 and altered the entire basis on which the benefits were available to the eligible units, during the period of five years as originally promised. The petitioners submit that under the impugned notifications, the basis of exemption has been arbitrarily changed to value addition undertaken in the manufacturing of goods, instead of exemption on total duty actually paid. The refund available is limited to, the duty payable on value addition undertaken, which shall be equivalent to the amount calculated as a percentage of total duty payable on the excisable goods at the rate specified in table given in the said impugned Notification. The petitioners have on page-9 produced it in a more articulated manner, which is reproduce hereunder:-
