Case Law Details
Union of India & Another Vs V.V.F Limited & Another (Supreme Court)
Conclusion: Subsequent notifications/industrial policies were issued in public interest and in the interest of the Revenue and they seek to achieve the original object and purpose of giving incentive/exemption while inviting the persons to make investment on establishing the new undertakings and they did not take away any vested rights conferred under the earlier notifications/industrial policies and therefore could not be said to be hit by the doctrine of promissory estoppel, the same was to be applied retrospectively and they could not be said to be irrational and/or arbitrary.
Held: Kutch District in the State of Gujarat was struck by a devastating earthquake on 26.01.2001 which destroyed the existing infrastructure in that District, besides causing huge casualties. Government of India announced an Incentive Scheme for setting up New Industries in the earthquake affected District of Kutch, by issuing Central Excise Exemption Notification No. 39/2001-CE dated 31.07.2001. The said notification granted exemption to goods cleared from a New Industrial Unit set up in the Kutch District of Gujarat prior to 31.07.2003 (which was subsequently extended to 31.12.2005) from so much of duty of excise as was equivalent to the amount of duty paid in cash/Personal Ledger Account (PLA) on the finished goods. That the said incentive of refund of the duty paid in cash/PLA was available for the period of 5 years from the date of commencement of commercial production. Assessee had set up new industrial units in the Kutch District and made an investment in the plant and machinery of more than Rs.20 crores. According to them, almost the entire duty was required to be paid in cash, the whole of which was refundable without any upper cap in terms of the notification No. 39/2001-CE dated 31.07.2001. Various amendments were made to the original Incentive Scheme Notification No. 39/2001-CE dated 31.07.2001 between September, 2001 to September, 2004, inter alia, to clarify certain matters and also to extend the cut-off date for setting up new industrial units from 31.07.2003 to 31.12.2005. Assessee challenged the subsequent notification No. 16/2008-CE before the High Court of Gujarat by way of the aforesaid writ petitions as the subsequent notification No. 16/2008-CE changed the entire basis of the incentive exemption and had the effect of substantially reducing their entitlement of refund from nearly 100% of the duty paid to only 34% of such duty amount. According to assessee, since the promised incentive was curtailed midway before the expiry of the five years period, the subsequent notification was in breach of the principle of promissory estoppel. It was held that once it was held that the subsequent notifications/industrial policies which were impugned before the respective High Courts were clarificatory in nature and were issued in public interest and in the interest of the Revenue and they seek to achieve the original object and purpose of giving incentive/exemption while inviting the persons to make investment on establishing the new undertakings and they did not take away any vested rights conferred under the earlier notifications/industrial policies and therefore could not be said to be hit by the doctrine of promissory estoppel, the same was to be applied retrospectively and they could not be said to be irrational and/or arbitrary. It was clarified that the present judgment should not affect the amount of excise duty already refunded, meaning thereby, the cases in which the excise duty was already refunded prior to the subsequent notifications/industrial policies impugned before the respective High Court, they were not to be reopened. However, it was further CLARIFIED that the pending refund applications shall be decided as per the subsequent notifications/industrial policies which were impugned before the respective High Courts and they should be decided in accordance with the law and on merits and as per the subsequent notifications/industrial policies impugned before the respective High Courts.
FULL TEXT OF THE SUPREME COURT JUDGEMENT
1. Leave granted in all the special leave petitions.
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