The Gauhati High Court has restored the full exemption of Central Excise to the units in North eastern area under Area Based Exemption scheme vide notification No.32/1999-CE and Notification No. 33/1999-CE Dated 8/7/1999, as amended in 2007. The notification provided that the units operating in the area shall pay duty and portion of duty paid in cash shall be refunded to the units. The notification was amended later to exclude such benefits to tobacco products manufacturers and later to pan masala manufacturers.

In the year 2008, vide Notification 17/2008 dated 27.03.2008 the notification 32/99 was amended and cap was placed on the refund amount. This cap was challenged in the Guwhati High Court in Writ Petition No. WP(C) 1707/2008 in case of M/s Kamakhya Cosmetics & Pharmaceuticals Pvt. Ltd. v. Union of India. The Hon’ble High Court vide its final order have quashed the Notification 17/2008 dated 27.03.2008 and restored original refund provisions of the notification. The Court held,

“Because of what we have discussed and pointed out above, I hold that the impugned notifications, dated 27.03.2008 and 10.06.2008, are not sustainable in law and must, therefore, be set aside and quashed.

In the result and for the reasons discussed above, these writ petitions succeed. The impugned notifications, dated 27.03.2008 and 10.06.2008, are hereby set aside and quashed. The petitioners are hereby held entitled to receive 100% exemption from payment of excise duty as were available to them in terms of the relevant notifications dated 08.07.1999 and 25.04.2007, as the case may be.”

The order has been passed on the proposition of promissory estoppel. In MRF Limited v. AC, Sales Tax [2006 (206) ELT 6 (SC)], Hon’ble Supreme Court held that doctrine of promissory estoppel applies to statutory notifications where the state does not plead any overriding public interest or equity. The High Court observed in the present case that state has not been able to show any supervening public interest.

Earlier such restriction in Himachal Pradesh was quashed in case of Gillete India Limited v. Union of India [2009 (235) ELT 5 (HP)] by the Himachal Pradesh High Court on the same ground of promissory estoppel. In case of Unicorn Industries v. UOI [2007 (218) ELT 175], the Sikkim High Court has stayed the operation of amendment which withdrew exemption from pan masala.

(Views expressed are personal views of the author.)

Written by:- Advocate Rajesh Kumar. The author can be contacted on The author can be contacted on [email protected] , Web:


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September 2021