Dharampal Satyapal Ltd. Vs Union of India And 3 Ors (Gauhati High Court)
The Gauhati High Court allowed the writ petition filed by Dharampal Satyapal Ltd. and set aside the minutes of the Investment Appraisal Committee (IAC) dated 25.06.2014 rejecting investments claimed under the North East Industrial Policy exemption scheme, along with the consequential demand notice dated 15.09.2014. The petitioner, engaged in manufacture and sale of chewing tobacco/pan masala, had manufacturing units in Tripura and Assam and claimed excise duty exemptions under Notifications No.32/99-CE and 33/99-CE dated 08.07.1999 and subsequent notifications. Notification No.69/2003-CE dated 25.08.2003 provided a 50% exemption subject to specified investment conditions. Subsequently, Notifications dated 21.01.2004 and 09.07.2004 introduced a scheme involving investment of amounts equivalent to excise duties in plant and machinery, infrastructure, civil works or social projects in the North Eastern Region. Under the 09.07.2004 notification, amounts were deposited in an escrow account, withdrawals required prior approval of the jurisdictional Commissioner of Central Excise, and the IAC was required to examine investment details and issue certification.
The petitioner’s claimed investments were considered by the IAC. Earlier proceedings had resulted in the Court holding that principles of natural justice were applicable and directing reconsideration. The High Court also relied upon its earlier decision in Dharampal Satyapal Ltd. and others-Versus-Union of India and others, reported in 2010 (1) GLT 744, which had examined the respective roles of the jurisdictional Commissioner and the IAC under the post-escrow scheme. The Court held that once the jurisdictional Commissioner permitted withdrawal from the escrow account after considering the notification conditions, the IAC could not subsequently re-examine whether the proposed investment satisfied Condition B. In the post-escrow situation, the IAC’s role was confined to determining whether the investment was made in accordance with the approval granted by the jurisdictional Commissioner and whether the investment was actually made.
