# UNION OF INDIA & ANOTHER ETC. ETC v. M/S V.V.F LIMITED & ANOTHER ETC. ETC

- **Citation:** [2020] 7 S.C.R. 695
- **Court:** Supreme Court of India
- **Decided:** 2020-04-22
- **Case number:** Civil Appeal Nos. 2256-2263 of 2020
- **Bench:** Arun Mishra, M. R. Shah, B. R. Gavai
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/union-of-india-another-etc-etc-v-m-s-v-v-f-limited-another-etc-etc-34695
- **Pages:** 39

## Headnote

Doctrines/Principles - Doctrine of promissory estoppel -
Applicability of, in fiscal matters - In CA Nos. 2256-2263 of 2010,
notification was issued providing exemption/incentives for setting
up new industries in the earthquake affected district of Kutch -
Excise duty exemption was granted by way of refund of the duty
paid in cash/PLA - Respondents set up new units in Kutch - By
subsequent notification, the incentive of refund of excise duty was
limited to the extent of the value addition - Challenged by
respondents - Quashed by High Court on the ground of breach of
doctrine of promissory estoppel - In other allied matters, similar
notifications/industrial policies allowing refund of excise duty on
value addition basis were quashed by High Courts of Sikkim and
Guwahati - On appeal, held: Doctrine of promissory estoppel cannot
be invoked in the abstract - Courts are bound to consider all aspects
including the objective to be achieved and the public good at large
- The doctrine must yield when the equity so demands - Object of
subsequent notifications/industrial policies was to prevent tax
evasion by unscrupulous manufacturers - They are clarificatory in
nature since they declared the refund of excise duty paid genuinely
on actual manufacturing of goods and not on the goods
manufactured only on paper without undertaking any
manufacturing activities of such goods - Subsequent notifications/
industrial policies were issued in public interest and do not take
away any vested rights conferred under the earlier notifications/
industrial policies - Thus, are not hit by the doctrine of promissory
estoppel - Respective High Courts erred in quashing them -
Impugned judgments set aside - Excise Duty - Central Excise Act -
ss.5A, 11B - Interpretation of Statutes - Cenvat Credit Rules, 2001.
Interpretation of Statutes - Parliamentary Statute/ Subordinate
Legislation/ Declaratory Statutes/ Clarificatory Orders - Operation
of - Discussed.
[2020] 7 S.C.R. 695
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Interpretation of Statutes - Fiscal Statutes - Interpretation of
- Discussed - Excise Duty - Tax/Taxation.
Disposing of the matters, the Court
Held : 1.1 The doctrine of promissory estoppel cannot be
invoked in the abstract and the courts are bound to consider all
aspects including the objective to be achieved and the public
good at large. While considering the applicability of the doctrine,
the courts have to do equity and the fundamental principles of
equity must forever be present to the mind of the court, while
considering the applicability of the doctrine. The doctrine must
yield when the equity so demands if it can be shown having regard
to the facts and circumstances of the case that it would be
inequitable to hold the Government or the public authority to its
promise, assurance or representation. [Para 11.1]
Kasinka Trading v. Union of India (1995) 1 SCC 274:
[1994] 4 Suppl. SCR 448; Shrijee Sales Corporation
v. Union of India (1997) 3 SCC 398 : [1996] 10 Suppl.
SCR 888 ; STO v. Shree Durga Oil Mills (1998) 1 SCC
572 : [1997] 6 Suppl. SCR 488; State of Rajasthan v.
Mahaveer Oil Industries (1999) 4 SCC 357 : [1999] 2
SCR 798 ; Shree Sidhbali Steels Ltd. v. State of U.P.
(2011) 3 SCC 193 : [2011] 3 SCR 134 - relied on.
1.2 The respective notifications/industrial policies
impugned before the High Courts can be said to be clarificatory
in nature and it can be defined as an Act to remove doubts. It
cannot be said that by the subsequent notifications/industrial
policies the benefits which were accrued/granted under the earlier
notifications were sought to be taken away. It also cannot be said
that by the subsequent notifications/industrial policies, the rights
which have been accrued under the earlier notifications had been
taken away. The main objective of the earlier respective
notifications/industrial policies was to encourage the
entrepreneurs to put new industries in the area so as to generate
employment and for that an

## Text

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UNION OF INDIA & ANOTHER ETC. ETC.
v.
M/S V.V.F LIMITED & ANOTHER ETC. ETC.
(Civil Appeal Nos. 2256-2263 of 2020)
APRIL 22, 2020
[ARUN MISHRA, M. R. SHAH AND B. R. GAVAI, JJ.]
Doctrines/Principles - Doctrine of promissory estoppel -
Applicability of, in fiscal matters - In CA Nos. 2256-2263 of 2010,
notification was issued providing exemption/incentives for setting
up new industries in the earthquake affected district of Kutch -
Excise duty exemption was granted by way of refund of the duty
paid in cash/PLA - Respondents set up new units in Kutch - By
subsequent notification, the incentive of refund of excise duty was
limited to the extent of the value addition - Challenged by
respondents - Quashed by High Court on the ground of breach of
doctrine of promissory estoppel - In other allied matters, similar
notifications/industrial policies allowing refund of excise duty on
value addition basis were quashed by High Courts of Sikkim and
Guwahati - On appeal, held: Doctrine of promissory estoppel cannot
be invoked in the abstract - Courts are bound to consider all aspects
including the objective to be achieved and the public good at large
- The doctrine must yield when the equity so demands - Object of
subsequent notifications/industrial policies was to prevent tax
evasion by unscrupulous manufacturers - They are clarificatory in
nature since they declared the refund of excise duty paid genuinely
on actual manufacturing of goods and not on the goods
manufactured only on paper without undertaking any
manufacturing activities of such goods - Subsequent notifications/
industrial policies were issued in public interest and do not take
away any vested rights conferred under the earlier notifications/
industrial policies - Thus, are not hit by the doctrine of promissory
estoppel - Respective High Courts erred in quashing them -
Impugned judgments set aside - Excise Duty - Central Excise Act -
ss.5A, 11B - Interpretation of Statutes - Cenvat Credit Rules, 2001.
Interpretation of Statutes - Parliamentary Statute/ Subordinate
Legislation/ Declaratory Statutes/ Clarificatory Orders - Operation
of - Discussed.
[2020] 7 S.C.R. 695
695
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SUPREME COURT REPORTS
[2020] 7 S.C.R.
Interpretation of Statutes - Fiscal Statutes - Interpretation of
- Discussed - Excise Duty - Tax/Taxation.
Disposing of the matters, the Court
Held : 1.1 The doctrine of promissory estoppel cannot be
invoked in the abstract and the courts are bound to consider all
aspects including the objective to be achieved and the public
good at large. While considering the applicability of the doctrine,
the courts have to do equity and the fundamental principles of
equity must forever be present to the mind of the court, while
considering the applicability of the doctrine. The doctrine must
yield when the equity so demands if it can be shown having regard
to the facts and circumstances of the case that it would be
inequitable to hold the Government or the public authority to its
promise, assurance or representation. [Para 11.1]
Kasinka Trading v. Union of India (1995) 1 SCC 274:
[1994] 4 Suppl. SCR 448; Shrijee Sales Corporation
v. Union of India (1997) 3 SCC 398 : [1996] 10 Suppl.
SCR 888 ; STO v. Shree Durga Oil Mills (1998) 1 SCC
572 : [1997] 6 Suppl. SCR 488; State of Rajasthan v.
Mahaveer Oil Industries (1999) 4 SCC 357 : [1999] 2
SCR 798 ; Shree Sidhbali Steels Ltd. v. State of U.P.
(2011) 3 SCC 193 : [2011] 3 SCR 134 - relied on.
1.2 The respective notifications/industrial policies
impugned before the High Courts can be said to be clarificatory
in nature and it can be defined as an Act to remove doubts. It
cannot be said that by the subsequent notifications/industrial
policies the benefits which were accrued/granted under the earlier
notifications were sought to be taken away. It also cannot be said
that by the subsequent notifications/industrial policies, the rights
which have been accrued under the earlier notifications had been
taken away. The main objective of the earlier respective
notifications/industrial policies was to encourage the
entrepreneurs to put new industries in the area so as to generate
employment and for that an incentive was offered to get back by
way of refund the excise duty paid either in cash or PLA, namely,
the amount of duty paid by the manufacturer of goods other than
the amount of duty paid by utilization paid by CENVAT credit.
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The same was subject to conditions that it will be applied to the
new industrial units, i.e. the units which are set up on and after
the publication of the said notification in the Official Gazette, i.e.
not later than 31.07.2003. The notification was modified from time
to time. However, during the operation of the earlier notifications,
it was noticed that the provision of granting refund of cash paid
portion of duty and eligibility of credit the entire amount of duty
to the buyers of such excisable goods had prompted certain
unscrupulous manufacturers to indulge in different types of tax
evasion tactics. It was revealed on analysis of cases booked by
the Excise Department and even the representations received
from the Industry Association about misuse of exemptions
granted by the Government, which was meant to be available
only for genuine manufacturers. Therefore, the Government came
out with the impugned notifications/industrial policies that the
refund of excise duty shall be provided on actual and calculated
on the basis of actual value addition. On a fair reading of the
earlier notifications/industrial policies, it is clear that the object
of granting the refund was to refund the excise duty paid on
genuine manufacturing activities. The intention would not have
been that irrespective of actual manufacturing/manufacturing
activities and even if the goods are not actually manufactured,
but are manufactured on paper, there shall be refund of excise
duty which are manufactured on paper. Therefore, it can be said
that the object of the subsequent notifications/industrial policies
was the prevention of tax evasion. It can be said that by the
subsequent notifications/industrial policies, they only rationalizes
the quantum of exemption and proposing rate of refund on the
total duty payable on the genuine manufactured goods. At the
time when the earlier notifications were issued, the Government
did not visualize that such a modus operandi would be followed
by the unscrupulous manufacturers who indulge in different types
of tax evasion tactics. It is only by experience and on analysis of
cases detected the Excise Department the Government came to
know about such tax evasion tactics being followed by the
unscrupulous manufacturers which prompted the Government to
come out with the subsequent notifications which was to clarify
the refund mechanism so as to provide that excise duty refund
would be allowed only to the extent of duty payable on actual
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value addition made by the manufacturer undertaking
manufacturing activities in the concerned areas. The entire
genesis of the policy manifesting the intention of the Government
to grant excise duty exemption/refund of excise duty paid was to
provide such exemption only to actual value addition made in the
respective areas. As it was found that there was misuse of excise
duty exemption it was considered expedient in the public interest
and with a laudable object of having genuine industrialization in
backward areas or the concerned areas, the subsequent
notifications/industrial policies have been issued by the
Government. The earlier notifications were issued under Section
5A of the Central Excise Act and even the subsequent
notifications which were issued in public interest and in the
interest of Revenue were also issued under Section 5A of the
Central Excise Act, which can not be said to be bad in law, arbitrary
and/or hit by the doctrine of promissory estoppel. [Paras 14, 14.1]
1.3 The subsequent notifications/industrial policies do not
take away any vested right conferred under the earlier
notifications/industrial policies. Under the subsequent
notifications/industrial policies, the persons who establish the new
undertakings shall be continue to get the refund of the excise
duty. However, it is clarified by the subsequent notifications that
the refund of the excise duty shall be on the actual excise duty
paid on actual value addition made by the manufacturers
undertaking manufacturing activities. Therefore, it cannot be said
that subsequent notifications/industrial policies are hit by the
doctrine of promissory estoppel. The respective High Courts
have committed grave error in holding that the subsequent
notifications/industrial policies impugned before the respective
High Courts were hit by the doctrine of promissory estoppel. As
the subsequent notifications/industrial policies are "to explain"
the earlier notifications/industrial policies, it would be without
object unless construed retrospectively. The subsequent
notifications impugned before the respective High Courts as such
provide the manner and method of calculating the amount of
refund of excise duty paid on actual manufacturing of goods. The
subsequent notifications therefore are clarificatory in nature, since
it declares the refund of excise duty paid genuinely and paid on
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actual manufacturing of goods and not on the duty paid on the
goods manufactured only on paper and without undertaking any
manufacturing activities of such goods.[Paras 14.2, 14.3]
1.4 Once it is held that the subsequent notifications/
industrial policies which were impugned before the respective
High Courts are clarificatory in nature and are 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 do not take away any
vested rights conferred under the earlier notifications/industrial
policies and therefore cannot be said to be hit by the doctrine of
promissory estoppel, the same is to be applied retrospectively
and they cannot be said to be irrational and/or arbitrary. Under
the circumstances, the respective High Courts committed a grave
error in quashing and setting aside the subsequent notifications/
industrial policies impugned before the respective High Courts
on the ground that they are hit by the doctrine of promissory
estoppel and that they are retrospective and not retro-active.
The impugned Judgments and Orders passed by the respective
High Courts, which are impugned in the present appeals, quashing
and setting aside the subsequent notifications/industrial policies
impugned in the respective writ petitions before the respective
High Courts, are hereby quashed and set aside. Consequently,
the original writ petitions filed by the respective original writ
petitioners before the respective High Courts challenging the
respective subsequent notifications/industrial policies stand
dismissed, the challenge to the respective subsequent
notifications/industrial policies impugned before the respective
High Courts FAIL. However, the present judgment shall not affect
the amount of excise duty already refunded, meaning thereby,
the cases in which the excise duty is already refunded prior to
the subsequent notifications/industrial policies impugned before
the respective High Court, they are not to be reopened. However,
the pending refund applications shall be decided as per the
subsequent notifications/industrial policies which were impugned
before the respective High Courts and shall be decided in
accordance with the law and on merits and as per the subsequent
UNION OF INDIA & ANOTHER v. M/S V.V.F LIMITED &
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notifications/industrial policies impugned before the respective
High Courts. [Paras 15, 16]
1.5 In Civil Appeals @ SLP © Nos. 14751/2013, 14752/
2013 and 14753/2013, the challenge to notification Nos. 16/2008CE and 33/2008-CE FAIL and the Excise authorities have in fact
allowed the refund of excise in line with the subsequent notification
Nos. 16/2008-CE and 33/2008-CE which are now upheld by this
Court. [Para 16.1]
Union of India v. Godfrey Philips India Ltd. (1985) 4
SCC 369 : [1985] 3 Suppl. SCR 123; Pournami Oil
Mills v. State of Kerala 1986 (Supp) SCC 728 : [1987]
SCR 654 ; Shri Bakul Oil Industries v. State of Gujarat
(1987) 1 SCC 31 : [1987] 1 SCR 185 ; Pawan Alloys
& Casting Pvt. Ltd. v. U.P. Electricity Board (1997) 7
SCC 251: [1997] 3 Suppl. SCR 266; Dai Ichi Karkaria
Ltd. v. Union of India (2000) 4 SCC 57 : [2000] 2
SCR 1254; Mahabir Vegetable Oils (P) Ltd. v. State of
Haryana (2006) 3 SCC 620: [2006] 2 SCR 1172; State
of Punjab v. Nestle India (2004) 6 SCC 465 : [2004] 2
Suppl. SCR 135; MRF Ltd. Kottayam v. Assistant
Commissioner of Sales Tax (2006) 6 SCC 702 : [2006]
3 Suppl. SCR 778; Southern Petrochemical Industries
Co. Ltd. v. ETIO (2007) 5 SCC 447 : [2007] 6 SCR
955 - held inapplicable.
State Bank of India v. V. Ramakrishnan (2018) 17 SCC
394 : [2018] 10 SCR 974 ; State of Bihar v. Ramesh
Prasad Verma (2017) 5 SCC 665 : [2017] 2 SCR 342;
Union of India v. Martin Lottery Agencies Ltd. (2009)
12 SCC 209 : [2009] 7 SCR 946 ; T.N. Electricity
Board v. Status Spg. Mills Ltd. (2008) 7 SCC 353 :
[2008] 9 SCR 870 ; Zile Singh v. State of Haryana
(2004) 8 SCC 1 : [2004] 5 Suppl. SCR 272 ; R. K.
Garg v. Union of India (1981) 4 SCC 675 : [1982] 1
SCR 947; Commissioner of Customs (Import) v. Dilip
Kumar and Company (2018) 9 SCC 1 : [2018] 7 SCR
1191 - relied on.
Darshan Oils (P) Ltd. v. Union of India (1995) 1 SCC
345 : [1994] 5 Suppl. SCR 278 ; Papu Sweets and
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Biscuits v. Commissioner of Trade Tax, U.P. (1998) 7
SCC 228 : [1998] 2 Suppl. SCR 119 ; DG of Foreign
Trade v. Kanak Exports (2016) 2 SCC 226 : [2015] 15
SCR 287 - referred to.
Case Law Reference
[1982] 1 SCR 947
relied on
Para 8.6.2
[1994] 4 Suppl. SCR 448
relied on
Para 8.7
[1994] 5 Suppl. SCR 278
referred to
Para 8.7
[1996] 10 Suppl. SCR 888
relied on
Para 8.7
[1997] 6 Suppl. SCR 488
relied on
Para 8.7
[1998] 2 Suppl. SCR 119
referred to
Para 8.7
[1999] 2 SCR 798
relied on
Para 8.7
[2011] 3 SCR 134
relied on
Para 8.7
[2015] 15 SCR 287
referred to
Para 8.7
[2018] 7 SCR 1191
relied on
Para 8.7
[1985] 3 Suppl. SCR 123
held inapplicable
Para 9.2.4
[1987] SCR 654
held inapplicable
Para 9.2.4
[1987] 1 SCR 185
held inapplicable
Para 9.2.4
[1997] 3 Suppl. SCR 266
held inapplicable
Para 9.2.4
[2000] 2 SCR 1254
held inapplicable
Para 9.2.4
[2006] 2 SCR 1172
held inapplicable
Para 9.2.4
[2004] 2 Suppl. SCR135
held inapplicable
Para 9.2.4
[2006] 3 Suppl. SCR 778
held inapplicable
Para 9.2.4
[2007] 6 SCR 955
held inapplicable
Para 9.2.4
[2018] 10 SCR 974
relied on
Para 13
[2017] 2 SCR 342
relied on
Para 13.1
[2009] 7 SCR 946
relied on
Para 13.2
[2008] 9 SCR 870
relied on
Para 13.3
[2004] 5 Suppl. SCR 272
relied on
Para 13.4
UNION OF INDIA & ANOTHER v. M/S V.V.F LIMITED &
ANOTHER
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SUPREME COURT REPORTS
[2020] 7 S.C.R.
 CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 22562263 of 2020.
From the Judgment and Order dated 10.03.2010 of the High Court
of Gujarat at Ahmedabad in SCA Nos. 5909, 6300, 6298, 6299, 5907,
8468, 6334 and 6562 of 2008.
With
Civil Appeal Nos. 2264, 2265, 2266, 2267-2275, 2276, 2277, 2278,
2279, 2280, 2281, 2282, 2283, 2284, 2285, 2286, 2287, 2288, 2289, 2290,
2291, 2292, 2293, 2294, 2295, 2296, 2297, 2298, 2299, 2300, 2301, 2302,
2303, 2304, 2305, 2306, 2307,2308, 2309, 2310, 2363, 2311, 2312, 2313,
2314, 2315, 2316, 2317, 2318, 2319, 2320, 2321, 2322, 2323, 2324, 2325,
2326, 2327, 2328, 2329, 2330, 2331, 2332, 2333, 2334, 2335, 2364, 2336,
2337, 2338, 2339, 2340, 2341, 2342, 2343, 2344, 2345, 2346, 2347, 2348,
2349, 2350, 2351, 2352, 2353, 2354, 2355, 2356, 2357, 2358, 2359, 2360,
2361, 2362 of 2020.
Dhruv Aggarwal, Rafiq Dada, K.V. Vishwanathan, Dr. Ashok
Saraf, Balbir Singh, Tarun Gulati, Sr. Advs., Rupesh Kumar, Ms. Nisha
Bagchi, Ms.Aruna Gupta, Dharmendra Gupta, B.K. Prasad, A.G. Garg,
Rakesh Garg, Ms. Shweta Garg, Aman Raj Gandhi, Abhishek Sharma,
Bindi Girish Dave, M.L. Lahoty, Paban K. Sharma, Anchit Sripat,
Himanshu Shekhar, Vishal Gupta, M/s. AP & J Chambers, Mahesh
Agarwal, Vipin Jain, Rishi Agrawala, Krishan Kumar, Abhinav Agrawal,
E.C. Agrawala, Ms. Kavita Jha, Ms. Swati Agarwal, Anant Mann, Pawan
Shree Agarwal, Kaushik Choudhary, Pawan Shree Agarwal, Ajay Kumar
Roy, Shantanu Tyagi, Ms. Nandita Chouhan, S.S. Shroff, M/s. Legal
Options, A.P. Mayee, A. Rajarajan, Ms. Deepanwita Priyanka, Rahul
Narayan, Ms. Mala Narayan, Shashwat Goel, Parvinder Kaur Bhattal,
Hitesh Kumar Sharma, Ms. Sawati Aggarwal, Sunil Murarka, Kunal
Chatterji, Ms. Maitrayee Banerjee, Supratik Sarkar, Kshitij Vaibhav,
Ms. Sheena Taqvi, Ms. Bina Gupta, Ms. Suvarna Dubey, Raghavendra
Srivastava, Zangpo Sherpa, Ms. Sheetal Rajput, Rahat Bansal, V.K.
Sidharthan, Shriram P. Pingle, Gangadeep Sharma, Kumar Visalaksh,
Udit Jain, Praveen Kumar, Parthiv K. Goswami, Ishan Bisht, Ms. Diksha
Rai, Rana Ranjit Singh, Vivek Kumar Singh, Akanksha Singh, Gaurav
Juneja, Mohit Oommen, Ms. Charanya Lakshmikumaran, Aditya
Bhattacharye, Mrs. Ishita Mathur, Ms. Apeksha Mehta, Ms. Monica
Kasturi, R. Parthasarthy, Ajay Aggarwal, Ms. Mallika Joshi, Ishan Narain,
Rajan Narain, Rakesh Sinha, Partha Sil, Kumar Visalaksh, Udit Jain,
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Mahfooz A. Nazki, Shekhar Prit Jha, Ms. Himani Mishra, Raghvendra
Kumar, Ms. Aruna Mathur, Shuvodeep Roy, Kabir Shankar Bose,
Ms. Neelima Tripathi, Gunjan Singh, K.V. Mohan, Nikhil Singhvi, Obhirup
Ghosh, Ms. Sonia Dubey, Ramendra Lal Auddy, B. Krishna Prasad,
M/s. Khaitan & Co., Vishal Gupta, M/s. Arputham Aruna & Co.
M/s. K.J. John & Co., Satya Mitra, Ms. Hemantika Wahi, Gopal Singh,
Advs. for the appearing parties.
The Judgment of the Court was delivered by
M. R. SHAH, J.
1. Leave granted in all the Special Leave Petitions.
Civil Appeals @ SLP © Nos. 28194-28201 of 2010
2. As common question of law and facts arise in this group of
appeals and as such arise out of the impugned common judgment and
order dated 10.03.2010 passed by the High Court of Gujarat at
Ahmedabad in respective Special Civil Application Nos. 5909/2008,
6300/2008, 6298/2008, 6299/2008, 5907/2008, 8468/2008, 6334/2008 and
6562/2008, all these appeals are being decided and disposed of by this
common judgment and order.
2.1 Feeling aggrieved and dissatisfied with the impugned common
judgment and order dated 10.03.2010 passed by the High Court of Gujarat
at Ahmedabad in respective Special Civil Application Nos. 5909/2008,
6300/2008, 6298/2008, 6299/2008, 5907/2008, 8468/2008, 6334/2008 and
6562/2008, by which the Division Bench of the High Court has allowed
the aforesaid writ petitions preferred by the respondents herein - original
writ petitioners and by which the High Court has held that the impugned
policy of withdrawal of the benefit/incentive to the original writ petitioners
is retrospective and not retroactive and quashed and set aside the
Notification 16/2008 dated 27.03.2008, on the ground that bar of
promissory estoppel would operate, the Union of India has preferred the
present appeals.
3. The facts leading to the present appeals and the List of Dates
& Events in nutshell are as under:
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. With a view to attract
large scale investment and to generate new employment opportunities in
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the District of Kutch, the 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. 39/2001CE 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. The object of the Incentive Scheme was to revive
the economy in Kutch District by attracting fresh large scale investments
from entrepreneurs by setting up new industries in the said District so as
to generate new employment which in turn would help Kutch District
and its people to be brought back in the main stream with the Nation.
The said notification operationalised the incentive scheme in the following
manner:
a)
The eligible unit was required to produce a certificate from a
High Powered Committee comprising of a Chief
Commissioner of Central Excise and the Chief Secretary to
the Government of Gujarat certifying that the unit was indeed
a new industrial unit which had been set up on or after the
date of the Exemption Notification but not later than 31.07.2003
(this cut-off date was subsequently extended to 31.12.2005);
b)
The unit was to furnish a declaration regarding the value of
investment in plant and machinery installed in the factory as
on the date of commercial production and also obtain a
certificate to this effect from the Committee confirming the
original value of the investment;
c)
The procedure for claiming refund, envisaged submission of
a statement of the total duty payments including duty paid by
utilization of Cenvat Credit) to the jurisdictional Central Excise
Authority and verification of the above in a time bound manner
by such authority;
d)
The notification also provided for recovery of any excess
refund claimed/granted together with interest in case the value
of plant and machinery was wrongly declared, as also in some
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other eventualities which were added by various amending
notifications;
e)
Where fresh investment in the plant and machinery was below
Rs. 20 crores - the incentive available was for the first
clearances up to an aggregate value not exceeding twice the
value of such investment from the date of commencement of
commercial production, in each year; and
f)
Where the investments were more than Rs.20 crores - the
Incentive would be unlimited as there was no upper cap.
3.1 The original writ petitioners set up new industrial units in the
Kutch District. They 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.
3.2 It appears that the then Government of Gujarat announced an
Incentive Scheme, 2001 dated 09.11.2001 for the economic development
of Kutch District. Under the said notification, Sales Tax exemption was
provided. The Sales Tax exemption was available only to those industries
which were eligible for excise exemption under Notification No.
39/2001-CE dated 31.07.2001.
3.3 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. One another amendment was made with
effect from 06.08.2003 vide notification No. 65/2003-CE to provide that
PLA payments could be made to discharge duty liabilities on the finished
products only after exhausting the CENVAT Credit balances.
3.4 According to the original writ petitioners, in view of the inventive
offered under Notification No. 39/2001-CE, the respondents herein -
original writ petitioners which had initially planned to expand their
manufacturing activities at Maharashtra, decided to instead set up the
new units in the Kutch District. That was in the month of December,
2005. According to the original writ petitioners, the said decision was
taken only because of the "incentive" promised by the Government to
refund excise duty paid in the Kutch area. According to the original writ
UNION OF INDIA & ANOTHER v. M/S V.V.F LIMITED &
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petitioners, as a result of the decision to set up a new unit in Kutch
District, the company had to additionally incur substantial costs towards
additional freight, handling charges, storage charges etc., which worked
out to approximately Rs.2,200/- PMT. In addition, the company suffered
severe locational disadvantages.
3.5 Original writ petitioners commenced commercial production
of split/crude fatty acid, etc. somewhere between the months of
November, 2004 to December, 2005. The primary raw materials for
manufacture of these final products was palm kernel oil, crude palm
kernel oil, other vegetable oils.
3.6 The said Incentive Notification No. 39/2001-CE was amended
by another notification No. 16/2008-CE dated 27.03.2008 (impugned
before the High Court), which according to the writ petitioners was
relating to a virtual withdrawal of the incentive scheme. The amended
notification provided that the benefit of refund would be granted with
reference to the value addition, which was notionally fixed @ 34% for
the commodity manufactured. Notification No. 16/2008-CE also provided
for determination of a special rate by the Commissioner, in a situation
where the actual value addition was more than the deemed value addition
as specified. According to the original writ petitioners, as a consequence
of the said amendment, the inventive available to them stood reduced
from the refund of the entire of the duty paid in cash/PLA to 34% of the
total duty paid. The original writ petitioners challenged the subsequent
notification No. 16/2008-CE before the High Court of Gujarat by way of
the aforesaid writ petitions. It was the case of the original writ petitioners
that 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. It was also the case on behalf of the original
writ petitioners that as a result of the said amendment which resulted in
their entitlement for refund being reduced from nearly 100% of the duty
paid to only 34% of such duty amount. According to the original writ
petitioners, 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.
3.7 The aforesaid writ petitions were opposed by the revenue by
submitting as under:
i)
the Exemption Notification prompted certain unscrupulous
manufacturers to indulge in different type of tax evasion
tactics;
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ii) the intention behind the Exemption Notification was to
incentivise genuine manufacturers only to the extent of actual
value addition made by them;
iii) duty paid in cash by units set up in District of Kutch pursuant
to the Exemption Notification was found to be inordinately
high as compared to other similarly placed units in other parts
of India;
iv) the Central Government by the very same power by which it
grants exemption is empowered to withdraw the same;
v) the impugned notifications are only a modification to give effect
to the real intention of the Government and are not withdrawal
of the benefit; and
vi) in light of the misuse of the exemption pleaded by UOI, public
interest warrants such withdrawal.
3.8 Simultaneously, the manufacturing units also filed
representations to the Government for re-consideration. Pursuant to the
representations, one another notification was issued by the Central
Government vide Notification No. 33/2008-CEdated 10.6.2008.
Therefore, the original writ petitioners amended the writ petitions
challenging the subsequent notification dated 10.6.2008 also. It appears
that thereafter the Central Government vide notification No. 51/2008
dated 3.10.2008 revised the deemed value addition at 75% in respect of
the products manufactured by the original writ petitioners without giving
them any option of applying for a special rate.
3.9 The aforesaid writ petitions were heard by the Division Bench.
The members of the Division Bench differed. One learned Judge allowed
the writ petitions and another learned Judge held that the writ petitions
deserve to be dismissed. In view of the difference of opinion between
the two learned Judges of the Division Bench, the matter was referred
to a third learned Judge. By the impugned judgment and order, the third
learned Judge has agreed with the view taken by the learned Judge who
allowed the writ petitions. Consequently, by the impugned judgment and
order, the writ petitions are allowed mainly on the ground of doctrine of
promissory estoppel. Consequently, it is held by the High Court that the
incentive as originally envisaged by notification No. 39/2001-CE was
required to be implemented and the differential amount was directed to
be refunded to the writ petitioners. Hence, the present appeals.
UNION OF INDIA & ANOTHER v. M/S V.V.F LIMITED &
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Civil Appeals @ SLP © Nos. 14751 of 2013,
Civil Appeals @ SLP © Nos. 14752 of 2013 and
Civil Appeals @ SLP © Nos. 14753 of 2013
4. All these appeals arise out of the common judgment and order
passed by the High Court of Gujarat at Ahmedabad dated 17.10.2012 in
Special Civil Application Nos. 3582/2012, 3569/2012 and 3587/2012
respectively, by which the High Court has dismissed the said petitions.
Before the High Court, respective original writ petitioners claimed
for refund of the excise duty in terms of the original notification No. 29
of 2001. The Excise authorities, however, granted the exemption only in
terms of the amended notification Nos. 16/20098-CE and 36/2008-CE
(which are subject matter of Civil Appeals @ SLP © Nos. 28194-28201
of 2010). Before the High Court, initially, only the orders passed by the
Excise authorities granting refund as per the subsequent notifications
were under challenge. However, subsequently, the original writ petitioners
also challenged the subsequent notification Nos. 16/2008-CE and
33/2008-CE. By the impugned Judgment and Order, the High Court has
refused to entertain the petitions under Article 226 of the Constitution
and dismissed the same filed for refund of the excise duty in view of the
provisional Section 11B of the Central Excise Act. So far as the challenge
to the subsequent notification Nos. 16/2008-CE and 33/2008-CE is
concerned, the High Court has not entered into the merits in view of its
earlier decision which is the subject matter before this Court in the case
of Civil Appeals @ SLP © Nos. 28194-28201 of 2010. As, in the present
appeals, the question is with respect to the challenge to the subsequent
notifications which are also the subject-matter of this Court in the case
of Civil Appeals @ SLP © Nos. 28194-28201 of 2010, all these appeals
are also decided and disposed of together with this common judgment
and order.
Civil Appeal Nos. ................... of 2020 @ SLP (C) Nos.
15481-15489 of 2011
5. These Civil Appeals arise out of the impugned Judgment and
Order passed by the High Court of Sikkim at Gangtok dated 15.11.2010
passed in Writ Petition Nos. 11/2008 and other allied writ petitions, by
which the High Court has quashed and set aside the similar notifications
dated 27.03.2008 and 10.06.2008 allowing the refund of excise duty on
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value addition basis, on the ground that the same are against the principle
of promissory estoppel. As the original notifications dated 09.09.2003 as
well as OM dated 01.04.2007 and the subsequent notifications
dated 27.03.2008 and 10.06.2008 are as such similar to the notification
No. 16 of 2008 applicable to Kutch area of Gujarat, the present group of
Civil Appeals shall also be governed by this common Judgment and Order.
Civil Appeal No. .........of 2020 @ SLP © No. 11878/2015
and other allied matters
6. All these appeals arise out of the impugned common Judgment
and Order passed by the High Court of Guwahati dated 20.11.2014 in
Writ Appeal No. 243 of 2009 and other allied writ petitions, by which the
High Court has quashed and set aside the subsequent notification dated
27.03.2008 and the subsequent industrial policies of 2007 on the ground
that the same are hit by the doctrine of promissory estoppel. In some of
the writ petitions, the High Court has disposed of the respective writ
petitions following the common Judgment and Order dated 20.11.2014.
The particulars of respective Civil Appeals are as under:
Sl. No.
Item No.
Particulars
High Court
IN
Judgment date
1
3.7
SLP (C)
No.11878/2015
Guwahati
WA No.243/2009
20.11.2014
2
3.8
SLP (C) No.
19370/2015
Guwahati
WP C No.1242/2013
20.11.2014
3
3.9
SLP (C)
No.19868/2015
Guwahati
WP C No.3940/2009
20.11.2014
4
3.10
SLP (C)
No.19386/2015
Guwahati
WP C No.1151/2013
20.11.2014
5
3.11
SLP (C)
No.19379/2015
Guwahati
WP C No.84/2013
20.11.2014
6
3.12
SLP (C)
No.19376/2015
Guwahati
WP C No.4119/2010
20.11.2014
7
3.13
SLP (C)
No.19384/2015
Guwahati
WP C No.235/2013
20.11.2014
8
3.14
SLP (C)
No.19380/2015
Guwahati
WP C No.3377/2009
20.11.2014
9
3.15
SLP (C)
No.20626/2015
Guwahati
WP C No.6161/2012
20.11.2014
10
3.16
SLP (C)
No.21583/2015
Guwahati
WP C No.5444/2014
20.11.2014
11
3.17
SLP (C)
No.19320/2015
Guwahati
WP C No.809/2013
20.11.2014
12
3.18
SLP (C)
No.19371/2015
Guwahati
WP C No.1975/2013
20.11.2014
13
3.19
SLP (C)
No.20109/2015
Guwahati
WP C No.937/2015
20.02.2015
14
3.20
SLP (C)
No.19378/2015
Guwahati
WP C No.6786/2013
20.11.2014
15
3.21
SLP (C)
No.19375/2015
Guwahati
WP C No.3457/2014
20.11.2014
UNION OF INDIA & ANOTHER v. M/S V.V.F LIMITED &
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16
3.22
SLP (C)
No.21406/2015
Guwahati
WP C No.4112/2010
20.11.2014
17
3.23
SLP (C)
No.23331/2015
Guwahati
WP C No.6685/2013
20.11.2014
18
3.24
SLP (C)
No.20630/2015
Guwahati
WP C No.483/2015
31.01.2015
19
3.25
SLP (C)
No.20631/2015
Guwahati
WP C No.6883/2014
19.12.2014
20
3.26
SLP (C)
No.20628/2015
Guwahati
WP C No.410/2013
20.11.2014
21
3.27
SLP (C)
No.20627/2015
Guwahati
WP C No.228/2015
22.01.2015
22
3.28
SLP (C)
No.19228/2015
Guwahati
WP C No.932/2015
20.02.2015
23
3.29
SLP (C)
No.23394/2015
Guwahati
WP C No.1472/2013
20.11.2014
24
3.30
SLP (C)
No.23399/2015
Guwahati
WP C No.227/2015
22.01.2015
25
3.31
SLP (C)
No.23328/2015
Guwahati
WP C No.487/2015
31.01.2015
26
3.32
SLP (C)
No.19373/2015
Guwahati
WP C No.1694/2014
20.11.2014
27
3.33
SLP (C)
No.23329/2015
Guwahati
WP C No.279/2013
20.11.2014
28
3.34
SLP (C)
No.23326/2015
Guwahati
WP C No.239/2013
20.11.2014
29
3.35
SLP (C)
No.20442/2015
Guwahati
WP C No.972/2015
24.02.2015
30
3.36
SLP (C)
No.23398/2015
Guwahati
WP C No.723/2014
20.11.2014
31
3.37
SLP (C)
No.23393/2015
Guwahati
WP C No.1696/2014
20.11.2014
32
3.38
SLP (C)
No.20370/2015
Guwahati
WP C No.864/2015
19.02.2015
33
3.39
SLP (C)
No.19842/2015
Guwahati
WP C No.1433/2015
30.03.2015
34
3.40
SLP (C)
No.22568/2015
Guwahati
WP C No.1427/2015
30.03.2015
35
3.41
SLP (C)
No.21605/2015
Guwahati
WP C No.931/2015
20.02.2015
36
3.42
SLP (C)
No.23303/2015
Guwahati
WP C No.2660/2013
28.11.2014
37
3.43
SLP (C)
No.23301/2015
Guwahati
WP C No.933/2015
20.02.2015
38
3.44
SLP (C)
No.23334/2015
Guwahati
WP C No.1789/2010
28.11.2014
39
3.45
SLP (C)
No.21584/2015
Guwahati
WP C No.4869/2009
20.11.2014
40
3.46
SLP (C)
No.23391/2015
Guwahati
WP C No.104/2013
20.11.2014
41
3.47
SLP (C)
No.23297/2015
Guwahati
WP C No.5969/2012
20.11.2014
42
3.48
SLP (C)
No.23898/2015
Guwahati
WP C No.724/2014
20.11.2014
43
3.49
SLP (C)
No.23251/2015
Guwahati
WP C No.3387/2009
20.11.2014
44
3.50
SLP (C)
No.23896/2015
Guwahati
WP C No.230/2009
20.11.2014
45
3.51
SLP (C)
No.23903/2015
Guwahati
WP C No.186/2015
20.01.2015
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B
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D
E
F
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46
3.52
SLP (C)
No.23396/2015
Guwahati
WP C No.811/2013
20.11.2014
47
3.53
SLP (C)
No.23294/2015
Guwahati
WP C No.2918/2010
20.11.2014
48
3.54
SLP (C)
No.23897/2015
Guwahati
WP C No.2138/2009
20.11.2014
49
3.55
SLP (C)
No.23900/2015
Guwahati
WP C No.41/2013
20.11.2014
50
3.56
SLP (C)
No.23295/2015
Guwahati
WP C No.2887/2014
20.11.2014
51
3.57
SLP (C)
No.23299/2015
Guwahati
WP C No.3458/2014
20.11.2014
52
3.58
SLP (C)
No.23902/2015
Guwahati
WP C No.4433/2014
23.01.2015
53
3.59
SLP (C)
No.27036/2015
Guwahati
WP C No.5968/2012
20.11.2014
54
3.60
SLP (C)
No.23296/2015
Guwahati
WP C No.526/2015
04.02.2015
55
3.61
SLP (C)
No.26286/2015
Guwahati
WP C No.317/2014
20.11.2014
56
3.62
SLP (C)
No.23693/2015
Guwahati
WP C No.416/2012
12.05.2015
57
3.63
SLP (C)
No.26764/2015
Guwahati
WP C No.5538/2014
20.11.2014
58
3.64
SLP (C)
No.23247/2015
Guwahati
WP C No.319/2013
20.11.2014
59
3.65
SLP (C)
No.23899/2015
Guwahati
WP C No.3376/2009
20.11.2014
60
3.66
SLP (C)
No.23901/2015
Guwahati
WP C No.211/2015
23.01.2015
61
3.67
SLP (C)
No.27041/2015
Guwahati
WP C No.632/2013
20.11.2014
62
3.68
SLP (C)
No.27024/2015
Guwahati
WP C No.242/2013
20.11.2014
63
3.69
SLP (C)
No.27034/2015
Guwahati
WP C No.312/2013
20.11.2014
64
3.70
SLP (C)
No.26284/2015
Guwahati
WP C No.486/2015
31.01.2015
65
3.71
SLP (C)
No.27053/2015
Guwahati
WP C No.417/2013
20.11.2014
66
3.72
SLP (C)
No.27058/2015
Guwahati
WP C No.399/2013
20.11.2014
67
3.73
SLP (C)
No.25804/2015
Guwahati
WP C No.528/2015
04.02.2015
68
3.74
SLP (C)
No.27046/2015
Guwahati
WP C No.1153/2013
20.11.2014
69
3.75
SLP (C)
No.26767/2015
Guwahati
WP C No.240/2013
20.11.2014
70
3.76
SLP (C)
No.27043/2015
Guwahati
WP C No.457/2013
20.11.2014
71
3.77
SLP (C)
No.26821/2015
Guwahati
WP C No.6698/2013
20.11.2014
72
3.78
SLP (C)
No.27050/2015
Guwahati
WP C No.290/2015
28.01.2015
73
3.79
SLP (C)
No.26294/2015
Guwahati
WP C No.109/2013
20.11.2014
UNION OF INDIA & ANOTHER v. M/S V.V.F LIMITED &
ANOTHER [M. R. SHAH, J.]
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74
3.80
SLP (C)
No.27048/2015
Guwahati
WP C No.2468/2014
20.11.2014
75
3.81
SLP (C)
No.26283/2015
Guwahati
WP C No.6864/2014
19.12.2014
76
3.82
SLP (C)
No.27049/2015
Guwahati
WP C No.259/2015
23.01.2015
77
3.83
SLP (C)
No.25799/2015
Guwahati
WP C No.187/2013
20.11.2014
78
3.84
SLP (C)
No.26295/2015
Guwahati
WP C No.527/2015
04.02.2015
79
3.85
SLP (C)
No.26287/2015
Guwahati
WP C No.810/2013
20.11.2014
80
3.86
SLP (C)
No.25797/2015
Guwahati
WP C No.729/2014
20.11.2014
81
3.87
SLP (C)
No.26290/2015
Guwahati
WP C No.1723/2014
20.11.2014
82
3.88
SLP (C)
No.27744/2015
Guwahati
WP C No.6865/2014
19.12.2014
83
3.89
SLP (C)
No.26972/2015
Guwahati
WP C No. 226/2015
22.01.2015
84
3.90
SLP (C)
No.1907/2016
Tripura
WA No. 38/2009
24.08.2015
85
3.91
SLP (C)
No.7208/2016
Guwahati
WP C No.6972/2015
02.12.2015
6.1 The relevant facts are as under:
The Government of India issued an industrial policy on 01.04.2007
reiterating the terms and conditions of the earlier industrial policy dated
24.12.1997 which provided the fiscal based incentive to new industrial
units and their substantial expansion. As per this policy, 100% excise
duty exemption was provided on the products manufactured in the NorthEastern region. By the subsequent notifications/industrial policies which
were impugned before the High Court, the refund of excise duty was
limited to the extent of the value addition. The High Court by the impugned
common Judgment and Order has set aside the subsequent notifications/
industrial policies which were similar to notification No. 16 of 2008
applicable to Kutch area of Gujarat and subject matter of Civil Appeals
@ SLP © Nos. 28194-28201 of 2010.
Civil Appeal No. .........of 2020 @ SLP © No.