DHARAMPAL SATYAPAL LTD. Vs. UNION OF INDIA

JUDGEMENT

(1.) Heard Dr. A.K. Saraf, learned Sr. counsel assisted by Mr. A. Goel, learned counsel appearing on behalf of the appellant. Also heard Mr. S.C. Keyal, learned Asstt. SGI appearing on behalf of the respondent Nos. 1 to 4 as well as Ms. B. Sarma Goel, learned Sr. Govt. Advocate representing respondent No. 5.

(2.) This intra court appeal is directed against common judgment and order dated 10.12.10 passed by the learned Single Judge in W.P. (C) No. 749/2010 as well as W.P.(C) No. 750/2010 repelling the challenge made to the notifications No. 11/07-CE dated 1.3.2007 and No. 21/2007-CE dated 25.04.2007 withdrawing the exemption of excise duty in respect of the products covered by the respective notifications.

(3.) The brief factual background of the case is that the Govt. of India had earlier issued the "New Industrial Policy and other concessions for North Eastern Region, 1997" which was notified by the office memorandum No. EA/1/2/96-IPD dated 24.12.1997 announcing incentives by way of central excise and income tax exemption on various excisable commodities/ goods including pan masala, with or without tobacco, for a period of 10 years from the date of commencement of the production or the date of issuance of the notification, whichever was later. The purpose of announcing the incentives under the new Industrial Policy was to promote industrialization in the northeastern region with a view to remove the economic backwardness of the region. Thereafter, on 08.07.1999 the Central Government had issued notification No. 32/1999-CE and 33/1999-CE in exercise of powers conferred under sub-section (1) of Section 5A of the Central Excise Act, 1944. The notification No. 32/1999-CE provided for exemption from payment of excise duty to goods specified in the First Schedule and the Second Schedule of the Central Excise Tariff Act, 1985, in respect of goods cleared from a units located in the Growth Centre or Integrated Infrastructure Development Centre or Export Promotion Industrial Park or Industrial Estates or Industrial Area or Commercial Estate as specified in Annexure to the aforesaid notification and the exemption from payment of excise duty was made available in respect of such units which had commenced commercial production on or after 24.12.97 or in respect of those industrial units which existed before 24.12.1997 but undertook substantial expansion by way of increase in installed capacity to the extent of 25% or more. The notification No. 33/1999-CE covered exemption from payment of excise duty in respect of goods specified in the schedule to the notification and cleared from units located in the State of Assam or Tripura or Meghalaya or Mizoram or Nagaland or Arunachal Pradesh. However, soon thereafter, the benefit of exemption pertaining to tobacco products, which was earlier made available under the notification Nos. 32/1999-CE and 33/1999-CE, were withdrawn on 31.12.1999 only to be restored again by a separate notification No. 45/1999-CE issued on 17.01.2000. From the period in between 17.01.2000 to 21.01.2004 several notifications had been issued by the Central Excise Department withdrawing the benefit upon the tobacco products including cigarette and thereafter again partially restoring the same until such time notification No. 8/2004-CE dated 21.01.2004 was issued permitting exemption of 100% excise duty in respect of tobacco products including chewing tobacco, subject to the condition that the exempted amount shall be invested by the manufacturers in the plant and machinery in a manufacturing unit located in the northeastern region as well as in infrastructure or civil work or social work in those States. However, the withdrawal of exemption in respect of cigarette attained finality once the constitutional validity of the Section 154 of the Finance Act, 2003 was upheld by the Supreme Court in the case of R.C. Tobacco (P) Ltd. Vs. Union of India, (2007) 5 SCC 725. In this manner the Central Govt. had restored the exemption granted under the notification No. 32/1999-CE and notification No. 33/1999-CE in all products, save and except cigarette, subject to the condition as imposed under the notification dated 21.01.2004.While the said position was holding field and the Industrial Policy of 1997 was coming to an end, the Department of Excise had issued notification No.11/2007-CE dated 01.03.2007 withdra-wing the exemption granted under the notification No.8/2004-CE to the pan masala containing tobacco and chewing tobacco.