By TIOL News Service

MUMBAI, SEPT 19, 2017: THE substantial questions of law are -

(1) Whether the Tribunal committed error while interpreting and construing the provisions of Section 11D of C.E.A., 1944, while ignoring the interpretation and construction of provisions of Section 5A of C.E.A., 1944, granting exemption from duty of excise to the Appellant/Assessee which is required to be construed liberally while upholding the impugned order passed by the respondent Authority ?

(2) Whether the Tribunal is justified in law to uphold the impugned order passed by respondent Authority, by committing error by misreading and misconstruing the provisions of section 11-D vis-a-vis the provision of Section 5-A of the Central Excise Act, 1944, by failing to construe the aforesaid provisions by adopting principle of purposive interpretation of the statutes in the interest of justice ?

It is the case of the appellant that the appellant was a new sugar factory and had commenced its production of sugar after obtaining certificate No.845 dated 11th August 1989 from the Government of India, Ministry of Food and Civil Supplies, Department of Food, Directorate of Sugar, New Delhi.

On 4th November, 1987 the Government of India, Ministry of Food and Civil Supplies, Department of Food, New Delhi, issued an incentive scheme for new sugar factories and expansion projects licensed during Sixth Five-Year Plan period.

In the SCNs,it was mentioned that the appellant had cleared the white crystal sugar under incentive scheme by charging Excise duty as basic Rs.17/-, additional Rs.21/- and cess Rs.14/- i.e. totaling to Rs.52/- per quintal and debited the same to their P.L.A. account during the said period between September 1991 to January 1992.

It is alleged that the appellant had actually charged and collected more amount from the customers at the rate i.e. basic Rs.34/-, additional Rs.37/- and cess Rs.14/- totaling Rs.85/- per quintal as Central Excise duty.

Inasmuch as the appellant had collected the amount of Rs.85/- per quintal, but had deposited Rs.52/- per quintal with the Central Government.

By the SCNs, the Superintendent, CE, Jalna, directed the appellant to show cause as to why the differential excise duty of Rs. 60,12,699/- should not be recovered from the appellant.

The demands were confirmed by the Collector by order dated 13th August, 1994.

The CESTAT dismissed the appeal filed by the appellant by an order dated 27th October, 2005.

Being aggrieved by the said order, the appellant has preferred appeal u/s 35G of the CESA.

After considering the elaborate submissions made by both sides, the High Court inter alia observed –

++ Insofar as the submission of the appellant that there was no opportunity to engage an Advocate was granted by the learned Collector of Central Excise and Customs is concerned, this submission of the learned counsel is ex-facie contrary to the averments made in paragraph no.8 of the appeal memo filed by the appellant before the said Tribunal, in which it has been admitted that the said Collector of Central Excise and Customs had heard the appellant through their Advocate in those six show cause notices.

++ Insofar as the submission of the appellant that the rights vested in the appellant under the said incentive scheme cannot be taken away by Section 11-D after the appellant had acted upon the said incentive scheme detrimental to its interest and the said section was in breach of promissory estoppel is concerned, in our view, such issue could not have been raised before the Collector of Central Excise and Customs by the appellant . The appellant did not file any proceedings for enforcement of the said incentive scheme before any Court of law.

++ Be that as it may, in our view, the …Collector of Central Excise and Customs has rightly held that no such incentive scheme, which was in the nature of executive instructions … could be given effect to while considering the provisions of Section 11-D of the Central Excise and Customs Act.

++ In our view, even otherwise in view of the non obstante clause provided in Section 11-D of the Central Excises and Salt Act, 1944, which was introduced later in point of time, the said provision will prevail over the provisions of the Essential Commodities Act, 1955, having similar non obstante provision in Section 6.

Conclusion:

+ Inso far as the question no.1 is concerned, the same is answered in negative, against the assessee and in favour of the Revenue.

+ Insofar as the substantial question of law at Sr.No.2 is concerned, the same is answered in affirmative, against the assessee and in favour of the Revenue.

The appeal was dismissed.

(See 2017-TIOL-1919-HC-MUM-CX)