CX - Any relief under doctrine of promissory estoppel can be enforced only in hands of Courts - Tribunal cannot arrogate to itself such powers: CESTAT
By TIOL News Service
NEW DELHI, MAR 25, 2017: THE appellant is a manufacturer of Carbon paper & Stencil Paper [Hdg 4816 and 4809] and situated in Dehradun, Uttarakhand.
On January 2004, the appellant informed the department that they have undertaken substantial expansion in their unit and are eligible for exemption under Notification 50/2003-CE dated 10.06.2003 for their product under tariff heading 4816 i.e. Carbon paper. Further, they also informed the department that they have stopped production of carbon paper falling under tariff sub heading 4809.10 having width exceeding 36 cms and intend to avail the exemption under the abovementioned notification. Incidentally, the said Notification 50/2003-CE excludes products under Tariff sub-heading 4809.10.
The department entertained doubts about the appellants claim of substantial expansion and their manufacture of goods under heading 4816. It is also alleged that the Khasra no 164 H in Mohbewala Industrial Region has been deleted from Annexure-2 by amendment through notification 27/2005-CE dated 19.05.2005 and, therefore, area-based exemption cannot be extended.
The CE duty demand by disallowing the exemption was confirmed with penalties.
The Commissioner(A) agreed with the o-in-o to the extent of denial of exemption, however, he dropped penalty and viewed that CENVAT credit ought to be extended for adjustment against CE duty demand.
The appellant is before the CESTAT and submits that the amending notification 27/2005-CE is prospective in nature and does not affect the exemption entitlement for units like the appellant, who had undertaken substantial expansion prior to 19.05.2005 and who were in existence earlier viz. year 2004. They also stress on the principle of "Promissory Estoppel" and cite the following decisions in support -
2016-TIOL-1876-HC-TRIPURA-CX - Dharampal Premchand ltd.
2013-TIOL-438-HC-SIKKIM-CX - Unicorn Industries
2010-TIOL-979-HC-J&K-CX - Reckitt Benckiser
The Bench observed -
+ The area based exemption benefit is extended to units situated in designated backward areas listed out in the relevant notification but the area in which the appellants unit is situated has been deleted from the relevant notification, the appellant will cease to enjoy the benefit of the notification from the date of such amendment.
+ The appellant has challenged the duty demand under the doctrine of promissory estoppel. It is now a settled law that doctrine of promissory estoppel is a rule of equity and for the enforcement of this rule, apart from equitable considerations, the public interest, public policy, sovereign and statutory exercise of authority by the State and its functionaries are other relevant factors.
+ It is equally settled law that the extended promise or its basis is exercise of sovereign or statutory powers or on account of any valid public policy.
+ However, any relief under such Rule of equity can be enforced only in the hands of Hon'ble High Courts and Supreme Courts. This Tribunal, which is a creature of the statute, cannot arrogate to itself such powers. The Tribunal is required to decide tax disputes on the basis of law and the relevant Notifications issued by the Government. It is clear on fact that the area where the appellant's unit is located is no more covered under the relevant notification.
Concluding that the demand confirmed is fully justified, the same was upheld and the appeal was dismissed.
(See 2017-TIOL-1001-CESTAT-DEL)
