THE HONOURABLE SRI JUSTICE L. NARASIMHA REDDY and THE HON’BLE SRI JUSTICE T.SUNIL CHOWDARY WRIT PETITION No.23593 of 2001 ORDER: (per the Hon’ble Sri Justice L.Narasimha Reddy) The petitioners are small scale industries undertaking manufacture of parts of arms and ammunition, duly obtaining permission from the concerned authorities of the Government of India. The goods manufactured by them are subject to levy of excise duty. Under the notifications issued by the Government of India in exercise of powers under the Central Excise Act, 1944 (for short ‘the Act’), the goods manufactured by the petitioners were exempted from excise duty upto 28.02.2001. However, the exemption was withdrawn through Notification dated 01.03.2001. On account of the conditions stipulated in Notification No.8/2001, there is no serious financial implication for the petitioners. However, Notification No.47/2001, dated 01.10.2001, was issued amending Notification No.8/2001. On the basis of that notification, the demand notices were issued to the petitioners on 07.11.2001 for payment of basic excise duty @ 16% and special excise duty @ 16% and interest @ 24% for the goods that were cleared between March and April, 2001. The petitioners felt aggrieved by the same and challenged the Notification dated 01.10.2001 insofar as it was proposed to amend Notification No.8/2001 retrospectively.
The respondents filed a counter-affidavit, wherein the basic facts are not denied. It is, however, stated that it is prerogative of the State to extend or withdraw exemption. The plea as to retrospective amendment is also denied.
Heard Sri Parikshith, learned counsel for the petitioners and Smt.S.Nanda, learned counsel for the respondents.
It is no doubt true that the State has the prerogative to grant or withdraw exemptions from duty levied, referable to the Act. However, no retrospective levy of excise duty can be permitted, whether it is directly or indirectly. In the instant case, the exemption that was granted to the petitioners was withdrawn through Notification No.8/2001, dated 01.03.2001. The petitioners did not challenge the same obviously because the terms are such that no immediate detriment was caused to the petitioners. However, through Notification No.47/2001, dated 01.10.2001, certain amendments were made to Notification No.8/2001. But for the amendments, the petitioners would not have been required to pay the excise duty for the goods cleared subsequent to 1st March, 2001. Though Notification No.47/2001 does not, in terms, mention that the amendment is retrospective in nature, the respondents sought to implement the amendment with effect from 01.03.2001.
We, therefore, partly allow the Writ Petition holding that no liability shall be fastened upon the petitioners on the basis of Notification No.47/2001 for the goods cleared anterior to the date of notification i.e., dated 01.10.2001. There shall be no order as to costs.
The Miscellaneous Petitions filed in this Writ Petition shall stand disposed of.
L.NARASIMHA REDDY, J Date: 13.08.2014 T.SUNIL CHOWDARY, J
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