Page No.# 1/ vs The Union Of India And 5 Ors
2025 Latest Caselaw 7585 Gua

Gauhati High Court

Page No.# 1/ vs The Union Of India And 5 Ors on 24 September, 2025

Author: Sanjay Kumar Medhi

Bench: Sanjay Kumar Medhi

                                                                Page No.# 1/10

GAHC010204262017




                                                           2025:GAU-AS:13136

                      THE GAUHATI HIGH COURT
  (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

                        Case No. : WP(C)/7214/2017

         M/S. PURBANCHAL CEMENT LTD.
         A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE
         COMPANIES ACT, 1956 AND HAVING ITS PRINCIPAL PLACE OF BUSINESS
         AND ITS FACTORY SITUATED AT VILL- SARUTARI MOUZA- SONAPUR, P.O-
         BYRNIHAT, DIST- KAMRUPM, ASSAM, PIN- 793101, REP. BY SRI SUNIL
         KUMAR AGARWAL THE PRESIDENT COMMERCIAL OF THE PETITIONER
         COMPANY


         VERSUS

         THE UNION OF INDIA and 5 ORS.
         REP. BY THE SECRETARY TO THE GOVT OF INDIA, MIN OF FINANCE,
         DEPTT. OF REVENUE, NORTH BLOCK, NEW DELHI

         2:THE UNDER SECRETARY
         TO THE GOVT OF INDIA
          MIN OF FINANCE DEPTT. OF REVENUE
          NEW DELHI- 110001

         3:THE JOINT SECRETARY
         TO THE GOVT OF INDIA
          MIN OF FINANCE DEPTT. OF REVENUE
          NEW DELHI- 110001

         4:THE SECRETARY TO THE GOVT OF INDIA
          MIN OF COMMERCE AND INDUSTRY
          UDYOG BHAWAN
          NEW DELHI- 110011

         5:THE COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX
          G S ROAD
          GUWAHATI- 781005
         ASSAM
                                                                      Page No.# 2/10


           6:THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE AND SERVICE
           TAX, OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE
            P.O- DIGBOI
            DIST- TINSUKIA- 786171
           ASSA

                                     BEFORE

               Hon'ble MR. JUSTICE SANJAY KUMAR MEDHI


Advocate for the petitioner   : Ms. N. Hawelia, Advocate.
Advocates for respondents     : Shri S. C. Keyal, Senior SC,

Central Excise.

Date of hearing                 : 16.09.2025


Date of judgment               : 24.09.2025



                              JUDGMENT & ORDER

The present application under Article 226 of the Constitution of India has been presented challenging orders dated 27.08.2012 and 24.03.2017 passed by the Assistant Commissioner of Central and Service Tax, Tinsukia whereby the application for grant of Central Excise Exemption on substantial expansion of the petitioner company for 10 years has been rejected. The petitioner has also challenged the provisions of Clause 5 (b) of the Notification No. 20/2007.

2. As per the facts projected, the petitioner is a company which is in the business of cement manufacturing. In the year 2007, a policy was adopted by the Government in the name North East Industrial and Investment Page No.# 3/10

Promotion Policy, 2007 (hereinafter referred to as the NEIIPP) whereby there were certain exemptions of central excise duty which was to be given to new as well as existing units undergoing substantial expansion. Such exemption was to be given for a period of 10 years from the date of commencement of commercial production or expansion whichever is later.

3. According to the petitioner, the petitioner had started its commercial production on 01.04.2008 and is a new unit. It is also admitted that the petitioner had got the exemption as a new unit for 10 years. It is however the case of the petitioner that on 01.02.2012 substantial expansion of the fixed capital more than 25% was made and therefore another application was made to seek further excise duty exemption for 10 years which however has been declined.

4. I have heard Ms. N. Hawelia, learned counsel for the petitioner. I have also heard Shri S. C. Keyal, learned Senior Standing Counsel, Central Excise.

5. Ms. Hawelia, the learned counsel for the petitioner has submitted that the policy was adopted in the year 2007 whereafter Notification No. 20/2007-CE was published on 25.04.2007. Under Clause 5 of the notification, there are two kinds of units which have been made eligible for exemption of excise duty. As per Clause 5 (a), new units which starts commercial production after 01.04.2007 would be entitled to such exemption and as per Clause 5 (b), existing units which undertakes substantial expansion not less than 25% of the fixed capital would also be entitled to get such exemption benefit.

6. The duration of the benefit has also been stipulated to be 10 years from the date of commercial production or the date of substantial expansion, whichever Page No.# 4/10

is later. It is the case of the petitioner that while as a new unit, the exemption was granted, the aspect of undertaking substantial expansion not less than 25% of the fixed capital was not taken into consideration resulting in issuance of the impugned orders. The learned counsel has referred to the clarification contained in the Notification dated 29.02.2016 and has submitted that after such clarification, the impugned orders could not have been issued by which the claim of the petitioner has been rejected.

7. She has also drawn the attention of this Court to the affidavit-in-opposition filed by the Department on 03.09.2020 wherein it has been laid down that the petitioner is a new unit and there was no clarity in the Notification dated 25.04.2007. She has emphasized that when the policy which is the foundation of the case stipulates such exemption, the same could not have been declined by the impugned notification, more particularly Clause 5 (b) thereof.

8. In support of her submission, the learned counsel for the petitioner has relied upon the case of State of Jharkhand and Ors. vs. Brahmputra Metallics Limited, Ranchi reported in (2023) 10 SCC 634. She has submitted that the doctrine of promissory estoppel would be clearly applicable in the instant case as the petitioner had started its business only because of the policy of 2007 and therefore the Department could not have backed out from the aspect of giving exemption for tax benefits which according to the petitioner is entitled to.

9. Per contra, Shri S. C. Keyal, learned Senior Standing Counsel Exercise Department has submitted that as a new unit the petitioner has already availed the benefit of the exemption under Clause 5 (a). He has submitted that for all Page No.# 5/10

purposes, the petitioner is construed to be a new unit as admittedly the commercial production has started from 01.04.2008. He has submitted that the aspect of an existing unit to claim exemption is on the condition of undertaking substantial expansion not less than 25% of the fixed capital. He has clarified that such exemption is entitled only to an existing unit which for all practical purposes would mean a unit which was in operation prior to the policy of 01.04.2007. He has clarified that the petitioner unit cannot be construed to be an existing unit and therefore the present claim is wholly unsustainable. He, accordingly justifies the impugned orders of rejection.

10. By drawing the attention of this Court to the judgment of the Hon'ble Supreme Court in the case of State of Gujarat Vs Arcelor Mittal Nippon Steel India Limited reported in (2022) 6 SCC 459, the learned Standing Counsel has submitted that an exemption notification is to be strictly construed and there cannot be any addition or subtractions. He has also submitted that the notification is to be read as a whole. For ready reference the relevant observations of the Hon'ble Supreme Court is extracted herein below:

"14.2. It is settled law that the notification has to be read as a whole. If

any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification. An exception and/or an exempting provision in a taxing statute should be construed strictly and it is not open to the Court to ignore the conditions prescribed in industrial policy and the exemption notifications."

11. The learned Senior Standing Counsel has also relied upon the case of Krishi Upaj Mandi Samiti , New Mandi Yard, Alwar Vs Commissioner of Page No.# 6/10

Central Excise and Service Tax, Alwar reported in (2022) 5 SCC 62 wherein it has been reiterated that exemption notification are not to be construed liberally. For ready reference, the relevant observations are extracted herein below:

"8. The exemption notification should not be liberally construed and beneficiary must fall within the ambit of the exemption and fulfill the conditions thereof. In case such conditions are not fulfilled, the issue of application of the notification does not arise at all by implication.

8.1 It is settled law that the notification has to be read as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification. An exception and/or an exempting provision in a taxing statute should be construed strictly and it is not open to the court to ignore the conditions prescribed in the relevant policy and the exemption notifications issued in that regard.

8.2 The exemption notification should be strictly construed and given a meaning according to legislative intendment. The Statutory provisions providing for exemption have to be interpreted in light of the words employed in them and there cannot be any addition or subtraction from the statutory provisions.

8.3 As per the law laid down by this Court in a catena of decisions, in a taxing statute, it is the plain language of the provision that has to be preferred, where language is plain and is capable of determining a defined meaning. Strict interpretation of the provision is to be accorded to each case on hand. Purposive interpretation can be given only when there is an ambiguity in the statutory provision or it results in absurdity, which is so not found in the present case.

8.4 Now, so far as the submission on behalf of the respondent that in the event of ambiguity in a provision in a fiscal statute, a construction favourable to the Page No.# 7/10

assessee should be adopted is concerned, the said principle shall not be applicable to construction of an exemption notification, when it is clear and not ambiguous. Thus, it will be for the assessee to show that he comes within the purview of the notification. Eligibility clause, it is well settled, in relation to exemption notification must be given effect to as per the language and not to expand its scope deviating from its language. Thus, there is a vast difference and distinction between a charging provision in a fiscal statute and an exemption notification."

12. Reference is also made on the decision of the Hon'ble Supreme Court in the case of Union of India Vs VVF limited reported in (2020) 20 SCC 57 wherein the aspect of promissory estoppel has been dealt with. He has lastly relied upon the case of Commerce Commissioner of Customs vs. Dilip Kumar reported in (2018) 9 SCC 1 wherein it has again been laid down that an exemption notification is to be construed strictly and if there is any ambiguity it cannot be construed to be in favour of the Assessee.

13. Ms. Hawelia, the learned counsel has clarified that the notification, as such is not the subject matter of challenge and the claim is mainly based on the policy which, according to the petitioner grants the benefit and the same is not clearly mentioned in the notification. She has drawn the attention of this Court to the decision of the Hon'ble Supreme Court in State of Bihar Vs Kalyanpur Cement Limited reported in (2010) 3 SCC 274. She has submitted that when the policy is giving the benefit, absence of any consequential notification cannot debar an assessee to get such benefit. She has submitted that the notification is silent on the aspect of a new unit making substantial expansion during the period of the validity of the policy. Lastly, she has also drawn the attention of this court to the aspect that for an existing unit benefit may be Page No.# 8/10

given more than once if such expansion is made which is not less than 25% of the fixed capital whereas a new unit is not entitled to more than one benefit. She submits that equity would demand that the case of the petitioner is to be considered fairly and transparently.

14. The rival submissions have been duly considered and the materials placed before this Court have been carefully perused.

15. The claim is based on the NEIIP of 2007 which was announced on 01.04.2007. As per the same, 10 years period was stipulated to give exemption which amongst others would include excise duty benefit. The subsequent notification issued by the Excise Department being Notification No. 20/2007-CE dated 25.04.2007 stipulates two kinds of units which would get the benefit. For ready reference, the said stipulation is extracted herein below:

"5 (a) New Industrial units which commence commercial production on or after

the 1st day of April, 2007 but not later than 31st day of March, 2017;

(b) Industrial units existing before the 1st day of April, 2007 but which have undertaken substantial expansion by way of increase by not less than 25% in the value of fixed capital investment in plant and machinery for the purposes of expansion of capacity / modernization and diversification and have commenced

commercial production from such expanded capacity on or after the 1 st day of

April, 2007 but not later than 31st day of March, 2017."

16. It clearly appears that a new unit which starts its commercial production after the date of the policy would be entitled to get the benefit and so far as existing units are concerned, they would also get such benefit if there is an Page No.# 9/10

expansion not less than 25% of the fixed capital. It is the case of the petitioner that it is a new unit and it is also admitted that in the status of a new unit it has got the benefit under Clause 5 (a). The claim is on the basis that the petitioner unit had undergone substantial expansion in the year 2012, which is more than 25% of the fixed capital and therefore had claimed for another exemption benefit.

17. The impugned order of rejection has been carefully perused. The rejection is on the basis that the benefits to be given under 5 (b) is only for an existing unit and not for a new unit undergoing a substantial expansion within the aforesaid period of 10 years. This Court is unable to accede to the contention advanced on behalf of the petitioner that the petitioner unit, after availing of the exemption as a new unit can also be treated as an existing unit. A submission has been made on the aspect of equity that an expansion done by an existing unit for the second time would also be entitled whereas a new unit undergoing expansion within the stipulated period would not get the benefit. Such submission is unable to be accepted in view of the fact that an existing unit is given exemption only on the aspect of the expansion which has to be not less than 25% of the fixed capital. On the other hand, a new unit gets the excise benefit exemption on the entire investment made. Therefore, the aspect of giving more than one benefit to an existing unit cannot be equated with a new unit like the present petitioner which had got full exemption under Clause 5 (a).

18. There is no dispute with the doctrine of promissory estoppel and in the instant case, it is not the case of the petitioner that no benefit at all was given to it. On the contrary, it is an admitted fact that the petitioner had got full benefit under Clause 5 (a) of the Notification. This Court has also considered the Page No.# 10/10

decisions of the Hon'ble Supreme Court on the aspect of interpretation of fiscal statute. It has been clearly laid down that any exemption notification has to be construed strictly and in favour of the revenue. This Court is of the view that the policy is only giving incentive so that industrialization may happen in a particular locality and only upon fulfillment of the conditions mentioned in the consequent notification, an unit would be eligible for such exemption. This Court is unable to accede to the contention advanced on behalf of the petitioner that in absence of any further stipulation in the consequent notification, the assessee would have the benefit of exemption. This Court is rather of the view that in absence of any express provision to grant exemption, an unit would not be in a position to claim any exemption as payment of excise duty is the rule and exemption is the exception which has been provided by the policy depending on particular facts and circumstances.

19. Though in the writ petition, it is found that Clause 5 (b) of the Notification dated 25.04.2007 was also a part of the challenge, the learned counsel for the petitioner has clarified that the said challenge is not pressed. In any case, the petitioner having undertaken the benefit of the notification, a part of the same cannot be challenged collaterally.

20. In view of the aforesaid discussion and the facts and circumstances, this Court is of the opinion that no case for interference is made out and accordingly the writ petition is dismissed.

21. No order as to cost.

JUDGE

Comparing Assistant