WP(C) 749/2010 BEFORE THE HON’BLE MR. JUSTICE AMITAVA ROY Feeling distressed by the withdrawal of the fiscal incentive professed under the new industrial policy in the Northeastern Region embodied in the office memoran dum No. EA/1/2/96-IPD dated 24/12/1997 of the Ministry of Industry and Commerce, Department of Industrial Policy and Promotion, Government of India by way of ex emption of duty under the Central Excise Act, 1944 (for short hereafter referred to as the Act) for its manufactured items of pan masala and other tobacco pro ducts the petitioner has mounted this assailment seeking invalidation of the imp ugned decision and restoration of the concession with all consequential benefits . By orders dated 9/3/2010, the operation of the impugned notifications 11/2007- CE dated 1/3/2007 and No. 21/2007-CE dated 25/4/2007 had been kept in abeyance. 01. I have heard Mr. A.K. Bhattacharyya, Sr. Advocate assisted by Mr . S.K. Medhi, Mr. R.K. Bharali, Mr. J. Das and Mr. A. Pathak, Advocates for the petitioner and Mr. K.N. Choudhury, learned Additional Advocate General, Assam, a nd Mr. B. Sharma, learned Central Government Standing Counsel, for the State as well as the Union respondents respectively. 02. The contentious pleadings dealt case wise lay the essential fact s. The petitioner in WP(C) 749/2010 has introduced itself to be a Company incorp orated under the Companies Act, 1956 with its registered office at 1711, S.P. Mu kherjee Marg, in New Delhi having fifteen units functional in the State of Assam out of which eight are exclusively engaged in the manufacture of pan masala. Th e Central Government in the Ministry of Industry and Commerce, Department of Ind ustrial Policy and Promotion, in order to provide a fillip to industrial growth in the Northeastern Region through its Northeastern Industrial Policy conveyed b y the office memorandum No. EA/1/2/96-IPD dated 24/12/1997 announced new initiat ives and incentives amongst others by way of central excise and income tax exemp tions on various excisable commodities/goods including pan masala for a period o f 10 years from the date of commencement of commercial production thereof or the date of issuance of the notification whichever was later. Consequent upon the a bove declaration, the Central Government issued notifications No. 32/99-CE and 3 3/99-CE dated 8/7/1999 under the Act read with other legal provisions as mention ed therein in reiteration. Thereunder the Central Government exempted the specif ied goods from excise duty or additional excise duty with regard to the units lo cated in certain areas/industrial estates etc. The exemption so granted was exte nded to new industrial units that had commenced their commercial production on o r after 24/12/1997 as well as those that had existed before that date but had un dertaken substantial expansion by way of increase in their installed capacity by not less than 25% on or after the said date. 03. According to the petitioner, though it was initially hesitant to set up its units in the Northeastern Region due to logistical and locational pr oblems as well as other difficulties, in view of the assurance of excise duty ex emption for a period of 10 years, it decided to do so and thus set up manufactur ing units within the areas specified in the aforementioned notifications. The co mmercial production in the fifteen units so established in the industrial estate , Bamunimaidam, Guwahati of which 8 were devoted to the manufacture of pan masal a commenced in the years 2001, 2002, 2006 and 2007. In the process it has invest ed huge amounts generating as well substantial employment to the locals besides stimulating industrialisation in the Region. The petitioner has claimed that its total investment in the projects as on 30/9/2009 is Rs. 90.65 crores. A chart h as been furnished by it disclosing the details of investment in the pan masala u nits and the dates of commencement of commercial production in them. It has main tained that its investment in the pan masala units has been to the tune of Rs. 2 9.09 crores which employ about 400 persons. According to it, it has also entered into various agreements for carrying out the manufacturing process and has sche med several new ventures in the Northeastern Region acting on the commitment tha t the exemption would continue for a full term of 10 years as alluded in the not ifications No(s) 32/99-CE and 33/99-CE. It having satisfied the eligibility crit eria as mentioned in the North East Industrial Policy, 1997, (for short hereafte r referred to as the Policy 1997) and being entitled, availed the benefit of exe mption from payment of excise duty on the finished goods manufactured and cleare d by it and was duly allowed the refund of such duty deposited by it since the y ear 2001 following the verification of its claims relatable thereto. 04. The North East Industrial and Investment Promotion Policy, 2007 (for short hereafter referred to as the Policy 2007) promulgated vide Office Mem orandum No. 10(3)/2007-DBA-II/NER dated 1/4/2007 by the Government of India in t he Ministry of Commerce and Industry, Department of Industrial Policy and Promot ion followed which though approved a package of fiscal incentives and other conc essions for the North East Region with effect from that date, catalogued pan mas ala covered under Chapter 21 of the First Schedule to the Central Excise Tariff Act, 1985 (for short hereafter also referred to as the Tariff Act, 1985) in the Negative List of industries identified as ineligible for the benefits thereund er. The petitioner, however, has insisted that the policy evinced that all exist ing industrial units that had commenced production on or before 31/3/2007 would enjoy the exemption benefits and that therefore though pan masala was included i n the Negative List of Policy, 2007, these units having commenced production on or before 31/3/2007 were entitled to avail the fiscal incentives under Policy 19 97. 05. By the impugned notification No. 21/2007-CE dated 25/4/2007, the benefits hitherto extended vide the notifications No. 32/99-CE and 33/99-CE to the petitioner were sought to be withdrawn vis-à-vis pan masala falling under Ch apter 21 of the First Schedule to the Tariff Act, 1985 signifying the mandate of payment of full excise duty by the manufacturers of the said commodity/goods. C ontending that such unilateral withdrawal is arbitrary and unwarranted as well a s annihilative of its legitimate expectation besides being impermissible qua the precept of promissory estoppel, the petitioner claims to have unsuccessfully re presented before the various authorities of the concerned Departments of both th e Governments and distraught by their gelid response has turned to this Court fo r judicial intervention. It, however, has referred to the office memoranda dated 22/11/2007, 24/1/2008 and 23/2/2009 of the Ministry of Commerce and Industries, Department of Industrial Policy and Promotion, Government of India, exhorting t he Ministry of Finance, Department of Revenue for a decision on the petitioner’s request for the reconsideration of the withdrawal of excise duty exemption to p an masala industries set up under the Policy 1997. 06. The respondents 1 to 4 have in two instalments submitted their r ecorded version. In the counter first in point of time represented to have been filed on behalf of the respondent No. 2 and affirmed by the Assistant Commission er of Central Excise, Guwahati, the promulgamation of the policy 1997 and the no tifications No. 32/99-CE and 33/99-CE dated 8/7/1999, the incentives thereunder including central excise holiday for a period of 10 years for the goods specifie d therein vis-à-vis the industrial units identified, the entitlement of the peti tioner and the grant thereof to it have been admitted. The answering respondents have averred that subsequent thereto though the Central Government issued notif ication No. 45 /99 dated 31/12/1999 under section 5A of the Act whereby the noti fications No. 32/99-CE and 33/99-CE dated 8/7/99 were amended with effect from t hat date excluding all tobacco related products including pan masala falling und er Chapter 24 or heading No. 21.06 of the First Schedule or Second Schedule of t he Central Excise Tariff Act, 1985, from the purview of the exemption, the benef it was, however, restored by the notification no. 1/2000 dated 17/1/2000. Therea fter by Notification No. 1/2001-CE dated 22/1/2001 the exemption on cigarettes w as withdrawn. This was followed by the notification No. 6/2001-CE dated 1/3/2001 withholding the excise duty exemption on all goods excluding the same from the ambit of the notifications No. 32/99-CE and 33/99-CE dated 8/7/99. According to the answering respondents, the Government of India, on a due consideration of th e achievements in the realm of industrial development in the North East Region, mushroom growth of tobacco related companies and heavy refund due to excise duty exemptions, in public interest by the Finance Act, 2003 inserted section 154 an d consequently rolled back the benefit of excise duty exemption with retrospecti ve effect thus effecting cessation of the benefits under Policy 1997 vis-à-vis p an masala. Reference to the determination made by the Apex Court in R.C. Tobacco (P) Ltd. versus Union of India, (2005) 7 SCC 725 sustaining the aforementioned amendment of the Central Act, 1944 by the Finance Act 2003 has been made in endo rsement of this stand. 07. According to the answering respondents, however, in view of the persistent demands of the affected companies/units, the Government of India issu ed another notification No. 69/03 dated 25/8/2003 also under section 5A of the A ct granting exemption to the extent of 50% of the central excise duty under cert ain conditions stipulating inter alia that the benefit would be extendable to th e units that had availed incentives under the notification No(s) 32/99-CE and 33 /99-CE and had continued their manufacturing activities on or after 28/2/2001. S ubsequent thereto vide notification No. 8/2004 dated 21/1/2004 under section 5A of the Act, the Government of India in suppercession of the notification No. 69/ 03 dated 25/8/2003 exempted all goods falling under sub-heading 2401.90, 2402.00 , 2404.49, 2404.50 or 2404.99 of the First Schedule or Second Schedule of the Ta riff Act, 1985 from the whole of the excise duty etc. payable thereon subject to certain conditions as enumerated therein. Under these notifications dated 25/8/ 2003 and 21/1/2004, the petitioner was entitled to retain amounts payable as exc ise duty and invested in the projects undertaken by it to be subsequently verifi ed and scrutinised by the Investment Appraisal Committee for issuance of a certi ficate on due satisfaction thereof. 08. On a post assessment of the arrangement so contemplated, the Gov ernment decided against the retention of Central Excise Duty for investment and thus issued notification No. 28/04 dated 9/7/2004 introducing Escrow Account Mec hanism System and accordingly amended the contents of the notification No. 8/200 4 dated 21/1/2004. The post escrow period also witnessed various problems accord ing to the answering respondents, as the Investment Appraisal Committee detected mis-utilisation of the investment as well as utilisation of the escrow fund. Th e Government decided to suspend the operation of the escrow account and eventual ly issued notification No. 11/07 dated 1/3/2007 also under the above provision o f the Act amending the one dated 21/1/2004 clarifying that the exemption contain ed therein would not be available to the goods cleared on or after the first day of March, 2007. 09. While reiterating that the promise of incentives under Policy 19 97 had ceased with the amendment vide the Finance Act, 2003 read with the Ninth Schedule thereto excluding pan masala and other products specified therein from the purview of the exemption, the partial respite from this levy granted by the notification No. 69/03 dated 25/8/2003 and 11/07-CE dated 9/7/2004 has been asse rted to be independent of the aforementioned policy and not by way of extension thereof. It has been stated that out of an amount of Rs. 100 crores represented by the petitioner to have been invested during the pre-escrow period, only an am ount of Rs. 34 crores had been certified by the Investment Appraisal Committee t o have been genuinely applied in its plants and machinery and social infrastruct ure projects. 10. Referring to the negative list in the Policy 2007, the answering respondents traced the radix of the said measure to section 154 of the Finance Act, 2003 whereby tobacco and goods covered under Chapter 21 of the First Schedu le of the Tariff Act 1985 including pan masala had been withdrawn from the ken o f the exemption of the central excise duty as evidenced by the Ninth Schedule th ereto. The impugned notification dated 25/4/2007 has been justified on this plea as well as on the ground of public interest bearing in mind the adverse ramific ations of the use of tobacco products and the resultant health hazards in the co untry. The answering respondents have insisted that the assurance of the continu ance of the benefit under Policy 1997 vis-à-vis industrial units that have comme nced commercial production on or before 31/3/2007 would not apply for tobacco an d tobacco based products. The impugned notification dated 25/4/2007 has also bee n endorsed stating that the grant of exemption of excise duty in respect of toba cco products did not yield any noticeable progress or industrial development as contemplated. 11. In reiteration and reaffirmation of its pleaded assertions, the petitioner has highlighted the inconsistency in the approach of the respondents in withdrawing the exemption from central excise duty on pan masala and tobacco while sustaining the income tax exemption/rebate extended by the Policy 1997. Ac cording to it, the grant of exemption of excise duty after the incorporation of section 154 of the Finance Act, 2003 by the notification No. 69/2003-CE dated 25 /8/2003 patently belied the plea of extinction of the promise qua the said incen tive by such amendment. While insisting that the Policy 2007 saved the petitione r’s pan masala manufacturing units that had commenced production on or before 31 /3/2007 it reiterated its assailment of the impugned notification dated 25/4/200 7 as illegal, arbitrary and malafide. Protection of section 38A of the Act has a lso been insisted upon and the justification of public interest vis-à-vis the im pugned notification has been refuted. 12. In their additional affidavit, the respondent No. 1 to 4 have be sides contending that the counter filed by the respondent No. 2 is also on behal f of the remaining respondents has questioned the maintainability of the writ pe tition on the ground of delay as the impugned notification is dated 25/4/2007. A part from asserting that the petitioner even otherwise has failed to lay any fac tual foundation to invoke the doctrine of promissory estoppel they have accused it of suppression of the material fact that it had, the impugned notification no twithstanding, been paying central excise duty for the pan masala manufactured i n terms of Pan Masala Packing Machines (Capacity, Determination and Collection o f Duty) Rules, 2008 (hereafter referred to as the Duty Rules). As the withholdin g of the said fact had a vital and decisive bearing on the grant of interim orde r in its favour, the respondents have pleaded that the petitioner has thereby di sentitled itself for any equitable relief from this Court. 13. The petitioner in its reply to this additional affidavit of the respondents has in substance sought to explain the time lag by referring to its persistent efforts with the various authorities of the Government Departments fo r the mitigation of the prejudicial consequences of the impugned notification. A ssurances to it for restoration of the benefit of exemption made by concerned au thorities but eventually departed from has also been cited as a reason for the i nterval. While denying the imputation of suppression of any material the petitio ner has insisted that following the issuance of the notification No. 11/2007 dat ed 1/3/2007, it was obliged in law to pay the consequential excise duty and that , therefore, the charge is wholly misplaced. According to it, having regard to i ts pleadings and the documents on record, a sound foundation exists for invocati on of the principles of legitimate expectation and promissory estoppel in denunc iation of the impugned decision. 14. The petitioner’s pleaded version in WP(C) 750/2010 is substantia lly akin to those as above except for a few factual variations. It is aggrieved by the notification No. 11/07 dated 1/3/2007 alluded hereinbefore seeking to wit hdraw the benefits under the Central Excise Notifications No. 32/99-CE and 33/99 -CE dated 8/7/99 issued in furtherance of the Policy 1997 so far as tobacco prod ucts as referred to therein are concerned. According to the petitioner, it is en gaged in the manufacture of zarda (scented tobacco/pan masala) in the four out o f its 15 manufacturing units located in the Industrial Estate, Bamunimaidan, Guw ahati. Further three more such tobacco manufacturing units have also been set up at Agartala being incentivised by the representations made in the aforementione d policy. Contending that the commercial production in the said units had commen ced in the years 1999, 2000, 2001, 2002, 2003, 2007 and 2008 respectively, it ha s asserted that it has thereby provided employment to about 2200 local persons t hereat. It has claimed to have invested Rs. 6911.03 lakhs in its said units till September, 2009, and has claimed to have been sanctioned the benefit of refund under the said Policy during the period 17/11/2000 to 28/2/2001. It has referred to the notifications dated 31/12/1999, 17/1/2000, 22/1/2001, 1/3/2001, 25/8/200 3, 21/1/2004 and 9/7/2004 mentioned by the Union respondents in their affidavits in WP(C) 749/2010. 15. The petitioner has maintained that pursuant to the notifications dated 21/1/2004 and 9/7/2004, it had entered into a tripartite escrow agreement with the concerned respondents on 21/6/2005. Reiterating its entitlement to the privileges granted by the Policy 1997 also under the Policy 2007, vis-à-vis its tobacco products, it has impugned the notification dated 1/3/2007 whereby the e xemptions contemplated in those dated 21/1/2004 and 9/7/2004 had been withdrawn vis-à-vis the goods cleared after 1/3/2007. It has assailed this notification as well as the one dated 25/4/2007 to be repugnant to the Policy 2007 besides bein g in arbitrary repudiation of the doctrines of promisory etoppel and legitimate expectation. Its failure, inspite of persistent representations to elicit redres sal of its grievances has also been recited. 16. The answering respondents have defended the impugned notificatio n dated 1/3/2007 to be in public interest and has denied the petitioner’s charge of arbitrariness, illegality and malafide. In their additional affidavit they h ave pleaded that the notification dated 25/8/2003 was not pursuant to any promis e held out by the Union Government and being under section 5A of the Act, it was permissible to rescind, vary and amend the grant accorded by it. They accused t he petitioner of suppression of the fact that the withdrawal of the benefit of e xemption granted to tobacco manufacturing units under the Policy 1997 by the ins ertion of section 154 in the Finance Act, 2003 had been upheld by the Apex Court in R.C. Tobacco versus Union of India, (2005) 7 SCC 725, for which the writ pet ition is liable to be dismissed in limine. They further contended that as pleade d by the petitioners, four of its seven units engaged in the manufacture of toba cco had admittedly commenced production after 2001 and were thus not eligible to avail the exemption under the notifications dated 21/1/2004 and 9/7/2004, the c ut off date therefor being 28/2/2001. They have urged as well against the applic ability of the doctrine of promissory estoppel and legitimate expectation. 17. The petitioner in its affidavit in reply has categorically denie d the allegation of misutilisation of funds and has instead urged that faced wit h numerous arbitrary and unfair decisions it was compelled to approach this Cou rt to invoke its writ jurisdiction on more than one occasion. It refuted as well the respondents plea that the notifications dated 25/8/2003, 21/1/2004 and 9/7/ 2004 had failed to achieve their objectives and charged the respondents of causi ng hindrances against it on one hand and accused it of the non-implementation th ereof on the other. It contended that the Investment Appraisal Committee though had certified the investment of Rs. 35 crores out of its claim of Rs. 96 crores, it did not reject the petitioner’s investment claims of the remaining amount. 18. In this narrated backdrop of the rival assertions, Mr. Bhattacha ryya has emphatically argued that having regard to the underlying objective of t he policies involved and the unequivocal and conscious assurances of the highest administrative authorities, a purposeful interpretation for the effectuation th ereof ought to be adopted. As the petitioner admittedly was entitled to the bene fit amongst others of exemption from excise duty on its products as involved und er the Policy 1997, having duly complied with all the stipulations as embodied t herein, it is evidently qualified for the same under the Policy 2007 as well as is apparent from Clause 2 thereof. As the Policy 2007 has specifically identifie d the industrial units which have commenced commercial production on or before 3 1/3/2007 to be eligible to avail the benefits/incentives under the Policy 1997 a s endorsed by the office memorandum No. 10(3)/2007-DBA-II/NER dated 1/4/2007, th e impugned notifications dated 1/3/2007 and 25/4/2007 being obtrusively in repud iation thereof are patently illegal and nonest in law. The learned Sr. Counsel h as insisted that though pan masala and tobacco products manufactured by it have been included in the Negative List in the Policy 2007, in view of the above savi ng clause, it having commenced its commercial production thereof on or before 31 /3/2007, cannot be denied the benefit of the incentives/exemptions sanctioned by the Policy 2007. This, Mr. Bhattacharyya, has pleaded is amply demonstrated amo ngst others by the office memorandum dated 22/11/2007, 24/1/2008 and 23/2/2009 o f the Department of Industrial Policy and Promotion, Government of India, urging upon the Finance Department to reconsider its decision of withdrawal of the pri vilege of exemption of excise duty on the said products. The notification dated 25/4/2007 has been denounced as well on the count that the grant of public inter est as mentioned therein is visibly vague and unintelligible in the attendant fa cts and circumstances. Referring to sections 5A and 38A of the Act, Mr. Bhattach aryya had maintained that the Policy 1997 has its roots in the legislative schem e outlined thereby, continuance of the benefit held out by it (policy 1997) bein g the mandate of section 38A. Any ’different intention’ as envisaged in this leg al provision thus necessarily has to be informed with relevant considerations in espousal of public interest to justify a departure, he urged and there being no ne in t he face of the two Policies as well as the notification dated 1/4/2007, in reinforcement thereof, the impugned notifications are null and void. In any c ase, the respondents having utterly failed to discharge their burden of demonstr ating such a different intention to promote public interest, the impugned notifi cations are visibly invalid, he contended. In any view of the matter, there bein g an apparent conflict on the issue between the two Ministries of the Central Go vernment which is constitutionally irreconcilable, the impugned notifications ar e liable to be adjudged as nonest, he pleaded. The learned senior Counsel refute d the plea that the notification dated 25/8/2003 is independent of the Policy 19 97. Referring to the various clauses of this notification as well, Mr. Bhattacha ryya has contended that it is obviously pursuant to the Policy 1997 and is to re main in force for a period of 10 years. 19. He argued that the impugned notification dated 1/3/2007 in parti cular having been issued before the Policy 2007,