MC 1926/2011 BEFORE HON’BLE THE CHIEF JUSTICE MR. A. K. GOEL THE HON’BLE MR. JUSTICE C.R.SARMA JUDGMENT AND ORDER (Oral) (A. K. Goel, CJ.) 1. This order will dispose of Misc. Case No.1926 of 2011 in C. Ex. Appeal N o.1 of 2008, Writ Appeal No.394 of 2010 and Writ Appeal No.395 of 2010 as the is sue raised in all the three matters is common and between the same parties. 2. Misc. Case No.1926 of 2011 is an application filed by the assessee seeki ng implementation of order of this Court dated 05.05.2010 passed in C. Ex. App. No.1 of 2008. 3. Writ Appeal No.394 of 2010 has been filed by the Revenue against order o f learned Single Judge dated 06.01.2010 issuing certain directions on a writ pet ition of the assessee for benefits in terms of exemption notifications dated 25. 08.2003, 21.01.2004 and 09.07.2004 under Section 5A of the Central Excise Act, 1 944 read with sub-section (3) of Section 3 of the Additional Duties of Excise (G oods of Special Importance) Act, 1957 and the Finance Act, 2001. 4. Writ Appeal No.395 of 2010 has been filed against order of learned Singl e Judge dated 29.06.2010 issuing further directions in the writ petition of the assessee already decided by the order dated 06.01.2010. 5. We have heard Mr. K. N. Choudhury, learned Senior Counsel appearing for the appellants, and Dr. Ashok Saraf, learned Senior Counsel, appearing for the r espondents. 6. The assessee is engaged in the manufacture of tobacco products falling u nder Chapter 24 of the Central Excise Tariff Act, 1985. By the above notificatio ns exemption from Central excise was granted subject to certain conditions, main ly, requiring investment to be done in the infrastructure in North Eastern State s within stipulated time. It will be appropriate to reproduce the notifications in question which are as under : Relevant part of Notification No. 69/2003 CE, dated 25.08.2003 : (a) The scheme would be available only in respect of those units, which woul d manufacture specified goods, including pan masala; (b) The manufacturing unit must be located in any of the seven North Eastern States, namely, the State of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizo ram, Nagaland or Tripura; (c) The scheme would be applicable to only those units, which had commenced commercial production on or after 24-12-1997, but not later than 28-02-2001; (d) The unit should have had continued its manufacturing activities after 28 -02-2001 and should have had availed the benefits under earlier Notification Nos . 32/99-CE and 33/99-CE, both dated 08.07.1999; (e) The sum of duty payable, but for the exemption, would have to be utilize d by the manufacturer only for ’investment’ in ’plant and machinery’ in a manufa cturing unit; (f) The said ’investment’s were to be made before expiry of a period of six months from the end of each quarter; (g) The manufacturer was obliged to furnish, to a Committee, within one mont h of the expiry of the period of six months as described hereinbefore, details o f the investments made by the manufacturer; (h) The said Committee was to consist of the Chief Commissioner of Central E xcise, Shillong, the Principal Secretary of the Department of Industry of the St ate in which the unit was located and the Principal Secretary of the Department of Industry of the State in which the investment was made; (i) The manufacturer was required to prove to the satisfaction of the Commit tee that the investment was made, in plant and machinery, in a manufacturing uni t located in any of the seven States aforementioned; and, (j) Finally, once the Committee (which came to be known as the Investment Ap prisal Committee, in short, ’the IAC’) was satisfied that the ’investment’ was m ade in ’plant and machinery’, in a manufacturing unit in terms of the Notificati on, dated 25.08.2003, aforementioned, it was to issue a certificate to this effe ct to the manufacturer within a period of three weeks after the period of one mo nth described above; (k) The certificate, granted by the IAC, was to be produced by the manufactu rer, within a period of two weeks from the date of issue of the certificate, to the jurisdictional Central Excise Officer; (l) The ’investment’, made under this Notification, dated 25-08-2003, was re quired to be for a period of ten years from the date on which the ’investment’ w as made. 21st January, 2004 Notification No. 8/2004-Central Excise In exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (59 of 1957), and sub-section (3) of section 136 of the Finance Act, 2001 (14 of 200 1), and in supersession of the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 69/2003-Central Excise, dated t he 25th August, 2003, published in the Gazette of India, vide G.S.R. 679(E), dat ed the 25th August, 2003, the Central Government, being satisfied that it is nec essary in the public interest so to do, hereby exempts all goods falling under s ub-heading 2401.90, 2402.00, 2404.41, 2404.49 2404.50 or 2404.99 of the First S chedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 198 6), from the whole of the duties of excise, additional duties of excise leviable under the said Central Excise Tariff Act, the Additional Duties of Excise (Good s of Special Importance) Act and the National Calamity Contingent duty leviable thereon under sub-section (1) of section 136 of the said Finance Act, subject to the following conditions, namely,-- (A) the exemption under this notification shall be available only in respect of a unit which,-- (i) is located in the State of Arunachal Pradesh, Assam, Manipur, Megha laya, Mizoram, Nagaland or Tripura; (ii) had commenced commercial production on or after the 24th day of December , 1997, but not later than the 28th day of February, 2001; (iii) had availed of the benefit under the notification of the Government of I ndia in the Ministry of Finance (Department of Revenue) No. 32/99-Central Excise , dated the 8th July, 1999 [G.S.R 508 (E) dated the 8th July, 1999] or No. 33/99 -Central Excise, dated the 8th July, 1999 [G.S.R..509(E) dated the 8th July, 199 9]; and (iv) has continued its manufacturing activities after the 28th day of Februar y, 2001. (B) an amount equal to the sum of basic excise duty, special excise duty, ad ditional excise duty and National Calamity Contingent duty, payable, but for the exemption in this notification, shall be utilized by the manufacturer only for investment in,- (i) plant and machinery in a manufacturing unit which is located in the Stat e of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland or Tripura ; or (ii) infrastructure or civil works or social projects in the State of Arunach al Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland or Tripura; (C) the investment in terms of condition (B) shall be made before the expiry of six months from the end of each quarter; (D) the manufacturer shall provide all details relating to the investment ma de in terms of condition (E), within one month after the expiry of the period of six months referred to in condition (C), to a Committee consisting of, the Chie f Commissioner of Central Excise, Shillong, the Principal Secretary of the Depar tment of Industry of the State concerned, in which the unit is located and the P rincipal Secretary of the Department of Industry of the State in which the inves tment is made, and shall have to prove to the satisfaction of the said Committee that the investment has been made for the purpose specified in condition (B); (E) if the Committee referred to in condition (D) is satisfied that the inve stment as specified in condition (B), has been made, it shall issue a certificat e to this effect to the manufacturer within a period of three weeks after the ex piry of the one month referred to in condition (D), which shall be produced by t he manufacturer, within a period of two weeks from the date of issue of such cer tificate, to the jurisdictional Central Excise Officer; (F) the investment made under this notification shall not be allowed to be w ithdrawn before the expiry of ten years from the date on which the investment is made except in a case where the investment withdrawn is reinvested in the same manner as specified in this notification, in any one of the States mentioned in condition (A): Provided that if the investment made under this notification is withdraw n before the expiry of ten years and is not reinvested as mentioned above, the d uty which is equal to the amount so withdrawn and not so reinvested shall be pai d by the manufacturer on the date on which the investment is withdrawn. G.S. Karki Under Secretary to the Government of India New Delhi, dated the 9th July, 2004 Notification No. 28/04 G.S.R (E).-In exercise of the powers conferred by sub-section (1) of S ection 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) A ct, 1957 (58 of 1957) and sub-section (3) of section 136 of the Finance Act, 200 1 (14 of 2001), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following amendments in the notif ication of the Government of India in the Ministry of Finance (Department of Rev enue) No. 8/2004-Central Excise, dated the 21st January, 2004 and published in t he Gazette of India vide number G.S.R.60(E), dated the 21st January, 2004, namel y :- In the said notification, in the conditions, for conditions (C), (D) and (E), the following shall be substituted, namely:- (C) the investment in terms of condition (B) shall be made in the following manner, namely :- (i) an amount equal to the sum of basic excise duty, additional excise duty and National Calamity Contingent Duty, payable in a quarter, but for the exempti on under this Notification, shall be deposited by the manufacturer within sixty days from the end of the quarter, in an escrow account opened by the manufacture r, for this purpose, in a bank authorized for excise duty collection; (ii) operations including withdrawals and closure of the said escrow account shall be made with the prior approval of the jurisdictional Commissioner of Cent ral Excise, taking into account the conditions specified in this notification an d to safeguard the revenue; (iii) the manufacturer shall, pending investment in the manner prescribed in c ondition (B), execute a bond, as may be specified by the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, binding himself to pay on demand an amount equal to the amount referred to i n clause (i) along with interest thereon at the rate specified under section 11A B of the Central Excise Act, 1944, and not so invested, in terms of condition (B ), with the amount lying in balance in the said escrow account as security or co llateral; (iv) the amount deposited in the said escrow account, in terms of clause (i), shall be invested, in the manner specified in condition (B), within two years f rom the date of its deposit in such account; (v) the amounts withdrawn from the escrow account shall be invested for the purposes specified in condition (B) within sixty days of its withdrawal from suc h account. (D) the manufacturer shall,- (i) submit a quarterly statement, within sixty days from the end of the rele vant quarter to a Committee, consisting the Chief Commissioner of Central Excise , Shillong, the Principal Secretary in the Department of Industry of the State c oncerned in which the unit is located and the Principal Secretary in the Departm ent of Industry of the State in which the investment is being made, giving detai ls of deposits made in and withdrawal made from, the escrow account, along with details of investment, made during the quarter; (ii) provide all details relating to the investment made in terms of conditio n (B), not later than one month after the expiry of the period of two years refe rred to in condition (C), to the said Committee; (iii) prove to the satisfaction of the said Committee that the investment has been made for the purposes specified in condition (B); (E) if the Committee referred to in condition (D) is satisfied that the inve stment as specified in condition (B), has been made, it shall issue a certificat e to this effect to the manufacturer within a period of one month from the recei pt of the details as referred to in condition (D), and on the issuance of which, the liability of the manufacturer shall stand discharged to the extent of inves tment so certified; (EA) if the manufacturer fails to make the deposit or does not invest the amo unt specified in condition (B), within the stipulated period and in the manner, then, the duty which is equivalent to the amount not so deposited or invested sh all be recoverable from the manufacture along with interest thereon at the rate specified under section 11AB of the Central Excise Act, 1944, and without prejud ice to any action that may be taken under the provisions of the said Act or any other law for the time being in force, by forfeiture of amount in the said escro w account. G.S. Karki Under Secretary to the Government of India 7. The Revenue issued notice dated 29.07.2005 under Section 11A of the Act asking the assessee to show cause why the Central Excise duty for the period fro m 9.7.2004 to 30.9.2004 should not be recovered with interest and penalty as the assessee claimed exemption without complying with the conditions for the exempt ion. After adjudication, the adjudicating authority confirmed the demand with in terest and also levied penalty. On appeal, the Customs, Excise and Service Tax A ppellate Tribunal (CESTAT) set aside the order of the revenue authority and uphe ld the plea of the assesee that the conditions for exemption had been duly compl ied with. On further appeal of the revenue, this Court upheld the view taken by the CESTAT with the following observations and findings : 15. The undisputed facts of the case also reveal that the Department by its letter dated 8.12.2004 had intimated the respondent Company that a separ ate Escrow Account in respect of the Agartala Unit should be opened by it and, accordingly, a separate account i.e. Account No. 01000051403 was opened to which account an amount of Rs. 8,64,38,636.00 was transferred from the main account i .e. Account No. 01000051400. The Department was informed of the said facts by th e respondent Company by letter dated 10.1.2005. No objection was taken by the De partment at that stage with regard to the transfer. That apart, the transfer was from one Escrow Account to another Escrow Account which was opened on the advic e of the Department. Such a transfer, therefore, cannot be understood to be a wi thdrawal or operation of the Escrow Account by the respondent Company, within th e meaning of the Notification No. 8/2004-CE read with the Notification No. 28/20 04-CE. If the Department itself had advised the respondent Company to open a sep arate Escrow Account in respect of the Agartala Unit after it was informed that the amount equivalent to the duty in respect of both the Guwahati and the Agarta la Units were deposited in one Escrow Account, it is axiomatic that the Departme nt had really ordered for transfer of the amount of duty in respect of the Agart ala Unit to the separate Escrow Account which was directed to be opened. 16. Coming to the transfer of the amount of Rs. 26.58 Crores from th e Escrow Account No. 01000051400 to a Corporate Liquid Term Deposit Account so a s to earn interest, the said transfer was made by the respondent Company unilate rally. The question, therefore, that has to be answered by the Court is whether the said transfer made to the Corporatte Liquid Term Deposit Account was prohibi ted by the Notification No. 8/2004-CE read with the Notification No. 28/2004-CE. 17. The contention of the respondent Company that the transfer was t o a Corporate Liquid Term Deposit Account which was linked to the Escrow Account and that the said transaction was within the umbrella of the Escrow Account can not be brushed aside, inasmuch as, the statement of the Bank Manager recorded in the proceedings under Section 14 of the Central Excise Act, had clearly indicat ed that a Corporate Liquid Term Deposit Account can be brought under an Escrow a rrangement and that, in the present case, the Corporate Liquid Term Deposit Acco unt was linked to the current account No. 01000051400 and the interest earned al so came under the purview of the Escrow Account. However, the fact remains that the said transfer to the Corporate Liquid Term Deposit Account was made, as stat ed by the Bank Manager, without the knowledge of the Central Excise Department. Under the Notification bearing No. 28/2004-CE operations including withdrawal a nd closure of the ESCROW Account require prior approval of the jurisdictional C ommissioner of Excise. In a situation where the Corporate Liquid Term Deposit Ac count was linked to the Escrow Account and the interest earned became a part of the Escrow Account, as stated by the Bank Manager, the transfer that had taken p lace must be understood to be a notional transfer and the money in the Escrow Ac count has to be understood to be always available, specifically when the Bank Ma nager in his statement had stated that the Bank was at all material times aware as to how the proceeds were to be utilized/ appropriated and the specific role o f the Central Excise Authorities in this regard. The subsequent stand taken by t he Union of India through the Union Minister of State for Finance in the letter dated 31.7.2006 as well as the decision of the Central Board of Excise & Customs , details of which have been noticed, in fact, vindicates the stand taken by the respondent Bank. We do not see how the benefit of the said decisions permitting the amounts lying in an Escrow Account to earn interest should be refused to th e respondent Company merely because such decisions were taken at a point of time subsequent to the actions initiated against the respondent. Coupled with the af oresaid fact is the additional fact recorded by the learned Tribunal that, in t he present case, no part of the amount lying in the Escrow Account(s) or any par t of the interest earned on the said amount was appropriated or utilized by the respondent Company. In the above facts, we are of the view that the learned Trib unal was perfectly justified in coming to the conclusion that the respondent Com pany had substantially fulfilled and complied with the requirements of the Notif ication No. 8/2004-CE read with the Notification No. 28/2004-CE and that the ord ers passed by the learned Commissioner confirming the demand and levying penalty were unjustified. 8. After the judgment of this Court dated 05.05.2010, the assessee sought i ts implementation. The application for implementation of the order was rejected vide order dated 7.6.2011 with the following observations : 4.3 In that context it is seen that section 72 of the Finance Act, 2011 has provided for retrospective amendment of the Notification Nos.08/2004-CE dated 21 .01.2004 as amended by Not. No.28/2004-CE dated 09.07.2004 wherein time line pro vided for withdrawal from the Escrow account has been made 4 years in place of 2 years from the date of deposit. AS any withdrawal has to be examined within the scope of the amended Notification, this amount of Rs.8.70 crore transferred to C.L.T.D. account was permissible for withdrawal/investment upto 25.11.2008 becau se the same was deposited in the Escrow Account on 25.11.2004. Hence, this amoun t cannot be allowed for withdrawal as it is beyond the timeline prescribed in th e amended Notification. Further, I find that no benefit arising from the earlier Judgment passed by the Hon’ble High Court and CESTAT, as mentioned above can be given to the assessee in view of sub-section (6) of section 72 of the Finance A ct, 2011 which reads as, (6) No suit or other proceedings shall be instituted, maintained or continued i n any court, Tribunal or any other authority for any action taken or anything do ne or omitted to be done, in respect of the said notifications and no enforcemen t shall be made by any court of any decree or order relating to such action take n or anything done or omitted to be done as if the amendments made in the said n otifications had been in force at all material times. 5. In view of the above, I do not permit withdrawal of Rs.8.70 crore, inclu sive of interest accrued thereon, from Escrow Account as per the application dat ed 25.06.2010 filed by M/s. Dharampal Satyapal Ltd. Agartala. 9. Learned counsel for the assessee submits that the Commissioner, Central Excise, was not justified in rejecting the application for implementation of the order of this Court only on the ground that under the Finance Act, 2011, there is a retrospective amendment of the exemption notification providing for longer period for withdrawal of the amount from the Escrow Account as the said amendmen t does not in any way put further conditions for the exemption but only relaxes the existing conditions. 10. WP(C) No.591 of 2008 was filed by the assessee challenging freezing of t he Escrow Accounts of the assessee on the ground that the assessee had failed to make investment within the period stipulated in the exemption notification, whi le WP(C) No.2814 of 2008 and WP(C) No.1048 of 2008 were filed questioning the de cision of the investment appraisal committee on the issue of compliance of condi tions for investment and consequential demand notices for recovery of the excise duty dues as claimed by the department. Dealing with the issues raised in the w rit petitions, the learned Single Judge recorded the following findings : 80. Thus, the ’forfeiture’, in the present cases, on the direction of the su perior authority, suffered from complete non-application of mind inasmuch as it is not the respondent No. 2, who has applied his mind to the facts of the presen t case and decided to forfeit the amount; rather, he merely carried out the dire ctions given by his superior authority; whereas the law made the respondent No. 2 responsible to take a decision on this aspect consciously and after fully appl ying his mind. This was obviously not possible without giving a notice to the pe titioners to have their say in the matter and when the respondent No. 2 has acte d at the behest of his superior officer and not according to his own decision re ached after applying his mind dispassionately and after taking into consideratio n all the relevant facts presented before him, such a decision and the action, t aken on the basis of such decision, cannot be sustained. This apart, the petitio ners also have considerable force in their submission that in respect of a part of the amount, which has been appropriated in the manner, as aforesaid, by the r espondent No.2, the CESTAT, Kolkata, had already granted stay and the stay order was