Kutch, J & K and North-East Excise changes challenged in HC


AIT News Network

AHMEDABAD. The amendment in Central Excise Exemption Notification No. 39/2001 by the Government vide Central Excise Tariff Notification No. 16/2008 has been challenged by couple of manufacturers by filing Writ Petitions in Gujarat High Court which has reportedly issued notices to the Government.

Similar Petitions have been filed/ are being filed in Jammu & Kashmir and Sikkim High Courts by the Industrialists after they failed in their efforts to convince the Government for reversal of the amendments done in the original excise exemption schemes.

It has been claimed by the Petitioners that investment of Crores was made by them in Excise Free Zones after working out the incentives and sops based on the promise made by the Government in the scheme and now the Government has backtracked from its promise and , therefore, it is  a case of Promissory Estoppel.

The Scheme for Jammu & Kashmir, Kutch, North-East & Sikkim was more lucrative than the scheme of Uttaranchal & Himachal because of the twin benefits. Though Uttaranchal & Himachal Units get outright exemption from excise duty and thus not required to pay any excise; a special mechanism was provided by the Government for J & K, Kutch , North-East & Sikkim. The Notifications for these States exempted that portion of the excise duty, which was paid by the manufacturers in cash. According to the mechanism prescribed in pre-amended Notifications ; the manufacturer was first required to pay the excise duty and thereafter, whatever was paid in cash(other than CENVAT) was refunded. It is also a part of the scheme that the buyer of any input or capital goods on which such exemption is availed ; gets full CENVAT Credit including the portion of duty refunded to the manufacturer. The provisions of section 11B of Central Excise Act do not apply in case of all these Notifications.

The following Central Excise Tariff Notifications were issued on 27th March 2008 amending the existing scheme in Jammu & Kashmir, Kutch, North-East & Sikkim.


Exemption from Excise duty in Kutch Notification No. 39/2001 amended 


Exemption from Excise duty in North-East Notification No. 32/99 amended 


Exemption from Excise duty in North-East  Notification No. 33/99 amended 


Exemption from Excise duty in J & K Notification No. 56/2002 amended 


Exemption from Excise duty in North-East Notification No. 20/2007 amended 


Exemption from  Excise duty in J & K Notification No. 56/2003 amended 


Exemption from Excise duty in J & K Notification No. 57/2002 amended 


Exemption from Excise duty in Sikkim Notification 71/2003 amended 

In the abovesaid Notifications , in the preamble, for the words and figures, “to the amount of duty paid by the manufacturer of goods other than the amount of duty paid by utilization of CENVAT credit under the CENVAT Credit Rules, 2002”, the words “to the duty payable on value addition undertaken in the manufacture of the said goods by the said unit” has been substituted with effect from 1st April 2008.

As a result, the refund of only duty paid on value addition will be admissible to a manufacturer in place of unlimited refund of duty paid in cash. As a general norm 36 per cent of duty has been treated as duty for value addition whereas a different percentage of value addition has been notified for Chapters 29, 30, 33. 34, 38, 39, 40, 72, 73 , 74 , 76 & 85.




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