Page 117 - ELT_15th May 2020_VOL 372_Part 4th

2020 ] UNION OF INDIA v. V.V.F. LTD. 507

the suspending the collection of duty under normal circumstance. It is submitted
that in the present case the exemption was by conditions laid down in the notifi-
cation and in public interest. Such an exemption of this very nature is susceptible
of being revoked, annulled, modified or varied or subjected to exercise of statu-
tory power of State under the law itself as is obvious from the language of Sec-
tion 5A;
8.3 The High Court has erred in not appreciating that the Government
has validly issued the notifications. The provision of granting of refund of cash
paid portion of duty and eligibility of credit of entire amount of duty to the buy-
ers of such excisable goods had prompted certain unscrupulous manufacturers to
indulge in different type of tax evasion tactics. An analysis of cases booked by
the Excise Department and the representations received from Industry Associa-
tion had revealed misuse of exemptions given by the Government which was
meant to be available only for genuine manufacturers. It is submitted that the
modus operandi which was being followed by such unscrupulous manufacturers
revealed that such unscrupulous manufacturers were reporting of bogus produc-
tion by mere issuance of sale invoice without actual production of goods and
supply/clearance of excisable goods, which would result in availment of Cenvat
credit by buyers of such excisable goods in other parts of the country without
actual production being carried out and in absence of actual receipt of goods;
reporting of bogus production by such units in these areas where actual produc-
tion takes place elsewhere in the country; over valuation of goods resulting in
availment of excess credit by buyers; goods were supplied by manufacturers,
importers to these units without issuance of sales invoice and these were backed
by bogus sale invoices issued by traders who did not undertake actual supply of
goods. The actual supplier of these goods issued bogus duty paid invoices to
other manufacturers who took credit based on such invoices without receipt of
goods. Having found such activities by such unscrupulous manufacturers
against the object and purpose of grant of exemption/incentive, therefore, the
Government came out with the Notification No. 16 of 2008 which as such can be
said to be clarificatory in nature. By no stretch of imagination it can be said to be
a withdrawal of exemption granted earlier and consequently it cannot be said to
be in contravention of doctrine of promissory estoppel;
8.4 That the High Court has not properly appreciated and/or consid-
ered the reasons for issuance of the subsequent notification. The reason for issu-
ance of the Notification No. 16 of 2008 which as such can be said to be clarificato-
ry was that by adopting such modus operandi, the units in these areas were want-
ing to pay maximum amount of duty in cash so that they became entitled to a
claim of refund of entire amount of duty paid in cash. In order to verify this as-
pect, it is submitted that a study was made by the Excise Department to find out
the percentage of duty paid in cash and from the Cenvat credit account by the
units availing this area based exemption. On receipt of these details, they were
compared with the duty payment details of the same industry groups for all the
units across the country to find out whether the percentage of duty paid by the
units in cash in the specified areas is comparable with the units in the rest of the
country. An analysis of these details clearly showed that the industry sectors in
the specified areas were paying a very high percentage of duty in cash i.e.
through Personal Ledger Account (PLA) in comparison to the all India payment
of duty through PLA on similar goods. Thus there was misuse of excise duty ex-
emption which was considered expedient in public interest and given by the
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