Page 118 - ELT_15th May 2020_VOL 372_Part 4th

508 EXCISE LAW TIMES [ Vol. 372

Central Government with a laudable object of having genuine industrialization
in either backward areas or areas such like Kutch, which suffered on account of
Natural calamity. Misuse of excise duty exemption being rampant and the effect
of such manipulated acts were brought to the notice of the Government. The pol-
icy and intention of the Government to provide excise duty exemption was in
respect of genuine manufacturing activities carried out in these areas. The entire
genesis of the policy manifesting the intention of the Government to grant excise
duty exemption was to provide such exemption only to actual value addition
made in these areas. It is in the background of these facts and with a view to give
effect to such a policy, the Government in exercise of powers conferred under
Section 5A of the Central Excise Act modified the refund mechanism so as to
provide that excise duty refund would be allowed only to the extent of duty pay-
able on actual value addition made by the manufacturers undertaking manufac-
turing activities in these areas. As a result of the notification impugned before the
High Court, the manufacturers are required to pay duty on full value of the
goods manufactured and cleared by them in the same manner as per existing
scheme but refund would be granted only to the extent of duty paid on the value
addition made by them in these specified areas based on all India average of per-
centage of duty paid in cash and Cenvat credit;
8.5 The High Court has erred in not appreciating that the Notification
No. 16 of 2008 was issued by the Government in public interest and in the inter-
est of revenue.
8.6 Learned Counsel appearing on behalf of the Union of India has
made further submissions while assailing the impugned judgment and order
passed by the High Court as follows :
8.6.1 That the Central Government has the power to provide for ex-
emption from duty on goods either wholly or partly with or without condition as
may be called for in public interest. The guiding factor for exercise of power is
public interest. When the exemption notification was issued under Section 5A of
the Central Excise Act, it was implicit in it that it could be rescinded or modified
at any time if the public interest so demands;
8.6.2 The amendment notification is non-discriminatory and treat all
industries at par. It only rationalizes the quantum of exemption by proposing
rate of refund on the total duty payable. In the field of taxation, the Court shall
be the slow to interfere with fiscal policy, more particularly when the same is
issued with respect to exemption/incentive on fulfillment of certain conditions
and when the same is in the public interest and in the interest of revenue. Reli-
ance is placed upon the decision of this Court in the case of R.K. Garg v. Union of
India, (1981) 4 SCC 675; that the basic principle of original notification is not al-
tered. The Central Government has only streamlined the provisions of the notifi-
cation relating to refund of duty paid through other than Cenvat utilization;
8.6.3 Prior to issuance of notification dated 31-7-2001, representations
were received from State Government as well as representations of the people
and Trade and Industry that tax holidays be provided to areas affected by earth-
quake. The Government considering the representations issued exemption notifi-
cation dated 31-7-2001 subject to conditions, the intention behind the exemption
scheme was to attract immediate fresh investment by incentivizing setting up of
new industrial units so as to generate employment. The exemptions are subject to
periodic review to weed out those which have outlived their utility, to meet the
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