Order Date – 30 December 2022

Parties: Godrej Consumer Products Limited Vs Union of India and others

Facts – 

• The Petitioner, Godrej Consumer Products Limited, was availing the area-based exemption under erstwhile Notification no.56/2002-Central Excise dated 14th November 2002,
• The Respondents rescinded erstwhile Central Excise Notification nos. 56/2002 and 02/2010 in terms of Notification no.21/2017 dated 18th July 2017, introducing a Central Scheme for budgetary support vide Notification no.F.No.10(1)2017-DBA-II/NER dated 5th October 2017.
• The petitioner’s application of UID Number was rejected on the ground that wrongly applying the eligibility criteria laid out under Para 4.1 of the Budgetary Support Notification dated 5th October 2017

Issue – 

• Whether rescinding notification has been issued without any legal backing or not?

Order – 

• The Hon’ble High Court observed in Circular no.1060/9/2017-CX dated 27th November 2017 as it existed prior to 1st July 2017, the units were eligible to avail exemption from payment of Central Excise duty in terms of area-based exemption notifications and that while exemption was available to the units located in Jammu and Kashmir were required to pay Central Excise duty and avail exemption by way of refund of cash component of such duty paid, but under GST regime there is no such exemption and the existing units availing exemption from payment of Central Excise duty prior to 1st July 2017 are required to pay CGST and GST/IGST like a normal unit and thus no exemption is available to these units by way of either ab-initio exemption or by way of refund. 
• Withdrawal of exemption in public interest is a matter of policy and the courts would not bind the Government to its policy decision. The courts do not interfere with the fiscal policy where the Government acts in public interest 
• The supersession or revocation of an exemption notification in the “public interest” is an exercise of the statutory power of the State under the law itself as held by the Supreme Court in Kasinka Trading v. Union of India (1995) 1 SCC 274,
• Thus, a person claiming exemption has to establish that his case squarely falls within the exemption notification and while doing so, a notification should be construed against the Assessee in case of ambiguity.
• Hence the writ petition is dismissed.