Exemption notifications in central excise :
Central excise legislation is driven by exemption notifications. Under section 5A, the Central Government is empowered to grant exemption in public interest either absolutely or subject to conditions (either before or after removal) from the whole or any part of the duty of excise payable. Notifications issued under section 5A(1) are not applicable to the excisable goods manufactured in FTZ/SEZ/100% EOU and brought to any other place in India, unless otherwise specified. This is because the goods manufactured in such units are exempted under other notifications issued specially for them.
It is clarified that where an exemption under sub-section (1) in respect of any excisable goods from the whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods [Subsection (1A)].
Sub section (2) of section 5A states that the Central Government can exempt excisable goods from the payment of duty by a special order if it is satisfied that it is necessary in the public interest to do so, under circumstances of an exceptional nature which are to be stated in such order.
Sub-section (2A) empowers the Central Government, if it considers it necessary or expedient so to do, to insert an explanation in such notification or order, by notification in the official gazette at any time within one year of issue of the notification under Section 5A (1) or (2), for the purpose of clarifying the scope or applicability of such notification. This enables the Central Government to issue clarifications retrospectively.
In Kasinka Trading v. U.O.I. 1994 (74) E.L.T. 782, the Supreme Court held that the power to exempt includes the power to modify or withdraw in terms of Section 21 of the General Clauses Act, 1897. It was held that even a time bound exemption notification issued under section 5A of the Central Excise Act, 1944, or section 25 of the Customs Act, 1962 can be modified and revoked if it is in public interest and the doctrine of Promissory Estoppel cannot be invoked since a notification cannot be said to be making a representation or a promise to a party getting benefit thereof.
It was held in case of Orient Traders Vs. CTO 2009 (237) E.L.T. 447 (S.C.), that the exemption notifications are to be construed strictly. If the intention of the legislature is clear and unambiguous, then it is not open to the courts to add words in the exemption notification to extend the benefit to other items which do not find mention in the notification. Date of effect of Notification – Section 5A provides that the date of effect of the notification will be the date of its issue. It also provides for statutory obligation on the part of the Department to publish and sell the notifications to the public through Directorate of Publicity and Public Relations on or before the date on which the notification will be effective. Notification to be treated as a part of the enactment itself – CCE v. Parle Exports P. Ltd. 1998 (38) ELT 741 (SC).
Interpretation given at the time of enactment or issue to be given weight – CCE v. Parle Exports P. Ltd. 1988 (38) E.L.T. 741 (S.C.)
In ITC Ltd. v. CCE 1996 (86) E.L.T. 477 the Supreme Court said that non-availability of the Gazette on the date of issue of the notification will not affect the operation and enforceability of the notification particularly when there are radio announcements and press releases explaining the changes on the very day.