M/S Best Crop Science Industrial Area Kathua Th Gulshan Bandral vs. Union Of INDIA Th Secretary Ministry Of Commerce And Industry Dipp And Others

Held

The Court held that the "specified goods" eligible for budgetary support under the Scheme are those that were manufactured and cleared by the eligible units while availing the benefit of excise duty exemption under the Exemption Notification. The Court found that the Scheme's definition of "specified goods" is clear and requires a direct link to past manufacturing and excise duty exemption. The Court rejected the petitioner's argument that "any goods under Chapter 38" were eligible, stating that this would render the definition of "specified goods" redundant. The Court agreed with the respondents that goods manufactured and cleared after 01.07.2017 under different 8-digit HSN codes, for which no excise duty exemption was availed prior to 01.07.2017, are not eligible for budgetary support. The Court found no illegality or arbitrariness in the respondents' decision and dismissed the petition. The Court also noted that a liberal interpretation of the Scheme was not warranted due to the clear language used.

Facts

The petitioner, M/s Best Crop Science, a manufacturer of chemical products, filed a writ petition challenging orders dated 03.09.2020 and 07.12.2020 issued by the Assistant Commissioner, Central Goods and Services Tax Division. These orders rejected the petitioner's claim for budgetary support under a scheme, stating that the benefit was only applicable to goods manufactured under an 8-digit HSN code and cleared before 01.07.2017. The petitioner had been availing excise duty exemptions under a 2010 notification for goods falling under Chapter 38 of the Central Excise Tariff Act, 1985, specifically HSN code 3808. With the introduction of GST, this exemption was withdrawn, and a new Budgetary Support Scheme was introduced to compensate eligible units. The petitioner argued that their continued manufacturing of goods under Chapter 38 entitled them to this support.

Key Issues

1. Whether the "specified goods" eligible for budgetary support under the Scheme are limited to those manufactured and cleared with excise duty exemption prior to 01.07.2017, and if so, whether this requires an identical 8-digit HSN code classification for goods manufactured before and after the GST regime. Petitioner's arguments: The petitioner contended that the Exemption Notification covered "all goods" under Chapter 38 without distinguishing between sub-headings or sub-items. Therefore, "specified goods" under the Scheme should encompass all goods falling under Chapter 38 that were previously eligible for excise duty exemption. They argued that the Scheme is beneficial and should be liberally construed. They also argued that the respondents were adding conditions not present in the Scheme by insisting on identical 8-digit HSN codes. Respondents' arguments: The respondents argued that the Scheme's definition of "specified goods" requires them to have been manufactured and cleared with excise duty exemption under the Exemption Notification. They asserted that goods manufactured after 01.07.2017 under different 8-digit HSN codes (e.g., 38089113, 38089199, etc.) were not manufactured or cleared by the petitioner prior to 01.07.2017, and therefore, no excise duty exemption was availed for them, making them ineligible for budgetary support. They also argued that a liberal interpretation would create an uneven playing field.