The judgment emphasized the principles of natural justice, the role of the jurisdictional Commissioner in allowing or disallowing withdrawal from the escrow account, and the need for the IAC to verify investments as per the approval granted by the jurisdictional Commissioner.

Heard Dr. A. Saraf, learned Senior counsel, assisted by Mr. K. Choudhury, learned counsel for the petitioner as well as Mr. B. Sarma, learned Standing counsel, Central Excise Department, Assam.

2. The petitioner is a company having its registered office at 1711, SP Mukherjee Marg, Delhi and is primarily engaged in the manufacture and sale of chewing tobacco, which is also known as pan masala. The petitioner company availed the benefit of the North East Industrial Policy, 1997 (NEIP 1997) and set up two manufacturing units, one in the State of Tripura and other in the State of Assam.

3. The Govt. of India, pursuant to a policy decision, had issued two Notifications, bearing No.32/99-CE and 33/99-CE, both dated 08.07.1999, by which exemptions were granted in respect of excise duty, as well as additional excise duty, in respect of certain goods manufactured in the specified areas in the North Eastern Region of India. The exemptions were made applicable to such manufacturing units which were established after 24.12.1997 and manufactured any of the goods mentioned in the 1st and 2nd Schedule to the Central Excise Tariff Act, 1985 and also to those goods which were specified in the Schedule to the Notifications. A further provision was that in order to avail the benefits the manufacturing units be located in any of the seven north eastern states, which apparently also includes the States of Assam and Tripura.

4. By a subsequent Notification No.45/99-CE dated 31.12.1999, the earlier two Notifications of 08.07.1999 were amended and tobacco related products, including pan masala, were excluded from the purview of the exemptions. By the later Notification dated 17.01.2000, the exemptions granted earlier were restored, but by the further Notifications dated 22.01.2000, and 01.03.2001, the exemptions were again withdrawn.

5. The exemptions granted and the withdrawal of the exemptions effected as indicated above, culminated in the Notification No.69/2003-CE dated 25.08.2003 by which the exemptions granted were to the extent of 50% of the duty payable. The Notification of 25.08.2003 further provided that the exemption to the extent of 50% would be available in respect of those units which manufactured the specified goods, which also included pan masala, and have their manufacturing unit in any of the seven north eastern states and had commenced their commercial production after 24.12.1997 and not later than 28.02.2001, subject to the following:

(i) The unit claiming such exemption should have continued the manufacturing activities after 28.02.2001 and had earlier availed the benefit of exemption as per the Notifications No.32/99-CE and 33/99-CE, both dated 08.07.1999.

(ii) The amount of the duty payable, which stood exempted, should be utilised by the manufacturer for investment in plant and machinery and such investments are to be made before expiry of six months from the end of its quarter.

(iii) The manufacturer was required to furnish the details of the investment within one month from the expiry of the six months to a committee comprising of the Chief Commissioner of Central Excise, Shillong, the Principal Secretary of the Department of Industry of the State where the unit is located and the Principal Secretary of the Department of Industry of the State where the investment was made, which committee was referred as the Investment Appraisal Committee (IAC).

(iv) The IAC upon examining the details would satisfy itself as to whether the investment was made in the required manner and thereupon issue a certificate to the manufacturer, which would be utilised by it for availing the 50% exemption in the excise duties.

(v). A further requirement was that the investment so made was for a period of 10 years from the date of investment.

6. The commercial productions of the pan masala and the later investments of the petitioner company towards claiming the exemption in excise duty stood covered by the Notification dated 25.08.2003. Another Notific