2013 (11) TMI 434 - HC - Central Excise

High Court grants writ petition, overturns order denying excise cess rebate under Automobile Cess Rules.

The High Court allowed the writ petition, setting aside the impugned order that rejected the claim for rebate of excise cess under the Automobile Cess ... Interpretation of 'duty' in Explanation I to the notification - applicability of Central Excise Rules to levy, collection and refund of cess - entitlement to rebate of excise cess on exported goods - failure to consider binding precedents as ground for remand - remand for reconsideration in accordance with lawInterpretation of 'duty' in Explanation I to the notification - applicability of Central Excise Rules to levy, collection and refund of cess - entitlement to rebate of excise cess on exported goods - Whether rejection of the petitioner's claim for rebate of excise cess solely on the ground that the cess is not listed in Explanation I to the notification is sustainable. - HELD THAT: - The court held that a combined reading of the notification and the Automobile Cess Rules, 1984 shows that the manner of levying, collecting and refund applicable to duties under the Central Excise Rules is also applicable to the Automobile Excise Cess. Explanation I enumerates enactments from which duties are collected, but the rules governing levy and refund operate to make cess refund procedures applicable. The impugned order rejected the rebate claim only because the cess was not expressly mentioned in Explanation I and did not consider the applicability of the Central Excise Rules (and related decisions) to cess. That reasoning was therefore incomplete and unsustainable. [Paras 4, 5, 8]Impugned rejection of rebate solely for absence of express reference in Explanation I is set aside and the matter requires reconsideration.Failure to consider binding precedents as ground for remand - remand for reconsideration in accordance with law - Whether the impugned order must be set aside and the matter remanded because it did not consider relevant judicial decisions bearing on rebate of cess. - HELD THAT: - The court noted that in identical circumstances the Rajasthan High Court had allowed rebate of an education cess though it was not covered under the notification for the relevant period, and that the Supreme Court had affirmed that Rajasthan High Court view in SLP No. 19864/2008. These precedents were placed before the Joint Secretary but were not considered in the impugned order. For that reason the court found the impugned order liable to be set aside and directed remand for fresh consideration in accordance with law. [Paras 9]Impugned order set aside and matter remanded to the Joint Secretary, Ministry of Finance (Department of Revenue) for reconsideration in accordance with law expeditiously and within three months.Final Conclusion: Writ petition allowed; impugned order dated 7-7-2010 set aside and the matter remanded to the Joint Secretary, Department of Revenue, for reconsideration in accordance with law (to be completed within three months); all contentions left open. Issues:Claim for rebate of excise cess under the Automobile Cess Rules, 1984 rejected by the respondents based on the notification under the Central Excise Rules, 1944.Analysis:The petitioner, a company engaged in manufacturing automobile goods, exported goods and claimed rebate of excise duty and excise cess. The respondents allowed the rebate of excise duty but rejected the claim for rebate of excise cess under the impugned order. The main ground for rejection was that the claim did not fall within the scope of Explanation I to the notification under the Central Excise Rules, 1944.The petitioner argued that the levy of cess under the Automobile Cess Rules should be considered under the definition of 'duty' in the Central Excise Act, as the Act and Rules cover the manner of levy, collection, and refund of both duty and cess. The petitioner relied on legal precedents to support this argument, including judgments from the Supreme Court and the Rajasthan High Court.On the other hand, the respondents contended that since the Automobile Cess Rules were not explicitly mentioned in the notification under the Central Excise Rules, the impugned order was lawful. They also highlighted the distinct purposes of levying duty and cess, suggesting that allowing refund of duty and levying cess serve different objectives.The High Court observed that a comprehensive reading of the notification under the Central Excise Rules and the Automobile Duty Rules indicated that the procedures for levying, collecting, and refunding duty were equally applicable to the Automobile Excise Cess. The Court noted that this crucial aspect was overlooked in the impugned order.Furthermore, the Court referenced a similar situation where the Rajasthan High Court had allowed a rebate on cess for education under excisable goods, even though it was not explicitly covered by the relevant notification. This view was upheld by the Supreme Court in a specific case. The Court criticized the Joint Secretary for not considering these relevant precedents while passing the impugned order.Consequently, the High Court allowed the writ petition, setting aside the impugned order and remanding the matter to the Joint Secretary for reconsideration within a specified timeframe, emphasizing the need for a lawful review considering all relevant legal aspects.