Tea cess on exports under bond not payable after Section 37B clarification on excise duties

Tea cess, collected as duty of excise under the Tea Act, 1953, was held not payable on tea exported under bond by DTA units after the Section 37B order dated 13.01.2006. The order was read as a uniform clarification that duties of excise and allied cesses were not required to be paid on export under bond, and its list of covered levies was treated as illustrative, not exhaustive. Earlier circulars, the EOU-DTA distinction drawn below, and the general Supreme Court ruling on tea cess chargeability did not override that later clarification. The demand and appellate order were therefore unsustainable.

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Issues: Whether tea cess, being collected as duty of excise under the Tea Act, 1953, is payable on tea exported under bond by DTA units under the Central Excise Rules, 2002, in view of the Section 37B order dated 13.01.2006.

Analysis: Tea cess is collected as duty of excise under Section 25 of the Tea Act, 1953. The Section 37B order issued under the Central Excise Act, 1944 was intended to secure uniformity regarding levy of duties of excise on goods exported under bond and expressly stated that none of the duties leviable under any Act of Parliament attracting the Central Excise regime was required to be paid on export under bond. The list of duties and cesses in that order was illustrative and not exhaustive. The earlier Board circular and the distinction drawn by the lower authorities between EOU exports and DTA exports could not override the later Section 37B clarification. The prior Supreme Court ruling on leviability of tea cess dealt with the chargeability of cess generally and did not govern the export-under-bond position after the Section 37B order. The fact that the Department had accepted relief in an earlier matter involving the same assessee and similar goods also supported the same conclusion.

Conclusion: Tea cess was not payable on the appellants' exports under bond, and the impugned demand and appellate order were unsustainable.

Ratio Decidendi: Where a statutory cess is collected as duty of excise and a later Section 37B order under the Central Excise Act, 1944 declares that duties of excise and allied cesses are not payable on export of goods under bond, the cess cannot be demanded on such exports, especially when the order's list of covered duties is illustrative and not exhaustive.

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