Petition granted: CESTAT order quashed, relief in NCCD exemption dispute

The High Court allowed the petition, quashing and setting aside the CESTAT order dated 5.7.2018, thereby granting relief to the petitioner in the dispute over National Calamity Contingent Duty exemption for captively consumed yarns used in manufacturing final products within the factory. The Court held that the Supreme Court's decision on the levy of NCCD in relation to excise duty exemptions governed the case, rejecting the respondent's argument for an alternative remedy.

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Issues:
Challenge to CESTAT order dated 5.7.2018 regarding National Calamity Contingent Duty exemption and restoration of previous order dated 27.5.2009.

Analysis:
The petitioner, engaged in manufacturing yarns, challenged the CESTAT order dated 5.7.2018, seeking a declaration of non-liability for National Calamity Contingent Duty (NCCD) and restoration of the order dated 27.5.2009. The petitioner's yarns were used as captive consumption for the production of final products within the factory, exempt from excise duty under notifications issued by the Central Government. However, disputes arose regarding the applicability of NCCD on captively consumed yarns, leading to a series of orders and appeals.

The Commissioner (Appeals) initially held that NCCD was not exempt for captively consumed yarns, but subsequent orders and appeals favored the petitioner, confirming the exemption. Despite this, a show cause notice was issued in 2008, leading to an adjudication order confirming NCCD liability. The petitioner challenged this, leading to the CESTAT order dated 5.7.2018, which set aside the exemption based on the ground that NCCD was not a duty of excise. The petitioner then filed the present petition challenging this order.

The High Court considered previous orders, including a decision of the Uttarakhand High Court and a Supreme Court case, in which the levy of NCCD was disputed in relation to excise duty exemptions. The Court found that the Supreme Court's decision would govern the petitioner's case, despite the respondent's argument that the challenge should be through a Tax Appeal rather than a writ petition. The Court held that the petitioner should not be relegated to an alternative remedy, as the Supreme Court's ratio squarely applied to the case. Consequently, the High Court allowed the petition, quashing and setting aside the CESTAT order dated 5.7.2018, thereby granting relief to the petitioner.

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