TaxTMI 
TaxTMI 
2005 (12) TMI 300
X X X X Extracts X X X X
X X X X Extracts X X X X
....allenged the said order dated 2-8-2005 before the Hon'ble Supreme Court objecting to the reference being made, but as recorded in the order dated November 11, 2005 of Hon'ble the Supreme Court made in Civil Appeal No. 6468/05, after hearing the learned Counsel for the parties and after some arguments, the learned Counsel appearing on behalf of the appellants was permitted to withdraw the appeals as the matter had been referred to a Larger Bench. 3. The principal objection against the making of reference to the Larger Bench raised on behalf of the appellant before the Division Bench was that, when the Revenue had accepted the legal position in several cases by not challenging the earlier decisions, it was not open to it to raise a contrary contention in the case of another assessee, and that it could not pick and choose the assessee for refund of duty. It was contended that having accepted an earlier judgment of the Tribunal and the legal position by not pressing the appeals, upon instructions before the Supreme Court, which were filed in another case, the Revenue cannot be permitted to raise a contrary contention in these appeals before the Division Bench or before the Larger Be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reclude the Tribunal from reconsidering the ratio of its earlier decisions. The Division Bench having considered the effect of dismissal of the Revenue's appeal as not pressed before the Hon'ble Supreme Court, for the reasons indicated in its order dated 2-8-2005, more particular in Paragraph 7 thereof, being itself of the opinion that the question referred had arisen for being considered by a Larger Bench in view of its inability to agree with the earlier decisions, has referred the above question for a decision of the Larger Bench. 4. Against the said decision, the appellants filed Civil Appeal No. 6468 of 2005 before the Supreme Court in which the following order was passed on November 11, 2005 : "ORDER Heard learned counsel for the parties. After some arguments, learned counsel appearing on behalf of the appellants is permitted to withdraw these appeals as the matter has been referred to Larger Bench by the impugned order. The civil appeals are, accordingly, dismissed as withdrawn." 5. These appeals have arisen out of the claim made by the appellants for refund of additional duty of Customs on natural rubber which was collected under Section ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) of the Customs Tariff Act, and quantified as per the Rubber Act, 1947, was legal and proper and that the claim merited rejection. 5.2 In the appeal which was preferred against the order of the Assistant Commissioner, it was held by the Commissioner (Appeals) that the cess leviable in terms of the Rubber Act was to be collected as a duty of excise, and that, the power to levy excise duty as additional duty was in Section 3(1) of the Customs Tariff Act. It was observed that under Section 3(1) of the Customs Tariff Act, the additional duty equivalent to the amount of excise duty for the time being leviable on a like article, if produced or manufactured in India, was leviable on imported goods. The learned Commissioner (Appeals) held that whether cess was leviable as excise duty, an amount equal to that amount was collected as additional/countervailing duty on imported goods. He noted that this legal position had been affirmed by the clarification issued by the Ministry of Finance vide F. No. 345/31/97-TRU, dated 29-9-97, wherein it was stated that where cess is leviable as duty of excise on goods produced/manufactured in India, then on similar imported goods an amount of cess lev....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eference to the Central Excise Tariff Act, and not to the Rubber Act. The learned counsel submitted that this clearly indicated that Section 3 of the Customs Tariff Act referred to duty of excise levied under the Central Excise Act, 1944. It was also submitted that the cess was collected under the Rubber Act, and though first credited to the Consolidated Fund of India, it was then paid to the Rubber Board for being utilized for the purposes of the Rubber Act. Thus, it was a tax collected for the allocated purpose, i.e., for the benefit of rubber industry to which the taxpayer belonged and benefited by such allocation. The levy of cess, therefore, did not constitute any additional burden to the taxpayer like duty of excise, which was not for any allocated purpose of development of the industry to which the taxpayer belonged. According to the learned counsel, the decisions of the Supreme Court in Motiram Tolaram v. UOI, reported in 1999 (112) E.L.T. 749 (S.C.) and Hyderabad Industries Ltd. v. UOI, reported in 1999 (108) E.L.T. 321 (S.C.), concluded the issue. It was also submitted that the Revenue was precluded from raising the contention which was contrary to the earlier decisions o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s & Salt Act, 1944, and, therefore, the promise was for exemption from payment of excise duties and not cess which was a fee, as held by the Division Bench in Nath Bros. Exim International Ltd. (quoted in Paragraph 15 of the judgment). It was also held that there was no notification of exemption under Section 5E of that Act, and the notification of exemption was issued under the Central Excise Act, 1944, and, therefore, the question of promissory estoppel did not arise in respect of exemption from cess. (d) The decision of the Delhi High Court in Nath Bros. International Ltd. v. UOI & Ors. reported in 1995 (78) E.L.T. 437 (Del.) = 67 (1997) Delhi Law Times 458 (DB), was cited to point out that it was held in Paragraph 18 of the judgment that apart from the fact that having regard to the nature and purpose of the cess levied under the Textiles Committee Act, 1963, although credited to the Consolidated Fund of India and then disbursed to the Textile Committee, it still had the traces of fee as was being levied prior to insertion of Section 5A in the Act, and could perhaps be distinguished from a tax, and that it was felt that the incidence of the two levies....
X X X X Extracts X X X X
X X X X Extracts X X X X
....985, but included duty of excise leviable under the other laws as well. He relied on the decision of the Tribunal in Haryana Distillery v. Collector of Customs reported in 1992 (62) E.L.T. 773 (Para 7), in support of this contention. It was held by the Tribunal therein that excise duty contemplated by Section 3(1) of the Customs Tariff Act was not confined to the excise duty leviable under the Central Excise Act, but would also apply to levy under various State enactments. He then submitted that proviso to Section 3(1) of the Customs Tariff Act, which was inserted by the Finance Act, 2001, provided for the levy of additional customs duty on alcoholic liquor for human consumption imported into India, clearly indicated that the scope of expression "excise duty" under Section 3(1) of the Customs Tariff Act was not confined to the central excise duty alone. The learned authorized representative for the Department further submitted that the expression "excise duty for the time being leviable on a like article" occurring in Section 3(1) of the Customs Tariff Act was only a measure of duty leviable on the imported article and did not determine the nature of duty. According to him, the rat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....graphs 4 and 6), Collector of Customs v. Birla Jute Industries Ltd. reported in 1992 (61) E.L.T. 100 (Tribunal) (Paragraphs 11 and 16), Vikrant Tyres Ltd. v. Commissioner of Customs, Chennai reported in 2002 (144) E.L.T. 554 (Tribunal) (Paragraph 5), Commissioner of Customs v. Vikrant Tyres (Tribunal's Final Order Nos. 786-789/2003, dated 25-9-2003 (Para 5), Vikram Ispat v. Commissioner of Customs, Mumbai reported in 2005 (180) E.L.T. 229 (Tri.-Mumbai) (Para 3), Collector of Customs v. Gemini Overseas Ltd. reported in 1993 (63) E.L.T. 574 (Tribunal) (Para 6) and Morarjee Brembana Ltd v. Commissioner of Central Excise, Nagpur reported in 2003 (154) E.L.T. 500 (Tribunal) (Para 19), supported levy of additional duty of customs on the imported goods equal to the cess leviable as duty of excise. It was submitted that though the decisions were with reference to the cess leviable under the Textiles Committee Act, 1963, the ratio was applicable to the cess leviable as duty of excise under Rubber Act, 1947, since the provisions of Section 5A of the Textiles Committee Act and Section 12 of the Rubber Act were similar. He further argued that the Tribunal's judgment in the case of MRF Ltd. (su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er, the Ministry of Commerce and the Rubber Board were not the authorities competent to issue clarification regarding leviability of the additional duty of customs under Section 3(1) of the Customs Tariff Act. For this he relied on the decision of the Supreme Court in Jacsons Thevera v. Collector of Customs & Central Excise reported in 1992 (61) E.L.T. 343 (S.C.) (Para 7), and the decision of the Tribunal in National Aluminium Co. Ltd. v. Collector of Customs, Madras reported in 1997 (94) E.L.T. 409 [(Five Members) Paras 13, 15 & 16]. It was further submitted that the contention that the department was precluded from contesting the issue and the Tribunal, therefore, could not consider the same, was rejected by the Division Bench making the reference and having withdrawn the appeal filed against that order before the Supreme Court after some arguments, that question cannot be agitated again before the Larger Bench. He then argued that a case decided on the basis of a concession/wrong concession did not form a binding precedent, and, therefore, dismissal of the appeal in other matters by the Supreme Court on the basis of the statement of the counsel that the appeals were not pressed,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....excise duty for the time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at the percentage of the value of the imported article. Explanation. - In this section, the expression 'the excise duty for time being leviable on a like article if produced or manufactured in India' means the excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India, or, if a like article is not so produced or manufactured, which would be leviable on the class or description of articles to which the imported article belongs, and where such duty is leviable at different rates, the highest duty." (Emphasis added) It will be noticed from the above provision that the quantum of the additional duty of customs chargeable by virtue of Section 3(1) of the Customs Tariff Act depends upon the quantum of the excise duty "for the time being leviable on the like article if produced or manufactured in India". Where such excise duty on a like article is levia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....representing such portion of the excise duty leviable on such raw materials, components and ingredients as, in either case, may be determined by rules made by the Central Government. The Supreme Court has in the context of the provisions of Section 3 of the Customs Tariff Act held in Paragraph 15 of its judgment in Hyderabad Industries Ltd. (supra), that even though the impost under Section 3 of the Customs Tariff Act is not called a countervailing duty, there can be little doubt that this levy under Section 3 is with a view to levy additional duty on an imported article so as to counter-balance the excise duty leviable on the like article indigenously made. In other words, Section 3 of the Customs Tariff Act has been enacted to provide for a level playing field to the present or further manufacturers of the like article in India. In the Notes to Clauses to the Customs Tariff Bill, 1975, it was stated that Clause (3) provided for the levy of additional duty on an imported article to counter-balance the excise duty leviable on the like article made indigenously or on the indigenous raw materials, components or ingredients which go into making of the like indigenous articles. This pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eme Court are based on picking certain observations out of the context in which the observations were made, and, in both these cases, it is evident that no issue regarding excise duty leviable under other laws vis-a-vis Section 3 of the Customs Tariff Act was at all involved. Admittedly, there are number of Central Acts providing for levy of cess as a duty of excise or simply of duty of excise, leviable on various items and the interpretation sought to be suggested on behalf of the appellants would bring about unintended consequences that would fly in the face of the provisions of Section 3(1) of the Customs Tariff Act, which was enacted for affording a level playing field to indigenous producers and manufacturers by imposing the countervailing duty on the imports of like articles. 8.1 The nature of "excise duty" was considered by the Federal Court and Gwyer, C.J., described "excise duty" thus : "But its primary and fundamental meaning in English is still that of a tax on articles produced or manufactured in the taxing country and intended for home consumption". [In re the Central Provinces and Berar Act No. XIV of 1938 (1939) F.C.R. 18, 40, 41, 107, cited with approval....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isen, reads as under : "12. Imposition of new rubber cess. - (1) With effect from such date as the Central Government may, by notification in the Official Gazette, appoint, there shall be levied as a cess for the purposes of this Act, a duty of excise on all rubber produced in India at such rate, not exceeding two rupees per kilogram of rubber so produced, as the Central Government may fix. (2) The duty of excise levied under sub-section (1) shall be collected by the Board in accordance with rules made in this behalf either from the owner of the estate on which the rubber is produced or from the manufacturer by whom such rubber is used. (3) The owner or, as the case may be, the manufacturer shall pay to the Board the amount of the duty one month from the date on which he receives a notice of demand therefore from the Board and, if he fails to do so, the duty may be recovered from the owner or the manufacturer, as the case may be, as an arrear of land revenue. (4) For the purpose of enabling the Board to assess the amount of the duty of excise levied under this section - (a) the Board shall, by notification in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion 3(1) of the Customs Tariff Act that additional duty shall be equal to "excise duty for the time being leviable for the article if produced or manufactured in India". The additional duty leviable under Section 3(1) will be equal to the excise duty leviable under Section 12(1) of the Rubber Act in respect of the rubber produced in India when like article is imported so as to attract the provisions of Section 3(1) of the Customs Tariff Act. The mode adopted for the collection of excise either from the owner of the estate or from the manufacturer by whom rubber is used will not change the nature of excise duty which is levied as a cess. The fact that the duty of excise is levied as a cess under the Rubber Act for being paid by the Central Government to the Rubber Board for its being utilized for the purposes of that Act will not change the nature of the excise duty. In other words, the duty of excise remains as such notwithstanding the fact that it is levied as a cess for the purposes of the Act. When cess is a tax and not a fee, the fact that the duty of excise collected is to be ultimately used for the purposes of the Act will not change the nature of a tax into a fee. As is evi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 12 of the Rubber Act, 1947, cess is levied on rubber produced in India and not on rubber imported". Copy of the office memorandum dated 30-6-97 of the Ministry of Commerce was forwarded for information and necessary action. In that office memorandum dated 30-6-1997 issued by the Ministry of Commerce, it was stated that "under Section 12 of the Rubber Act, 1947, cess is levied on the rubber produced in India and not rubber imported". It is thus clear that neither the communication dated 22-7-97 of the Finance Ministry nor the communication dated 30-6-97 of the Ministry of Commerce dealt with the additional duty of customs leviable under Section 3(1) of the Customs Tariff Act. The communications only clarified that the cess cannot be levied under Section 12 of the Rubber Act on any imported rubber, obviously because, the provision of Section 12 was intended to levy duty of excise as cess on rubber produced in India and not on imported rubber. There was no question of levying duty of excise by way of cess under Section 12 of the Rubber Act on the imported rubber. The imported rubber was liable to additional duty of Customs under Section 3(1) of the Customs Tariff Act, which was a d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Acts - reg. Section 3 of the Customs Tariff Act, 1975 provides for levy of additional duty of Customs equal to excise duty leviable on like goods produced or manufactured in India. Cess is leviable on number of goods manufactured or produced in India under various Acts. In number of cases such cess is collected as duty of excise. Since, cess is collected as duty of excise, additional duty of customs equivalent to such cess is also leviable on imported goods. In other words, for imported goods, an amount equivalent of amount of cess leviable as duty of excise is to be collected as additional duty of customs. 2. All Commissioners of Customs are, therefore, requested to ensure collection of additional duty of customs on imported goods equal to cess wherever leviable as duty of excise. 3. This is issued with the approval of Member (Customs), Central Board of Excise and Customs. Yours faithfully, Sd/- DEPUTY COMMISSIONER OF CUSTOMS" [Emphasis added] "F. No. 345/31/97-TRU Government of India Ministry of Finance Department of Revenue North Block, N. Delhi 29....