TaxTMI 
TaxTMI 
2013 (5) TMI 460
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....les can be availed on a date prior to its substitution in the 2004-Rules or in other words, whether the substituted sub-rule 6(6)(i) is retrospective or not'. THE FACTS 3. Rule 6 of the 2004-Rules (see Appendix-1) imposes different obligations on a manufacturer of exempted and dutiable goods: • Under sub-rule 2 of rule 6 {sub-rule 6(2)} of the 2004-Rules such a manufacturer is required to maintain separate accounts for the receipt, consumption, and inventory of input and input service meant for use in manufacture of dutiable goods; • Under sub-rule 3 of rule 6 (Sub-rule 6(3)} of the 2004-Rules, it may not do so, but in that event, the manufacturer is required to pay certain amount of total price of the exempted goods; • Sub-rule (6) of rule 6 {sub-rule 6(6)} of the 2004-Rules exempts the operation of sub-rules 6(1) to 6(4) of the 2004-Rules in certain contingencies. 4. Initially when the 2004-Rules were framed, sub-rule 6(6)(i) exempted the operation of sub-rules 6(1) to 6(4) to the goods cleared to the units in the Special Area Zone (SEZ) established under the Special Area Zone Act, 2005 (the SEZ-Act). 5. Later on, sub-rule 6(....
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.... substituted sub-rule 6(6)(i) of the 2004-Rules was retrospective. Hence, the present appeal by the Central Excise Department (the Department). QUESTIONS INVOLVED 13. We have heard counsel for the parties. This case was admitted on 30.10.2012 on the following questions of law: '(i) Whether the Tribunal erred in holding the amendment notification 50/2008 dated 31.12.2008 as retrospective, when admittedly the said notification provides for they shall come into force on their publication in official gazette ? (ii) Whether the supplied made to SEZ developers prior to 31.12.2008 can also be treated as exempted goods for the purpose of Rule 6(3)(b) of the Cenvat Credit Rules and can further be treated as exports under Section 2(18) of the Customs Act as well as under Clause (V) of Rule 6(6) of Cenvat Credit Rules, 2004 ?' However, the main point involved is, as mentioned in the second paragraph of the judgement. THE DECISION 14. The counsel for the Department submits that: • At the relevant time, sub-rule 6(6)(i) of the 2004-Rules did not include clearance to a developer in the SEZ. It was included by the Amending-Rules; â€....
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.... 19. Black's Law Dictionary explains taxes and duties as follows: • • Tax is a monetary charge imposed by the government on persons, entities, transactions, or property to yield public revenue. Most broadly, the term embraces all governmental impositions on the person, property, privileges, occupations, and enjoyment of the people, and includes duties, imposts, and excises. Although a tax is often thought of as being pecuniary in nature, it is not necessarily payable in money; * Duty is a tax imposed on a commodity or transaction, esp. on imports. A duty in this sense is imposed on things and not persons. 20. Thus, tax-imposed upon commodities, goods, financial transactions in contradistinction upon the individuals - is generally referred to as 'duty'; whereas, tax is levied also on the tax payers, who could be individuals or legal entitles. Duty and tax have same connotation, same purpose, though duty is sub-specie of the tax. Nature of Excise and Customs Duties 21. Different kind of duties are imposed upon goods. Traditionally, two duties were imposed: one is customs and the other is excise. Though, of late, other kinds of dutie....
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....tute imposing excise and customs duty in our country namely, the Excise Act and the Customs Act, 1962 (the Customs Act) also follow the same pattern as mentioned above. Provisions of the Excise Act and the 2002 Rules 26. Section 3 of the Excise Act is the charging section and is titled 'Duties specified in the Schedule to the Central Excise Tariff Act, 1985 to be levied'. It provides charging of the duty on the manufacture of the products as specified in the Central Excise Tariff Act, 1985. 27. The Central Excise Rules, 2002 (the 2002 Rules) provides how excise duty is to be assessed and collected: • • Rule 4 is titled 'Duty payable on removal'. It provides excise duty to be payable on removal of goods; • Rules 6 and 7 are titled 'Assessment of duty' and 'provisional assessment'. They provide as to how the assessment of the excise duty is required to be done; • Rule 17, 18 and 19 are titled 'Removal of goods by a hundred percent. Export-Oriented Undertaking for Domestic Tariff Area', 'Rebate of duty', and 'Export without payment of duty' respectively. These three rul....
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....hapter XA with Sections 76A to 76H was inserted. Subsequently, the SEZ-Act was enacted and Chapter XA of the Customs Act was deleted. 34. Section 2 of the SEZ Act is titled 'definitions'. It provides as follows: • • Sub-section (g) of section 2 {sub-section 2(g)} of the SEZ-Act defines 'developer'. It means a person or a State, which is granted a letter of approval under sub-section(10) of section 3 {section 3(10)} of the SEZ Act by the Central Government and includes an authority and a co-developer; • Sub-section (m) of section 2 {sub-section 2(m)} defines the word 'export'. It means supplying goods, or providing services, from the domestic tariff area to a unit or developer. • Sub-section (zc) of section 2 {sub-section 2(zc)} defines the words 'existing unit' and 'unit', it means, a unit which has been set up by an entrepreneur in a SEZ and includes an existing unit. 35. Section 51 of the SEZ-Act is titled 'Act to have overriding effect'. It provides that the SEZ-Act will have effect notwithstanding anything contained in any other law for the time being in force or in any oth....
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.... Rule 6. Obligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted services:- ... (6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either- (i) cleared to a unit in a special economic zone; ... 43. Initially, sub-rule 6(6)(i) provided that the provisions of sub-rules 6(1) to 6(4) of the 2004-Rules will not be applicable in case the excisable products are removed without payment of duty and cleared to a unit in a SEZ. 44. The relevant point to note is that the 2004-Rules as initially envisaged provided benefit to the goods cleared to a unit in SEZ only and not to the developer though under the SEZ Act the position of the developer as well as the unit was one and the same; they were in the same class, entitled to the same treatment. This appears to be an inadvertent omission. 45. It appears that the aforesaid mistake was realised by the Government and rule 6(6)(i) of the 2004-Rules was substituted by the following new sub-rule (see Appendix-2): "(i) cleared to a unit in a special economic zone or to....
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....istake, removes discrimination, and provides correct legal principle. Its prospective enforcement would leave it to be suspect at the touchstone of Article 14 of the Constitution. Considering this aspect it is proper to hold that the substituted sub-rule 6(6)(i) is came into force from the date the 2004-Rules were enforced. CONCLUSIONS 53. Our conclusions are as follows: (a) The Excise Duty is imposed on the manufacture of the product that is to be consumed in the country; whereas a customs duty is imposed on the product that is manufactured within the country but is to be used outside the country ie exported as well as manufactured outside the country and brought into the country for use ie imported; (b) The amended rule is merely clarificatory, corrects an obvious mistakes, removes discrimination between developers and units in special area zones. It merely clarifies or explains the existing law of providing non-imposition of excise duty on goods that are held to be export under the Special Area Zone Act; (c) The substituted sub-rule 6(6)(i) is enforced from the date the 2004-Rules came into force. 53. In view of above, both the substantial que....
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....ion of electricity; (v) newsprint, in rolls or sheets, falling within heading No.48.01 of the said First Schedule; (vi) final products falling within Chapters 50 to 63 of the said First Schedule; (vii) goods supplied to defence personnel or for defence projects or to the Ministry of Defence for official purposes, under any of the following notifications of the Government of India in the Ministry of Finance (Department of Revenue), namely:- (1) No. 70/92-Central Excise, dated the 17th June, 1992, G.S.R. 505(E), dated the 17th June, 1992; (2) No.62/95-Central Excise, dated the 16th March, 1995, G.S.R. 254(E), dated the 16th March, 1995. (3) No.63/95-Central Excise, dated the 16th March, 1995, G.S.R. 255(E), dated the 16th March 1995; (4) No.64/95-Central Excise, dated the 16th March, 1995, G.S.R. 256 (E), dated the 16th March, 1995, (viii) Liquefied Petroleum Gases (LPG) falling under tariff items 2711 12 00, 2711 13 00 and 2711 19 00 of the said First Schedule] (ix) Kerosene falling within heading 2710 of the said First Schedule, for ultimate sale through public distribution system.] The manufacturer....
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.... of duty are either- (i) cleared to a unit in a special economic zone; or (ii) cleared to a hundred per cent export-oriented undertaking; or (iii) cleared to a unit in an Electronic Hardware Technology Park or Software Technology Park; or (iv) supplied to the United Nations or an international organization their organization their official use or supplied to projects funded by them on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of revenue) No.108/95-Central Excise, dated the 28th August, 1995, number G.S.R.602(E), dated the 28th August, 1995; or (v) cleared for export under bond in terms of the provisions of Central Excise Rules, 2002; or (vi) gold or silver falling within Chapter 71 of the said First Schedule arising in the course of manufacture of copper or [zinc by smelting; or (Inserted by Notification No.3/2005-C.E. (N.T.), dated 28.01.2005.) (vii) all goods which are exempt from the duties of customs leviable under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty leviable under section 3 of the said....