TaxTMI 
TaxTMI 
2012 (5) TMI 621
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....e invested about Rs. 5.90 crores for establishing the factory. 4. It is the common case of the petitioners that they have established their units pursuant to the Industrial Policy Resolution (IPR) of the Government of India as notified vide Central Government Office Memorandum dated 24-12-1997 followed by the State Government Notification No. G.O./2/DI/2002-2003/901, dated 17-2-2003 and the statutory Notification No. 71/2003-C.E., dated 9-9-2003 issued by the Central Government under Section 5A of the Central Excise Act, 1944 (hereinafter referred to as "the Act") granting exemption for a period of 10 (ten) years from the date of notification or commencement of commercial production by new units set up in Sikkim from the payment of Income-tax and Excise duty leviable under the provision of the Act, the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 in respect to goods specified in the First Schedule and Second Schedule to the Central Excise Tariff Act, 1985 other than goods specified in Annexure-I appended thereto and some other incentives under the aforesaid notification. Thi....
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....tled M/s. Unicorn Industries v. Union of India & Ors. and W.P.(C) No. 27/2008 titled M/s. Akshay Ispat & Ferro Alloys Pvt. Ltd. & Anr. v. Union of India in this Court. Some of the industrial units who were also aggrieved of the notifications withdrawing Cenvat exemption also filed separate writ petitions. All the writ petitions were allowed by this Court vide Common Judgment dated 15-11-2010, quashing the impugned notifications with some directions. 7. In case of M/s. Unicorn Industries, the exemption from payment of Excise duty granted vide Notification No. 71/2003-C.E., dated 9-9-2003 was withdrawn by Notification No. 21/2007-C.E., dated 25-4-2007 by induction of Pan Masala in Annexure-I (Negative List). It filed a separate writ petition being W.P.(C) No. 22 of 2007 titled M/s. Unicorn Industries v. Union of India & Ors. This writ petition has been allowed by a separate judgment of even date. 8. The petitioners were availing the exemption in terms of exemption Notification No. 71/2003-C.E., dated 9-9-2003 in respect to the basic Excise duty payable under the Act and if leviable, the additional duties of Excise under the Acts specified in the notification. At the t....
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....ent may, after due appropriation made by Parliament by law in this behalf, utilise, such sums of money of the Education Cess levied under sub-section (11) of Section 2 and this Chapter for the purposes specified in sub-section (1), as it may consider necessary. xxxxxx xxxxxx xxxxxx xxxxxx 93. Education Cess on excisable goods. - (1) The Education Cess levied under Section 91, in the case of goods specified in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), being goods manufactured or produced, shall be a duty of Excise (in his section referred to as the Education Cess on excisable goods), at the rate of two per cent, calculated on the aggregate of all duties of Excise (including special duty of Excise or any other duty of Excise but excluding Education Cess on excisable goods) which are levied and col....
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....; xxxxxx xxxxxx xxxxxx "128.(1) The Secondary and Higher Education Cess levied under Section 126, in the case of goods specified in the First Schedule to the Central Excise Tariff Act, 1985, being goods manufactured or produced, shall be a duty of Excise (in this section referred to as the Secondary and Higher Education Cess on excisable goods), at the rate of one per cent., calculated on the aggregate of all duties of Excise (including special duty of Excise or any other duty of Excise but excluding Education Cess chargeable under Section 93 of the Finance (No. 2) Act, 2004 and Secondary and Higher Education Cess on excisable goods) which are levied and collected by the Central Government in the Ministry of Finance (Department of Revenue), under the provisions of the Central Excise Act, 1944 or under any other law for the time being in force. (2) The Secondary and Higher Education Cess on excisable goods shall be in addition to a....
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....half of the petitioners is that the exemption from Excise duty includes exemption from all kind of Excise duties levied, imposed and recoverable as Excise duty under any statute for the period of exemption, irrespective of nomenclature. Learned Counsel appearing for the petitioners while referring to the provisions of the Finance Act, 2001, Finance Act, 2004 and Finance Act, 2007, submit that all these duties though imposed by various Finance Acts are, in fact, recoverable as Excise duty notwithstanding their nomenclature. It is further contended that sub-section (3) of Section 136 of the Finance Act, 2001, sub-section (3) of Section 93 of the Finance Act, 2004 and sub-section (3) of Section 128 of the Finance Act, 2007 clearly provide that all rules and provisions of the Act relating to refund and exemption from duties and imposition of penalties as far as may apply in relation to the levy and collection of the NCCD, the Education Cess and the Secondary and Higher Education Cess respectively. The submission is that the exemption provision of the Act, namely, Section 5A of the Act, has been made applicable to all these different categories of duties introduced under the Finance Act....
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....nbsp; xxxxxx " "Department of Commerce and Industries Government of Sikkim No. G.O./2/DI/2002-2003/901 Dated : 17-2-2003 Notification The Notification/Memorandum issued by Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, Govt. of India vide No. 14(2)/2002-SPS, dated 23rd December, 2002 approving a special package of incentives for development of Industries in the State of Sikkim, is hereby reproduced for general information of the public and the entrepreneurs as under : No. 14(2)/2002-SPS Government of India, Ministry of Commerce and Industry, (Department of Industrial Policy and Promotion) New Delhi. Dated 23rd Dec. 2012. Office Memorandum Subject : New Industrial Policy and other concessions for the State of Sikkim. xxxxxx xxxxxx ....
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.... not under any other law or enactment including the Finance Act, 2001. As regards the Education Cess and Secondary and Higher Education Cess levied under the Finance Acts, 2004 and 2007 respectively are concerned, neither the memorandum of 2002 nor the exemption notification could have taken note of these duties as the same were not in existence at the relevant time, both the Finance Acts having been enacted later in time. 15. The contention of the petitioners is that all the duties, namely, NCCD (Finance Act, 2001), Education Cess (Finance Act, 2004) and Secondary and Higher Education Cess (Finance Act, 2007) being in the nature of duties of Excise have to be construed within the scope and ambit of exemption assured for a period of 10 (ten) years from the date of notification or commercial production. Section 2A of the Act defines certain expressions which is reproduced as under :- "2A. References of certain expressions. - In this Act, save as otherwise expressly provided and unless the context otherwise requires, references to the expressions "duty", "duties", "duty of Excise" and "duties of Excise" shall be construed to include a reference to "Central Value....
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....nt of Excise duty in respect to the goods specified in First and Second Schedule of the Central Excise Tariff Act, 1985 in respect to the duties imposed under the Act (basic duty), the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (additional duties) only and not under any other statute including the Finance Act, 2001, which was in operation when this exemption notification was issued. The petitioner, M/s. Unicorn Industries was liable to pay NCCD under the Finance Act, 2001. It goes without saying that Education Cess and Secondary and Higher Education Cess @ 2% and 1% respectively on the Excise duty payable were imposed under the Finance Acts, 2004 and 2007 respectively enacted much after the IPR, 1997, IPR, 2002 for the State of Sikkim and exemption notification dated 9-9-2003 were issued. 18. To appreciate the contentions of the petitioners, it becomes necessary to examine the nature of levies imposed under the three Finance Acts. It may be noticed that NCCD, Education Cess and Secondary and Higher Education Cess though not in essence the duties of Excise but have been tre....
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....oods shall, notwithstanding anything contained in any other provision of this Act, be determined in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975 (51 of 1975)." Entry 84 List I Schedule Seventh "84. Duties of Excise on tobacco and other goods manufactured or produced in India except - (a) alcoholic liquors for human consumption. (b) opium, Indian hemp and other narcotic drugs and narcotics, But including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry." 19. From the conjunctive reading of the above provisions, the definition of the Excise duty can be extracted to mean duty on the goods manufactured or produced in India as specified in First and Second Schedule under the Central Excise Tariff Act, 1985. Definition and nature of Excise duty has been examined and considered by the Hon'ble Supreme Court in various judgments, in AIR 1962 SC 1006 : M/s. Chhotabhai Jethabhai Patel and Co. v. Union of India, a Constitution Bench defined the Excise duty in the following manner :-....
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....urposes of the Union, a cess to be called the Secondary and Higher Education Cess, to fulfil the commitment of the Government to provide and finance secondary and higher education." It goes without saying that every legislation has a profound object and purpose. The legislative intent and purpose may be clearly, unambiguously and unequivocally evident from the preamble of the Act or any specific provision contained therein. In absence of any clear indication in this regard, the legislative intent has to be gathered from the various provisions contained in the Act. A Finance Act is a legislative measure to implement and give effect to the financial proposals of the Central Government for a particular financial year and to take within its compass various fiscal decisions which, inter alia, include imposition of new taxes proposed in the annual budget, modification/alteration of the existing taxes and budgetary allocation for different Departments and purposes/proposals. From the Budget Speech of the then Finance Minister of Union during 2001-2002 budget on 28-2-2001 (downloaded from the Lok Sabha Website), it appears that the National Calamity Contingency Fund was recommended by E....
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....d by the same Amendment cast a duty upon the parent or guardian to provide opportunities for education to his child between the age of 6 and 14 years. However by virtue of Articles 45 and 21A, the State took upon itself the duty to provide free education to children. 24. To discharge these constitutional obligations obviously the finances were required to undertake the exercise for providing free education. India has about 40% population below the age of 18 years. To discharge the constitutional obligation the Education Cess and Secondary and Higher Education Cess have been levied under the Finance Acts, 2004 and 2007 respectively. The statements contained in Section 91 of the Finance Act, 2004 and Section 136 of the Finance Act, 2007 noticed hereinabove indicate the purpose of the levy (Education Cess and Secondary and Higher Education Cess) by way of surcharge to be collected as Excise duty. It may also be noticed here that the Parliament has recently enacted "The Right of Children to Free and Compulsory Education Act, 2009" to carry out the constitutional mandate. 25. Admittedly, these are indirect taxes levied for particular purposes. It seems that the Central G....
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....ated 9-9-2003. Indisputably, neither the exemption notification nor the IPRs specifically grant exemption in respect to the levies as discussed hereinabove. At the first place the Finance Acts, 2004 and 2007 were not in operation when these exemptions were granted and thus the Central Government could not have intended or even conceived to grant exemption in respect to the duties which could not have been visualised at the relevant time. As regard the NCCD is concerned, the duty had already been imposed under 2001 Finance Act when the exemption notification was issued but no exemption was granted in respect to this duty. The intention has to be gathered and inferred from the exemption notification itself. The only inference is that the Central Government had no intention to exempt the NCCD as far as industries established in the State of Sikkim are concerned. This fact is evident from the reply filed by the respondents. In the counter affidavit filed by the respondents, it is stated that the goods manufactured by the petitioner attracts various Excise duties viz. Cenvat known as Basic Excise Duty @ 37.5% (of the First Schedule of the Central Excise Tariff Act, 1985), National Calam....
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.... 37B of the Central Excise Act, 1944, rendering explanation in respect to the exemption from payment of duties on goods exported under bond under Rule 13 of the Central Excise Rules, 1944, Rule 19 of the Central Excise Rules, 2001 and Rule 19 of the Central Excise Rules, 2002. It is argued that this circular which is of explanatory character issued by the Government of India clearly provides that duties including the NCCD, Education Cess and various other kinds of duties imposed in the nature of Excise duty are not payable under Rule 19 of the Central Excise Rules, 2002 and Rule 19 of the Central Excise Rules, 2001 and Rule 13 of the Central Excise Rules, 1994. These rules exempt the payment of Excise duty on the export of excisable goods outside India except few countries. 29. From the perusal of the aforesaid circular and the Rules, it seems that the Government of India had clarified that the duties payable under the Central Excise Tariff Act, 1985 for which exemption has been granted in respect to export of excisable goods, include the duties like NCCD and Education Cess, etc. The argument is that all Excise duties irrespective of enactments under which these are levied,....
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....uties which were levied or had been imposed at the time of grant of incentives. 33. A similar question came up for consideration before the Hon'ble Supreme Court in the case of Union of India v. Modi Rubber Ltd. - (1986) 4 SCC 66. In this case, the manufacture of tyres was subject to duty of Excise levied under Section 3 of the Act. Rule 8 of the Central Excise Rules, 1944 framed under the Act contained provision for exemption of duty wholly or in part on excisable goods by a notification to be issued by the Central Government. A notification bearing No. 123/74-C.E., dated 1-8-1974 was issued by the Central Government exempting tyres for motor vehicles from a portion of the Excise duty levied thereon. This was followed by another notification bearing No. 27/81-C.E., dated 1-3-1981 issued by the Central Government exempting part of the duty in respect of tyres for some other categories of motor vehicles, etc. Vide Section 32 of the Finance Act, 1979, a special duty of Excise was levied. Section 32 also contained a similar provision relating to refund and exemption from duties as contained under sub-section (3) of Section 136 of the Finance Act, 2001, sub-section (3) of Secti....
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....e Central Government could not be presumed to have projected its mind into the future and granted exemption in respect of Excise duty which may be levied in the future, without considering the nature and extent of such duty and the object and purpose for which such levy may be made and without taking into account the situation which may be prevailing then. It is only when a new duty of Excise is levied, whether special duty of Excise or auxiliary duty of Excise or any other kind of duty of Excise, that a question could arise whether any particular article should be exempted from payment of such duty of Excise and the Central Government would then have to apply its mind to this question and having regard to the nature and extent of such duty of Excise and the object and purpose for which it is levied and the economic situation including supply and demand position then prevailing, decide whether exemption from payment of such Excise duty should be granted and if so, to what extent. It would be absurd to suggest that by issuing the notification dated August 1, 1974 the Central Government intended to grant exemption not only in respect of Excise duty then prevailing but also in respect....