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2018 (1) TMI 770
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.... (SHEC). The appellant availed of the benefit of the exemption provided under Notification No. 50 of 2003. It did not pay the NCCD, EC or SHEC, and cleared the final product. The Authorities issued show cause notices, in which NCCD, EC and SHEC were demanded along with interest and also penalty under Section 11AC of the Central Excise Act, 1944 (hereinafter referred to as the Act). 3. The show causes from which the Appeals ultimately arise are related to various periods. The first period was from April, 2008 to 2009 and finally, the last period was from September, 2011 to 2012. The Appellant has a case that the appellant, for various periods, made payment of NCCD, EC and SHEC in some cases prior to issuance of the notices and in other cases, immediately, on receipt of the notice. 4. In short the case of the appellant appears to be that it was entitled to exemption in respect of NCCD, EC and SHEC under Notification No. 50 of 2003. Alternatively, it appears also the appellant set up a case that it is anyway entitled to avail the benefit of CENVAT Credit in the form of basic excise duty and additional duty paid on the inputs for payment of NCCD, EC and SHEC on the final product ....
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....vered by the Exemption Notification. 8. In the year, 2009, it is pointed out that the CESTAT took the view against the assessee in the cases of Paras Petrofils Ltd. vs. Commissioner of Central Excise, Surat reported in 2009 (237) ELT 367 (Tri.-Ahmd.) and Superfine Syntex Pvt. Ltd. vs. Commissioner of Central Excise, Surat-I reported in 2009 (237) ELT 292 (Tri.-Ahmd.). It is contended that in neither of these judgments, there is any reference to the earlier judgments, which were in favour of the assessee. It is illegal on the part of the CESTAT to take a different view as compared to the earlier CESTAT judgments, without referring the matter to a larger Bench. However, in the case of Nava Petrochemicals Ltd. vs. Commissioner of Central Excise, Ahmedabad reported in 2010 (254) ELT 165 (Tri.-Ahmd.), the CESTAT took the view in an interim order that the subsequent CESTAT judgments, which were against the assessee, were per incuriam as they did not consider the earlier judgments of the CESTAT. 9. It is the case of the counsel for the appellant that the appellant always bona fide entertained the belief that the appellant was entitled to the benefit of exemption under Exemption Noti....
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....Excise vs. Mefco Engineers (P) Limited reported in 2015 (317) ELT 461. (4) Commissioner of Central Excise vs. Him Chemicals and Fertilizers Ltd. reported in 2010 (256) ELT 363 (H.P.)." He would further rely on the judgment of the Hon'ble Apex Court in the case of Union of India and others vs. M/s Modi Rubber Ltd. reported in AIR 1986 SC 1992. It is his contention that the Hon'ble Apex Court in the aforesaid judgment has categorically declared that when exemption is granted from duty of excise, the words "duty of excise" can only be understood as the duty of excise under Section 3 of the Act and it would not include any other duty. Therefore, he would submit that in the definition of the words "exempted goods" in Rule 2(d) of the CENVAT Credit Rules, it refers to the goods being exempted from excise duty leviable thereon. The words "duty of excise" must be understood as imposing basic duty of excise. Therefore, and so understood having regard to the unambiguous terms of Rule 6 of the CENVAT Credit Rules, insofar as under Notification No. 50 of 2003, the products of the appellant had been exempted from the basic excise duty and the appellant also availed of the benefit of....
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....he duty of excise or additional duty of excise, as the case may be, leviable thereon under any of the said Acts. 2. The exemption contained in this notification shall apply only to the following kinds of units, namely:- (a) new industrial units which have commenced their commercial production on or after the 7th day of January, 2003; (b) industrial units existing before the 7th day of January, 2003, but which have undertaken substantial expansion by way of increase in installed capacity by not less than twenty five per cent, on or after the 7th day of January, 2003. 3. The exemption contained in this notification shall apply to any of the said units for a period not exceeding ten years from the date of publication of this notification in the Official Gazette or from the date of commencement of commercial production, whichever is later." 14. There is no dispute that the appellant has availed the benefit of said Notification. It be noted that under the same, the Authority has granted exemption from the whole of the duties payable under the enactments mentioned therein. In other words, it is not a case of partial exemption. There is no dispute th....
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.... in short, in other words, indisputably, under the terms of the Notification No. 50 of 2003, NCCD, EC and SHEC, which are to be treated as duties of excise, have not been exempted. Though the appellant did have the case before the Authorities that the appellant was entitled to exemption from paying NCCD and cesses under Notification No. 50 of 2003, appellant does not persevere in the said line of argument, obviously having regard to the judgment of the Gauhati High Court in Commissioner of Central Excise, Dibrugarh vs. Prag Bosimi Synthetics Ltd. reported in 2013 (295) ELT 682 (Gau.) and of this Court in the case of Bajaj Auto vs. Union of India reported in 2017(1) U.D. 375. 16. Therefore, he would submit that the Court may proceed on the basis that he is not entitled to exemption from payment of NCCD and the cesses, but that would axiomatically involve resurrect of the levy of NCCD and the cesses on the final product. This would mean that the final product of the appellant is not exempted from NCCD and other cesses. Necessarily, this would render the provision of Rule 6 inapplicable. In this regard, he drew our attention to the definition of the word "exempted goods" in 2(d), w....
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....e it clear that in the case, as in this case, where the Notification provides for exemption from the whole of the basic excise duty and additional excise duty, there can be no question of the appellant's claiming the benefit of the CENVAT credit. 18. Having set out the contentions, we may make the survey of the specific provisions. 19. Section 3 of the Central Excise Act, inter alia, reads as follows: "SECTION 3. Duties specified in [First Schedule and the Second Schedule] to the Central Excise Tariff Act, 1985] to be levied.- (1) [There shall be levied and collected in such manner as may be prescribed,- (a) [a duty of excise to be called the Central Value Added Tax (CENVAT) on all excisable goods [(excluding goods produced or manufactured in special economic zones)] which are produced or manufactured in India as, and at the rates, set forth in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986);] (b) a special duty of excise, in addition to the duty of excise specified in clause (a) above, on excisable goods [(excluding goods produced or manufactured in special economic zones)] specified in the Second Schedule to the Cent....
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....e Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section 93 of section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978). The Government granted area based exemption in respect of the goods specified in the first and the second schedule to the Central Excise Tariff Act, 1985, other than certain goods, which were mentioned, with which, we are not concerned. The exemption was from whole of the duty of excise or additional duty of excise, which were levied under the said Acts. 22. It is next important to immediately notice the judgment of the Hon'ble Apex Court in the case of Union of India and others vs. M/s Modi Rubber Ltd. reported in AIR 1986 SC 1992. The said case involved consideration of the expression 'duty of excise' employed in the Notification issued under Rule 8 of the Excise Rules. The question was, whether it was confined to the basic duty on excise under the Act or it covered special duty of excise levied under various Finance Acts, additional duty of excise levied under the Additional Duty of Excise (Goods of Special Importance) Act, 1957 and any other kind of duty of excise levied u....
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.... various notifications referred to above, the Central Government has, while granting exemption under Rule 8(1), used specific language indicating that the exemption, total or partial, granted under each such notification is in respect of excise duty leviable under the Central Excises and Salt Act, 1944. But, merely because, as a matter of drafting, the Central Government has in some notifications specifically referred to the excise duty in respect of which exemption is granted as 'duty of excise' leviable under the Central Excises and Salt Act, 1944, it does not follow that in the absence of such words of specificity, the expression 'duty of excise' standing by itself must be read as referring to all duties of excise. It isnot uncommon to find that the legislature sometimes, with a view to making its intention clear beyond doubt, uses language ex abundanti cautela though it may not be strictly necessary and even without it the same intention can be spelt out as a matter of judicial construction and this would be more so in case of subordinate legislation by the Executive. The officer drafting a particular piece of subordinate legislation in the Executive Department may employ words....
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....xtent. And obviously that can only be with reference to the duty of excise which is then leviable. The 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 1st August 1974 the Central Governm....
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....l Government in exercise of the power under Rule 8(1) simpliciter, without anything more, it must, by reason of the definition of 'duty' contained in Rule 2 clause (v) which according to the well-recognised canons of construction would be projected in Rule 8(1), be read as granting exemption only in respect of duty of excise payable under the Central Excise and Salt Act, 1944. Undoubtedly, by reason of sub-section (4) of section 32 of the Finance Act, 1979 and similar provision in the other Finance Acts, Rule 8(1) would become applicable empowering the Central Government to grant exemption from payment of special duty of excise, but when the Central Government exercises this power, it would be doing so under Rule 8(1) read with sub- section (4) of section 32 or other similar provision. The reference to the source of power in such a case would not be just to Rule 8(1), since it does not of its own force and on its own language apply to granting of exemption in respect of special duty of excise, but the reference would have to be to Rule 8(1) read with sub-section (4) of section 32or other similar provision. It is significant to note that during all these years, whenever exem....
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....ng the provisions of the Central Excise and Salt Act, 1944 and the Rules made thereunder applicable to the levy and collection of special, auxiliary or any other kind of excise duty levied under such statute, the exemption must be read as limited to the duty of excise payable under the Central Excise and Salt Act, 1944 and cannot cover such special, auxiliary or other kind of duty of excise. The Notifications in the present case were issued under sub-rule (1) of Rule 8 of the Central Excise Rules 1944 simpliciter without reference to any other statute and hence the exemption granted under these two Notifications must be construed as limited only to the duty of excise payable under the Central Excise and Salt Act, 1944. " 23. Having adverted to the said judgment, we must now proceed to advert to the claim for CENVAT credit. CENVAT Credit Rules 2004 have been made under Section 37 of the Act. They have been made in supersession of Rules of 2002, inter alia. Rule 2 (c) defines the "Excise Act", which means the Central Excise Act, 1944. Rule 2(d) defines the "exempted goods", which has already been extracted. 24. "Final product" is defined in Rule 2(h) as the excisable goods manu....
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....er sub- section (5) of section 3 of the Customs Tariff Act [***] Provided that a provider of output service shall not be eligible to take credit of such additional duty;] (viii) the additional duty of excise, leviable under section 157 of the Finance Act, 2003 (32 of 2003); (ix) the service tax leviable under section 66 of the Finance Act; [***] [(ixa) the service tax leviable under section 66A of the Finance Act] (ixb) the service tax leviable under section 66B of the Finance Act; (x) the Education Cess on taxable services leviable under section 91 read with section 95 of the Finance (NO. 2) Act, 2004 (23 of 2004); [(xa) the Secondary and Higher Education cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007); and] [(xi) the additional duty of excise leviable under [section 85 of Finance Act, 2005 (18 of 2005),]]: paid on- (i) any input or capital goods received in the factory of manufacture of final product or [by] the provider of output service on or after the 10th day of September, 2004; and (ii) any input service received by the man....
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....tax, as the case may be the CENVAT credit shall be utilized only to the extent such credit is available on the last day of the month or quarter, as the case may be, for payment of duty or tax relating to that month or the quarter, as the case may be: Provided further that CENVAT credit shall not be utilized for payment of any duty of excise on goods in respect of which the benefit of an exemption under Notification No. 1/2011-C.E., dated the 1st March, 2011 is availed; Provided also that the CENVAT credit of the duty, or service tax, paid on the inputs, or input services, used in the manufacture of final products cleared after availing of the exemption under the following notifications of Government of India in the Ministry of Finance (Department of Revenue),- Notifications omitted. shall, respectively, be utilized only for payment of duty on final products, in respect of which exemption under the said respective notification is availed of: Provided also that no credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, [***] shall be utilized for payment of service tax on any output service: ....
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.... (18 of 2005), [shall be utilised towards payment of duty of excise or as the case may be, of service tax leviable under the said Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 or the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001), or the education cess on excisable goods leviable under section 91 read with section 93 of the said Finance (No.2) Act, 2004 (23 of 2004), or the Secondary and Higher Education Cess on excisable goods leviable under section 136 read with section 138 of the Finance Act, 2007 (22 of 2007) or the additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of 2003), or the education cess on taxable services leviable under section 91 read with section 95 of the said Finance (No.2) Act, 2004 (23 of 2004), or the Secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007), or the additional duty of excise leviable under section 85 of the Finance Act, 2005 (18 of 2005) respectively, on any final products manufactured by the manufacturer or for payment of such duty on inputs th....
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....oyed is "the duty of excise specified in the Second Schedule to the Excise Tariff Act". Likewise, the preposition "the" precedes various duties / levies, which are mentioned in sub-rules (iii), (iv), (v), (vi) and (vii). It is in sub-rule (vii) that the words "the additional duty leviable under section 3 of the Customs Tariff Act, equivalent to the duty of excise specified under clauses (i) to (via)" have been used. We do notice that instead of using the words "duties of excise", the expression used is "the duty" and, therefore, in the singular. There are other duties also, with which, we may not be concerned. It is quite clear that all these imposts are component parts of CENVAT credit. In Rule 3(2) again, the expression used is "the duty paid". Furthermore, in Rule 3(4)(a), which deals with how the CENVAT credit may be utilized, it is declared that it may be employed for payment of "any duty of excise". In the first proviso to Rule 3(4), the words "duty of excise" are not preceded either by the word "the" or "any". The proviso appears to declare that the CENVAT credit can be utilized only to the extent such credit is available on the last day of the month or quarter for payment o....
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....Act, 1944 (1 of 1944) and the rules made thereunder, including those relating to refunds and exemptions from duties and imposition of penalty, shall, as far as may be, apply in relation to the levy and collection of the National Calamity duty leviable under this section in respect of the goods specified in the Seventh Schedule as they apply in relation to the levy and collection of the duties of excise on such goods under that Act or those rules, as the case may be. EC (Education Cess): It was levied by the Finance Act of 2004 vide Section 91 thereof. We may advert to Section 91 and 93: "91. Education Cess.-(1) Without prejudice to the provisions of sub-section (11) of section 2, there shall be levied and collected, in accordance with the provisions of this Chapter as surcharge for purposes of the Union, a cess to be called the Education Cess, to fulfil the commitment of the Government to provide and finance universalized quality basic education. (2) The Central Government may, after due appropriation made by Parliament by law in this behalf, utilize, such sums of money of the Education Cess levied under sub- section (11) of section 2 and this Chapter for the p....
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....y and Higher Education Cess levied under section 136, 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 any other duties of excise chargeable on such goods, under the Central Excise Act, 1944 or any other law for the time being in force and the Education Cess chargeable under section 93 of the Finance (No. 2) Act, 2004. (3) The provisions of the Central Excise Act, 1944 and the rules m....
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....booed the utilization of any other part of the CENVAT credit, except the NCCD for payment of the NCCD on final products, which fell under tariff items 8517 12 10 and 8517 12 90 respectively of the First Schedule of the Tariff Act. Thus, this proviso purported to render impermissible utilization of the basic excise duty paid on any input for payment of NCCD on the final product, if the final product fell under tariff item 8517 12 10 and 8517 12 90 respectively of the First Schedule. The said proviso has already been quoted above. The provision after its modification by the amendment on 1st March, 2016 reads as follows: "[Provided also that the CENVAT credit of any duty specified in sub-rule (1), except the National Calamity Contingent duty in item (v) thereof, shall not be utilized for payment of the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001):]" 33. After substitution of the said proviso in the year 2016, the rule-maker has totally proscribed the utilization of any part of the CENVAT credit, except the NCCD duty for payment of NCCD on any final product. Under Rule 3(7)(b), CENVAT credit, consisting of NCCD and the c....
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.... "21. It is pertinent to note that the most important object concerning grant of the MODVAT credit is to see that cascading effect of the duty imposed on the final product cleared at the time of sale is removed. If some duty is levied on the inputs, raw materials, etc, and if the final product is also dutiable, then the duty levied on inputs i.e. raw material is to be reduced from the duty ascertained on the final product. Thus, there are two conditions for getting the MODVAT credit benefit: (i) On the raw material i.e. on the inputs, the manufacturer must have paid duty and such raw material must have been used in the process of manufacturing the final product in his factory or premises. (ii) Excise duty must have been levied on the final product. If there is no duty levied on the final product, there would not be any question of grant of any relief because in that case there would not be any cascading effect on the duty imposed." 37. In the case of Escorts Limited vs. Commissioner of Central Excise, Delhi reported in 2004(171) E.L.T. 145 (S.C.), the appellants were manufacturer of tractors. They paid duties on certain inputs used in the manufacture of c....
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....ed by notification by the Board." 39. It is brought to our notice that Circulars have been issued. Appellant relies on Circular No. 641/32/2002/CX dated 26.06.2002 and other Circulars, which are dated 13.1.2006, 07.01.2009, and 11.12.1996. Reliance is placed on all these Circulars to demonstrate that the Authorities have understood that NCCD shall be treated as "duty of excise", for the purpose of exemption on products meant for export within the meaning of Rule 19, from payment of NCCD and hence, the contention appears to be that the words "duty of excise" are to be appreciated as it occurs in the CENVAT Credit Rules also, having regard to the Finance Acts, under which NCCD and the cesses are imposed, whereunder they are referred to as the duties of excise. The NCCD and the cesses would also be part of duties of excise under Rule 2 (d) and also Rule 6 of the CENVAT Credit Rules. 40. It is undoubtedly true that if the basic excise duty is paid on inputs, then it can be used ordinarily to pay the basic excise duty on the final product. We must consider, what is the scope of the expression "exempt from whole of the duty". We have noticed that Section 5A of the Act empowers the ....
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....credit on the duty paid on the goods, which are lying in stock or in process or inputs contained in the final products lying in stock, when the shadow cast over the claim for the CENVAT credit in the form of an exemption is lifted, inter alia. We are not concerned with the clause, which also likewise applies when the goods become excisable otherwise. 43. For our purpose, there can be no doubt that the words "duty paid" may take in the whole of the duties, which are contemplated under Rule 3 (1). Likewise, the language of Section 3(4)(a) of the CENVAT Credit Rules, which provides that CENVAT credit may be utilized for payment of any duty of excise on any final product clearly indicates that CENVAT credit is available with reference to all its component parts for payment of any duty of excise on the final product, subject to the restrictions or limitations under the provisos or any other provision, as for instance, Rule 6. It is clear that with reference to the facts of this case, for instance under the law as stood then, basic excise duty paid would be available for payment of NCCD and the cesses as they would fall under the category of "any duties of excise", which is imposed on....
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....se where apart from the excise duty, there are surcharges, as NCCD and cesses in this case, then when the assessee opts for the benefit of the exemption from the duty under Section 3, then it would not also, at the same time, claim further benefit by way of CENVAT credit. It is to be noticed that there is no case for the appellant that the appellant did not exercise his option in the matter of claiming benefit of Notification No. 50 of 2003. We would think that though, no doubt, Modi Rubber was rendered in the context of Excise Rules and it was not rendered in the scenario of the CENVAT credit, having regard to the language used in Rule 6 read with Rule 2(d) in conjunction with the language used in Section 5A of the Act, the conclusion would be that when there is exemption from the whole of the duty under Section 3 of the Act, the goods would be treated as exempted goods within the meaning of Section 2(d) of the Rules. As far as the case based on Rule 19 of the Central Excise Rules and the Circulars, which have been issued with reference to the same, whereunder NCCD, inter alia, has been treated as the duty of excise for the purpose of Rule 19, is concerned, we do not think that th....
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.... is paid within the period so specified]; (d) where the appellate authority or tribunal or court modifies the amount duty of excise determined by the Central Excise Officer under sub-section (10) of section 11A, then, the amount of penalties and interest payable shall stand modified accordingly and after taking into account the amount of duty of excise so modified, the person who is liable to pay duty as determined under sub- section (10) of section 11A shall also be liable to pay such amount of penalty or interest so modified. Explanation - For the removal of doubts, it is hereby declared that in a case where a notice is served under sub-section (4) of section 11A and subsequent to issue of such notice, the Central Excise Officer is of the opinion that the transactions in respect of which notice was issued have been recorded in specified records and the case falls under sub-section (5), penalty equal of 50 percent. of the duty shall be leviable. (2) Where the amount as modified by the appellate authority or tribunal or court is more than the amount determined under sub-section (10) of section 11A by the Central Excise Officer, the time within which the i....
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....E, Bangalore reported in 2001 (129) E.L.T. 523 (Tri-Bang), wherein it was held while interpreting Notification No. 214/86, Central Excise that the said notification issued under Rule 8(1) of the Rules exempts only basic excise duty and does not cover additional duty of excise; the same was set aside by the Hon'ble Apex Court in 2002 (146) E.L.T. A309(S.C.). We must notice that we were not able to trace out the last mentioned decision. 51. Following the judgment passed in Toyota Kirloskar Motor Pvt. Ltd. vs. Commissioner reported in 2007 (217) E.L.T. 403, the judgment in Tatra Trucks India Ltd. vs. CCE, Chennai reported in 2008 (227) ELT 269 (Tri-Chennai) was rendered on 23.04.2008. Therein, the Tribunal proceeded to take the view that NCCD is a duty of excise for the purposes of exemption notifications issued under Section 5A of the Act. In this case, the Tribunal proceeded to distinguish the decision of the Hon'ble Apex Court in Modi Rubber. Following is the reasoning of the Tribunal in not following the order of the Hon'ble Apex Court in Modi Rubber's case:- "The Revenue, in their appeal, has also claimed support from the Supreme Court's judgment in Union of India & O....
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....mmissioner (Appeals) has to be upheld. Still further in the case of Superfine Syntex Pvt. Ltd. vs. Commissioner of Central Excise, Surat-I reported in 2009 (237) ELT 292, the same Tribunal, by its order of even date, namely, 07.01.2009, took the similar view. It is thereafter that the Tribunal at Ahmedabad in the year 2010 in the case of NAVA Petrochemicals Ltd. vs. Commissioner of Central Excise, Ahmedabad reported in 2010 (254) ELT 165 (Tri-Ahmd), while passing an order in the Stay Application proceeded to consider the question as to whether demand for NCCD in respect of Partially Oriented Yarn for captive consumption to 100% EOU was justified. The Tribunal refers to the decisions in the Modern Petrofills Ltd. Vs. Commissioner; Tatra Trucks India Limited vs. Commissioner reported in 2008 (227) ELT 269 (Tri.- Chennai): J.B.F Industries Ltd. vs. Commissioner of Central Excise, Vapi reported in 2009 (246) ELT 286 (Tri.- Ahmd.) and, thereafter, it also referred to the decisions in the case of Paras Petrofills Ltd. vs. Commissioner reported in 2009 (237) ELT 367 (Tri.-Ahmd.) and Superfine Syntex Pvt. Ltd. vs. Commissioner of Central Excise, Surat-I reported in 2009 (237) ELT 292 (Tri.....
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....enalty is imposable as alleged. They have specifically set up the case that the judgments in TATRA Trucks India Ltd. vs. Commissioner of Central Excise reported in 2008 (227) ELT 269 (Tri.- Chennai) and Toyota Kirloskar Motor Pvt. Ltd. vs. Commissioner of Central Excise reported in 2007 (217) ELT 403 (Tri.-Bang.) have been accepted by the Revenue and have, accordingly, become final. Thereafter, it is that the Authority has entered the following findings under the head 'PENALTY' in its order (we are adverting to the order, which is annexed in CEXA No. 14 of 2017): "PENALTY From the above discussion and findings, it has become established that the party was required to pay NCCD and Ed. Cess S&HE Cess on NCCD and that as such non- payment of duty and Cesses were not on account of interpretation of relevant notification in any way. I also find that the colum No. 7 of the ER-1 returns submitted by the party revealed that they were well aware about all the duties of Excise including NCCD, Education Cess and Secondary & Higher education, which are leviable in their case, as same has been mentioned in the said column of the monthly returns submitted by them. Even then, th....
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.... SB Packaging Ltd. [2008 (223) ELT 360 (P & H) 4. But fact remains that in the above mentioned cases, the issue was regarding the payment of duty in cash but in the instant case, issue is not about the duty which was exempted. The issue is pertaining to National Calamity Contingent Duty (NCCD), Education Cess and Secondary Higher Education Cess which are neither created by the Ministry of Finance nor by the Central Excise Act, 1944. So, the above ratio is distinguishable." 56. We may also notice paragraphs 7 & 8: "7. After hearing both the sides and on perusal of record, it appears that in the instant case, for the earlier period, Tribunal has confirmed the demand as well as penalty in the assessee's case of Hero Honda Motors Ltd. vs. CCE, Meerut I (2017(348) ELT 737 (Tri-Del). In the present case, the arguments are confined to 'whether the penalty is imposable upon the assessee under Rule 25 of the Central Excise Rules, 2002, read with section 11AC of the Central Excise Act, 1944 for violation of provisions of Rule 4 & 8 of Central Excise Rules, 2002 and the provision of Notification No. 50/2003, with intent to payment of duty'. 8. From the record, it....
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....ase law in the order relating to other periods, which are the subject matter of other appeals before us. Thus, the penalty was sustained. 58. We must at this juncture also refer to an argument raised by Mr. H.M. Bhatia, learned counsel for the Revenue that in the reply to the notice given by the Commissioner, appellant has not denied the case with regard to penalty. We notice that in the reply, it is specifically stated that there is no contravention of any provisions of Rules 4 and 8 of the Rules. It is further stated that the facts and circumstances of the case do not call for any penalty. There is reference made to the judgment of the High Court of Gujarat in the case of IOC vs. Union of India reported in 2005 (186) ELT 271 (Gujarat), wherein we notice the court had, inter alia, held that it would be necessary for the Assessing Authority or the Tribunal to consider before imposing or upholding penalty, whether the assessee's case regarding its / his duty liability was bona fide, even if it was not accepted on merits. It is also stated that the noticee already paid the amount from PLA under protest. This is sufficient to drop the proceedings. It is also stated that the learned....
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.... they show on their product the name of the holding company, namely, Grasim Industry. Hon'ble Apex Court took the view that the order of the Tribunal holding that the assessee was entitled to exemption could not be sustained. However, in regard to penalty imposed under Rule 173Q of the Central Excise Rules, the Apex Court held as follows: "20. However, by this Order, the Commissioner has also imposed penalty in a sum of Rs. 10,00,000/- under Rule 173Q of the Central Excise Rules. While the conclusions of the Commissioner that the Respondents were not entitled to the benefit of the Notification are correct, the fact still remains that the Tribunal has in a number of matters given an interpretation as understood by the Respondent. It therefore cannot be said that the Respondents could not have taken the view they did. It cannot be said that they could never have concluded that they were entitled to the benefit of the Notification. We therefore feel that this is a case where penalty should not be imposed. We therefore delete the imposition of penalty on the Respondents." 62. It is in this context that the orders of the Tribunal in the cases of TATRA Trucks India Ltd. vs. C....
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.... the various provisos enumerate the conditions, subject to which and the extent to which the penalty may be reduced." 66. Thereafter, the Hon'ble Apex Court held as follows: "27. One can not fail to notice that both the proviso to sub section 1 of section 11A and section 11AC use the same expressions: "....by reasons of fraud, collusion or any wilful mis- statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,..." (emphasis supplied) 28. From the aforesaid discussion it is clear that penalty under section 11AC, as the word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section. 29. At this stage, we need to examine the recent decision of this Court in Dharamendra Textile (supra). In almost every case relating to penalty, the decision is referred to on behalf of the Revenue as if it laid down that in every case of non-payment or short payment of duty the penalty clause would automatically get attracted and the authority had no discr....
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.... scope for any discretion. This Court also referred in Para 136 of the Union Budget in which reference was made to the provisions stating that the levy of penalty is a mandatory penalty and that in notes on clauses also the similar indication has been given. 8. After considering all the aspects concerned, this Court finally held that the plea that Rule 96-ZQ and Rule 96-ZO have a concept of discretion inbuilt cannot be sustained meaning thereby that the said Rules are mandatory and there is no discretion available for reducing the penalty. The provisions of Rule 96-ZP being identical and in pari materia with that of Rule 96- ZQ and Rule 96-ZO, the ratio of the aforesaid decision rendered by a three-Judge Bench is squarely applicable to the facts and circumstances of the present case." 70. In the case of Commissioner of Central Excise, Chandigarh vs. Pepsi Foods Limited reported in (2011) 1 SCC 601, we notice that a Bench of three learned Judges was dealing with imposition of penalty under Section 11-AC. We notice that there is no reference as such to Dharmendra Textile (supra), but it has adverted to the case of Union of India vs. Rajasthan Spinning and Weaving Mills re....
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....ce at which the final products were sold by M/s. Frito-Lay India to its wholesale dealers. It enclosed certificate of a chartered accountant in support of its calculations. In its submission of Annexure-A as required under Rule 173C (3A) of Central Excise Rules, 1944, it mentioned that the sale of the products occurred at its factory gate. It was also evident from the letter that the final products were entering the market stream when they were being sold by 3 M/s. Frito-Lay India to their wholesale dealers." 73. It was essentially a case, which involved the Court taking note of the fact that the stand of the assessee in reply to the show cause notice that it had been paying the duty and there was no malafide intention on its part to evade the payment of duty was not found to be incorrect in the order-in-original. It was found that there was no finding of fraud or misstatement and, accordingly, the finding regarding levy of equal amount of penalty was interfered with. 74. In the case of Commissioner of Central Excise, Mumbai vs. Sunil Silk Mills reported in (2011) 15 SCC 164, we also notice that a Bench of two learned Judges referred to both the decisions in the cases of Dhar....
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....ey were well aware about all the duties of Excise including NCCD and the cesses, which are leviable in their case, as same has been mentioned in the said column of the monthly returns submitted by them and finally, it is stated that even then they failed to make proper assessment of duty and willfully & deliberately chose not to pay appropriate duty leviable on them, thus contravening the provisions of Rule 6 read with Rule 8 of the Central Excise Rules 2002. Finally it is found that this willful act made them liable to be penalized under Rule 25 of the Central Excise Rules 2002 read with Section 11AC of the Central Excise Act, 1944. Support is drawn from the case of Dharmendra Textile case to hold that the penalty is mandatory and there is no discretion to the authorities on quantum of such penalty. 76. Firstly, Mr. Ganesh, learned Senior Counsel would draw our attention to the impact of the entries in Column 7 of the ER-1 return. In Form ER-1 under Clause 3, which provides the details of manufacture, clearance and duty payable, Column 7 comes under the heading 'duty' and it provides for CENVAT and one other duty. He would submit that the Authority has not understood the scope ....
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....de question for interpretation relating to Notification No. 50 of 2003 in regard to whether NCCD and the cesses are exempted from duty. In this regard, one way to look at it is to find that the orders of the Tribunal, which they purport to rely on, persuaded them to bonafide believe that they were exempt from the payment of NCCD and the cesses. On the other hand, could it be said that the orders of the Tribunal were on the face of it bad in not following the judgment in Modi Rubber case. 81. In regard to setting up of a plea before the Authorities or Tribunal or the Court, it may hardly be sufficient for the assessee to raise a contention that it was under the impression that it was entitled to the benefit of exemption. If the plea is foundationless in law and on facts, then we would think that such a plea is clearly not enough to extricate the party from the clutches of the law providing for penalty as Section 11AC provides. As far as the order in Toyota Kirloskar Motor Pvt. Ltd. (supra) is concerned, the Tribunal has proceeded on the basis that NCCD is indeed a duty of excise. Secondly, it proceeded to take note of Section 129 of the Finance Act. Thirdly, it referred to Circul....
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....ating to exemption is concerned, it is the matter to be determined with reference to the terms of the exemption notification. It is in this regard that the decision of the Hon'ble Apex Court rendered in 1986 in Modi Rubber's case assumed crucial significance. In terms of the said judgment, we do not see any scope at all for any interpretation for including NCCD or the cesses under the expression 'duty of excise'. As far as the judgment of the Tribunal in TATRA Trucks India Ltd. (supra) is concerned, the Revenue correctly placed reliance on Modi Rubber. The Tribunal, however, did not follow the decision in Modi Rubber by merely referring to Section 136(3) of the Finance Act. We have noticed Paragraph 9 of the judgment of the Hon'ble Apex Court in Modi Rubber's case. The said paragraph is a complete answer and the Tribunal did not even refer to the said paragraph. Therefore, we would think that it may not be a case, where the appellants could point out that they were entertaining a bonafide impression generated by the orders passed by the Tribunal in these cases. We say so as we would think that in the light of the pronouncement of the Hon'ble Apex Court in Modi Rubber's case, it doe....
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....so taken the view that no CENVAT credit can be claimed, but this indeed was a truly pure question of law and we are also told that there was no decision of any other High Court on this matter. The matter was indeed res integra. In the light of this aspect, we would think that this question must be considered by the Tribunal, which has in fact not considered this aspect. Therefore, as far as the question of law no. 4(g) is concerned, we dispose of the Appeals by remitting them back to the Tribunal. The Tribunal will render finding on the effect of the claim for CENVAT Credit made by the appellant in regard to penalty with reference to the factual aspects as to what is also the amount, which was there to the credit of the appellant, the procedure, which was to be followed in this matter in this regard, whether the appellant has abided by the procedure in staking claim and it has indeed staked a claim in the matter as provided in law bearing in mind that it indeed was a pure legal issue and the bona fides also of the appellant cannot be doubted in this regard. 86. Accordingly, the resultant position is that we reject the case of the appellant that the appellant is entitled to claim....