TaxTMI 
TaxTMI 
2019 (12) TMI 286
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....Office Memorandum dated 24.12.1997, specific fiscal incentives including total exemption from tax to the new industrial units and substantial expansion of existing unit in the North Eastern Region for a period of 10 years from the date of commencement of production. Government of Sikkim vide Notification dated 17.2.2003, notified new industrial policy whereby all fiscal incentives available to the industries in the North Eastern Region would be available to the units set up in the State of Sikkim. 4. The Central Government issued a Notification dated 9.9.2003, granting exemption from payment of duty of excise for goods specified in the notification and cleared from a unit located in the Industrial Growth Centre or other specified areas within the State of Sikkim. Under the notification, a manufacturer of specified goods was required to pay excise duty on the goods cleared from its unit. The manufacturer has to first utilize the Cenvat Credit for discharging duty liability on final products, and the remaining amount of duties had to be paid through Personal Ledger Account (PLA) or Current Account, i.e., in cash. Thus, the exemption scheme was to discharge the liability on the fin....
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....r Chapter XXI of the Tariff from the purview of the notification. Thus, the exemption on Pan Masala came to an end vide Notification No.21/2007 dated 25.4.2007, which was challenged by way of separate Writ Petition No.22 of 2007. The High Court vide judgment and order dated 11.5.2012 allowed the Writ Petition (C) No.22 of 2007 and held that the appellant was entitled to exemption from payment of excise duty on manufacture of Pan Masala for ten years from the date of commencement of commercial production, i.e., 27.6.2006. 10. The appellant submitted that 14 separate claims were filed for refund of additional excise duty and education cess on the ground these levies are also duties of excise, for which exemption had been granted for ten years. The appellant filed Writ Petition (C) No.24 of 2007 before the High Court of Sikkim at Gangtok for quashing Notification No.71/2003CE, confining the exemption to "under any of the said Acts" mentioned in paragraph 1 of the notification. The prayer was made for a declaration that the exemption notification was applicable to NCCD, additional excise duty (Pan Masala) and education cess and the Notification No.71/2003CE was repugnant to the Indu....
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....ellant had illegally availed the benefits of the exemption in respect to it. Aggrieved by the dismissal of the writ petitions, the appeals have been preferred. 13. Learned counsel appearing on behalf of the appellant submitted that NCCD, education cess, and secondary and higher education cess form part of the excise duty. Hence, the decision of the High Court is bad in law. Reliance has been placed on SRD Nutrients Private Limited v. Commissioner of Central Excise, Guwahati, (2018) 1 SCC 105 and the decision of this Court in Bajaj Auto Limited v. Union of India & others, 2019 SCC OnLine SC 421, decided on 27.3.2019. It is submitted that the education cess was introduced by Sections 91 and 93 of the Finance Act, 2004 and higher education cess by the Finance Act, 2007 and the NCCD was imposed under Section 136 of the Finance Act, 2001. The imposition is in the nature of a duty of excise and in addition to any other duty of excise chargeable under the Central Excise Act, 1944 ('the Act of 1944'). It is further provided that the provisions of the Act of 1944 and Rules made thereunder relating to refunds and exemptions from duties and imposition of penalty, shall, as far as may be, a....
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....nt Centers (IIDCs) and other locations like Industrial Estates, Export Processing Zones, Food Parks, IT Parks, etc., as notified by the Central Government are entitled to 100% (hundred percent) income tax and excise duty exemption for a period of 10 years from the date of commencement of commercial production. Thrust Sector Industries as mentioned in Annexure-II are entitled to similar concessions in the entire State of Sikkim without area restrictions." 17. The Government decided to exempt 100 per cent income tax and excise duty for ten years. In accordance with the policy decision the Notification No.71/2003 was issued on 9.9.2003 by the Central Government in exercise of powers conferred by Section 5A(1) of the Act of 1944 read with Section 3(3) of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 ('the Act of 1957') and Section 3(3) of the Additional Duties of Excise (Textiles and Textiles Articles) Act, 1978 ('the Act of 1978'), exempted goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985, other than goods specified in Annexure I in the State of Sikkim. The exemption from payment of so much of excise duty....
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....ncluding 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." (emphasis supplied) 19. The education cess came to be imposed vide notification dated 10.9.2004 issued under the Finance Act, 2004. Sections 91 and 93 are extracted hereunder: "91. Education Cess (1) Without prejudice to the provisions of subsection (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 subsection (11) of Section 2 and this Cha....
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.... the purposes specified in subsection (1) as it may consider necessary. XXXXXX 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 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 Ce....
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....ute that when initial exemption notification was issued in 1997 for the North-Eastern States, which was later on applied to the State of Sikkim on 9.9.2003. The benefits from payment of excise duty and additional excise duty were confined to the basic excise duty payable under the Acts of 1944, 1957 and 1978. There was no reference made to NCCD imposed under the Finance Act, 2001. Apart from that, when the notification came to be issued, the education cess and secondary and higher education cess, which came to be imposed by Finance Acts of 2004 and 2007, were not in vogue. 25. A Division Bench of this Court in SRD Nutrients Private Limited (supra) has considered the Finance Acts of 2004 and 2007, by which education and secondary and higher education cess were imposed. Under the Industrial Policy dated 1.4.2007 for the North Eastern States, the notification dated 25.4.2007, issued by the Central Government, came up for consideration before this Court. The said notification and the industrial policy, have been dealt with in paragraphs 4 and 5 of the SRD Nutrients Private Limited (supra), which are extracted hereunder: "4. Industrial Policy dated 142007 for the North Easte....
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.... the exemption contained in this Notification shall be available subject to the condition that, the manufacturer first utilises whole of the CENVAT credit available to him on the last day of the month under consideration for payment of duty on goods cleared during such month and pays only the balance amount in cash. 3. The exemption contained in this notification shall be given effect to in the following manner, namely- (a) the manufacturer shall submit a statement of the duty paid other than the amount of duty paid by utilisation of CENVAT credit under the CENVAT Credit Rules, 2004, to the Assistant Commissioner or the Deputy Commissioner of Central Excise, as the case may be, by the 7th of the next month in which the duty has been paid other than the amount of duty paid by utilisation of CENVAT credit under the CENVAT Credit Rules, 2004; (b) the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, after such verification, as may be deemed necessary, shall refund the amount of duty paid other than the amount of duty paid by utilisation of CENVAT credit under the CENVAT Credit Rules, 2004, during the m....
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....anufactured prior to imposition of cess but cleared after imposition of such cess? Clarification: Education cess on excisable goods is a new levy. In similar cases, it has been held by the Supreme Court that if a levy is not there at the time the goods are manufactured or produced in India, it cannot be levied at the stage of removal of the said goods. Thus, education cess is not leviable on excisable goods manufactured prior to imposition of cess but cleared after imposition of such cess. Issue (2): Whether goods that are fully exempted from excise duty/customs duty or are cleared without payment of excise duty/customs duty (such as clearance under bond or fulfilment of certain conditions) would be subjected to cess. Clarification: The education cess is leviable at the rate of two per cent of the aggregate of all duties of excise/customs (excluding certain duties of customs like antidumping duty, safeguard duty, etc.), levied and collected. If goods are fully exempted from excise duty or customs duty, are chargeable to NIL duty or are cleared without payment of duty under specified procedure such as clearance under bond, there is no collection of duty. T....
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....may be applied in relation to levy and collection of education cess on excisable goods. A conjoint reading of these provisions would amply demonstrate that education cess as a surcharge is levied @ 2% on the duties of excise, which are payable under the Act. It can, therefore, be clearly inferred that when there is no excise duty payable, as it is exempted, there would not be any education cess as well, inasmuch as education cess @ 2% is to be calculated on the aggregate of duties of excise. There cannot be any surcharge when basic duty itself is NIL. *** 24. We are in agreement with the aforesaid reasons accorded by the Rajasthan High Court since it is in consonance with the legal principle enunciated by this Court. For this purpose, we may refer to the judgment in CCE v. TELCO (1997) 5 SCC 275. In that case, issue pertained to valuation of cess which was levied @ 1/8 per cent of ad valorem "value" of the Central excise duty. The Court held that the calculation of 1/8 per cent ad valorem of the motor vehicle for the purposes of the levy and collection of the automobile cess must be made that was being calculated since automobile cess was to be levied and calculat....
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....ra Syntex Ltd. v. Union of India, 2007 SCC OnLine Raj. 365, which was considered in SRD Nutrients Private Limited (supra), was also referred to, besides the circular of 2004. This Court has observed thus: "21. We may notice that the primary reasoning contained in the impugned order is common for the three cesses, i.e., NCCD; Education Cess and Secondary & Higher Education Cess. These were in the nature of surcharges levied in other Acts, which have not been specifically excluded under the Notification in question. That reasoning does not prevail, more so because of the judgment in SRD Nutrients Pvt. Ltd. The question, thus, is whether, even though the NCCD is in the nature of an excise duty, its incidence being on the product, rather than on the value of the excise duty, that itself would make any difference to the applicability of the NCCD to excise exempt units. 22. On a proper appreciation of the judicial pronouncement in SRD Nutrients Pvt. Ltd., we are not inclined to take a different view from the one taken for Education Cess and Secondary & Higher Education Cess, even while considering the issue of NCCD. 23. We may notice that this Court, in SRD Nut....
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....nal duty of excise levied under the Act of 1957 and other kind of duty of excise levied under the Central enactments. 30. In Modi Rubber Limited (supra), the company was the manufacturer of tyres, which product was subject to a duty of excise under the Central Excises and Salt Act, 1944. The word 'duty' under the said Act is defined in Rule 2(v) to mean "the duty payable under Section 3 of the Act". The exemption is dealt with under Rule 8 of Central Excise Rules, exempting various categories of excisable goods from the whole or any part of the duty of excise leviable on such goods. The notification dated 1.8.1974, came up for consideration before this Court in Modi Rubber Limited (supra), which is extracted hereunder: "3..... Notification No. 123/74C. E. dated August 1, 1974 In the exercise of the powers conferred by subrule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts tyres for motor vehicles falling under subitem (1) of Item No.16 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from so much of the duty of excise leviable thereon as is in excess of fiftyfive per cent ad valorem." ....
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....The provisions of Section 32 are pari materia to the abovementioned provisions of the Finance Act(s) in question. The special duty under Section 32 of Finance Act, 1979 imposed was in addition to any duties of excise chargeable on such goods under the provisions of the Central Excises Act and the Rules made thereunder, with respect to refunds and exemptions from duties, shall, as far as may be, apply to the levy and collection of special duties of excise leviable under the provisions of Section 32 of the Finance Act, 1979. 33. The assessee Modi Rubber Limited (supra) claimed that in view of the notification dated 1.8.1974, assessee was exempted from payment not only in respect of basic excise duty levied under the Central Excises and Salt Act, 1944, but also in respect of special duty of excise levied under the relevant Finance Acts, because the language used in the notification was not restrictive and it referred generally to 'duty of excise' without any qualification, therefore, it covered all duties of excise whether levied under the Central Excises and Salt Act, 1944 or under any other Central enactments. The dispute pertained to the period from November 1979 to October 1982....
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....944 but also under any other enactments that the question would arise whether the Central Laws (Amendment and Validation) Act, 1982 is constitutionally invalid. We, therefore, asked the learned counsel appearing on behalf of the parties to confine their arguments only to the first question of interpretation of the expression 'duty of excise' in the notifications dated August 1, 1974 and March 1, 1981. 7. Both these notifications, as the opening part shows, are issued under Rule 8(1) of the Central Excise Rules, 1944 and since the definition of 'duty' in Rule 2, clause (v) must necessarily be projected in Rule 8(1) and the expression "duty of excise" in Rule 8(1) must be read in the light of that definition, the same expression used in these two notifications issued under Rule 8(1) must also be interpreted in the same sense, namely, duty of excise payable under the Central Excises and Salt Act, 1944 and the exemption granted under both these notifications must be regarded as limited only to such duty of excise. But the respondents contended that the expression 'duty of excise' was one of large amplitude and in the absence of any restrictive or limitative words indicating th....
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....a 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 with a view to leaving no scope for possible doubt as to its intention or sometimes even for greater completeness, though these words may not add anything to the meaning and scope of the subordinate legislation. Here, in the present notifications, the words duty of excise leviable under the Central Excises and Salt Act, 1944' do not find a place as in the other notifications relied upon by the respondents. But, that does not necessarily lead to the inference that the expression "duty of excise' in these notifications was intended to refer to all duties of excise including special and auxiliary duties of excise. The absence of these words does not absolve us from the obligation to interpret the expression "duty of excise" in these notifications. We have still to construe this expression - what is its meaning and import - and that has to be done, bearing in mind t....
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....l Government would have applied its mind to the question whether exemption should be granted and if so, to what extent. 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 wh....
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....ng an identical provision in each Finance Act levying special duty of excise - which provided that the provisions of the Central Excises and Salt Act, 1944 and the rules made thereunder including those relating to refunds and exemptions from duties shall, as far as may be, apply in relation to the levy and collection of special duty of excise as they apply in relation to the levy and collection of the duty of excise under the Central Excises and Salt Act, 1944. It was urged on behalf of the respondents that by reason of this provision, Rule 8(1) relating to exemption from duty of excise became applicable in relation to the levy and collection of special duty of excise and exemption from payment of special duty of excise could therefore be granted by the Central Government under Rule 8(1) in the same manner in which it could be granted in relation to the duty of excise payable under the Central Excises and Salt Act, 1944. The argument of the respondents based on this premise was that the reference to Rule 8(1) as the source of the power under which the notifications dated August 1, 1974 and March 1, 1981 were issued could not therefore be relied upon as indicating that the duty of e....
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....e 37 of the Finance Bill, 1978". The source of the power recited in this notification is "subrule (1) of Rule 8 of the Central Excise Rules, 1944 read with subclause (5) of clause 37 of the Finance Bill, 1978". So also in the Notification bearing No. 29/79 dated March 1, 1979 exempting unmanufactured tobacco "from the whole of the duty of excise leviable thereon both under the Central Excises and Salt Act, 1944 and Additional Duties of Excise (Goods of Special Importance) Act, 1957", the reference to the source of power mentioned in the opening part of the notification is "subrule (1) of Rule 8 of the Central Excise Rules, 1944 read with subsection (3) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957". The respondents have in fact produced several notifications granting exemption in respect of special duty of excise or additional duty of excise and in each of these notifications, we find that the source of power is described as subrule (1) of Rule 8 of the Central Excise Rules, 1944 read with the relevant provision of the statute levying special duty of excise or additional duty of excise by which the provisions of the Central Excises and Salt....
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.... in excess of 15 per cent" and these words describing the nature and extent of the exemption on their plain natural construction, clearly indicate that the exemption is in respect of duty of excise leviable under the Central Excises and Salt Act, 1944 and does not cover any other kind of duty of excise. No more discussion is necessary in regard to this question beyond merely referring to the language of this notification." The appeals were allowed, and it was held that exemption was not available in respect of special duty of excise or additional duty of excise or auxiliary duty of excise. A three Judge Bench in Rita Textiles Private Limited v. Union of India, 1986 SCC Supp. 557, has followed the decision of Modi Rubber Limited (supra). The decision in Modi Rubber Limited (supra) squarely covers the issue and is rendered by a Coordinate Bench. 39. Rule 8 of Central Excise Rules, 1944, authorises the Central Government to grant an exemption to any excisable goods from the whole or any part of duty leviable on such goods. Rule 8 is extracted hereunder: "8. Power to authorise an exemption from duty in special cases.-(1) The Central Government may from time to time, by n....
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....udge Bench of this Court in Rita Textiles Private Limited (supra). 41. The Circular of 2004 issued based on the interpretation of the provisions made by one of the Customs Officers, is of no avail as such Circular has no force of law and cannot be said to be binding on the Court. Similarly, the Circular issued by Central Board of Excise and Customs in 2011, is of no avail as it relates to service tax and has no force of law and cannot be said to be binding concerning the interpretation of the provisions by the courts. The reason employed in SRD Nutrients Private Limited (supra) that there was nil excise duty, as such, additional duty cannot be charged, is also equally unacceptable as additional duty can always be determined and merely exemption granted in respect of a particular excise duty, cannot come in the way of determination of yet another duty based thereupon. The proposition urged that simply because one kind of duty is exempted, other kinds of duties automatically fall, cannot be accepted as there is no difficulty in making the computation of additional duties, which are payable under NCCD, education cess, secondary and higher education cess. Moreover, statutory notific....