TaxTMI 
TaxTMI 
2023 (5) TMI 1191
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....Services Tax Division rejecting the petitioner's claim for benefit of budgetary support under a scheme on the ground that the benefit thereunder can only be allowed on goods manufactured under an 8-digit HSN code and cleared prior to 01.07.2017, and thus the petitioner is not eligible for the refund. 3. The said claim was made by the petitioner under a scheme prepared by the Government of India in 2017 for providing budgetary support, in lieu of excise duty tax exemption granted earlier for manufacturing certain goods by the manufacturing units in the State of Jammu and Kashmir as per the exemption notification issued earlier in this regard in 2010. 4. The Central Government in exercise of powers conferred under Section 5A (1) of the Central Excise Act, 1944, issued a Notification bearing No. 1/2010-CE on 06.02.2010 (hereinafter referred to as the Exemption Notification) which exempted from payment of excise duty or additional excise duty leviable on such goods as specified in the First and Second Schedules to the Central Excise Tariff Act, 1985 for a period of 10 years when these goods were cleared from a unit located in the State (now UT) of Jammu and Kashmir to boost indus....
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....nits which were granted certain exemptions under the Excise Act, notified a "Budgetary Support Scheme" under the Goods and Services Tax regime to units located in the States of Jammu& Kashmir, Uttarakhand, Himachal Pradesh and the Northeast States including Sikkim (hereinafter referred as the "Scheme"). Under the Scheme, budgetary support was granted with effect from 01.07.2017 to all eligible units for the residual period in respect of the specified goods as defined in the new scheme. The eligible unit was to be provided reimbursement of the Central Government share of the cash component of the CGST and IGST, at 58% of CGST and 29% of IGST, in lieu of exemption provided earlier under the erstwhile Exemption Notification. 8. The mechanism for this support as offered in the Scheme was that a specified amount of budgetary support shall be provided in respect of "specified goods" manufactured and cleared by an eligible manufacturing unit for the residual period covered under the Exemption Notification. 9. Thus, what is contemplated under the new Scheme is that, those manufacturing units which were getting certain exemption of Central excise duty under the earlier Exemption Notif....
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....the respondents primarily on two grounds: i) Firstly, it has been submitted that under the Exemption Notification, "all goods" covered under Chapter 38 of the Tariff Act were eligible for exemption from Central Excise Duty and the said notification did not distinguish the goods classified under different sub-headings and sub-items within Chapter 38 for the purpose of grant of excise duty exemption. ii) Secondly, for the purpose of the Scheme, the "specified goods" can be read to mean any goods covered under Chapter 38 and not only goods under any particular sub-heading or entry as the respondents are seeking to restrict to. 14. The contention of the petitioner is that the petitioner's unit was manufacturing goods covered under Tariff Heading No. 3808 of Chapter 38 of the Tariff Act for which the petitioner was granted exemption of excise duty under the Exemption Notification and since the petitioner continued to manufacture goods which are covered under Tariff Heading No. 3808 after the Scheme came into operation, the petitioner will be entitled to budgetary support under the new Scheme in respect of any item falling under HSN Code 3808. According to the petiti....
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....s of a net weight content not exceeding 300 g Kg. 12.5% 3808 62 00 --In packings of a net weight content exceeding 300 g but not exceeding 7.5 kg Kg. 12.5% 3808 69 00 -- Other Kg. 12.5% - Other: 3808 91 -- Insecticides: 3808 91 11 ----Aluminium phosphate (for example phostoxin) Kg. 12.5% 3808 91 12 ---- Calcium cyanide Kg. 12.5% 3808 91 13 ----D.D.V.P. (Dimethyle-dichloro-vinyl- phosphate) Kg. 12.5% 3808 91 21 ---- Diaginal Kg. 12.5% 3808 91 22 ---- Methyl bromide Kg. 12.5% 3808 91 23 ---- Dimethoate, technical grade Kg. 12.5% 3808 91 24 ---- Melathion Kg. 12.5% 3808 91 31 ---- Endosulphan, technical grade Kg. 12.5% 3808 91 32 ---- Quinalphos Kg. 12.5% 3808 91 33 ---- Isoproturon Kg. 12.5% 3808 91 34 ---- Fenthion Kg. 12.5% 3808 91 35 ---- Cipermethrin, technical grade Kg. 12.5% 3808 91 36 ---- Allethrin Kg. 12.5% 3808 91 37 ---- Synthetic pyrethrum Kg. 12.5% --- Other 3808 91 91 ----Repella....
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....extile glazings, dressings and mordants Kg. 12.5% 3809 91 90 --- Other Kg. 12.5% 3809 92 00 -- Of a kind used in the paper or like industries Kg. 12.5% 3809 93 --Of a kind used in the leather or like industries :1 3809 93 10 ---Fatty oil or pull up oil Kg. 12.5% 3809 93 90 --- Other Kg. 12.5% 18. From the above, it is evident that goods covered under the generic head of the Tariff item HSN code 3808 under Chapter 38 are further classified under sub-heads and sub-items with 6-digit HSN code and 8-digit HSN code. Thus, HSN Code 3808 is the broad classification of different goods enumerated in the Table of the different goods/items with 6-digit and 8-digit HSN codes. Under the broad category of 4-digit Tariff Item HSN Code 3808 under Chapter 38, all such goods with 8-digit HSN code falling under it would be eligible for the exemption from excise duty in the manner provided under the Exemption Notification. Thus, if the petitioner's unit manufactured any of the items with 8-digit code mentioned in the sub-items or sub-heads under the broad Tariff Item 3808, exemption could be sought under the aforesai....
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....d to above cannot obviously refer only to the 4-digit and 6-digit code items as the tariff rate cannot be ascertained merely referring to these only, but by referring to the 8-digit items. In other words, the exemption claimed can be only with reference to the 8-digit items and not with reference to the 4-digit or 6-digit code items. 22. As mentioned above, upon introduction of the new GST regime, all the notifications issued earlier under the Central Excise Act,including the Exemption Notification were rescinded. However, the Government of India took a policy decision to provide budgetary support to the existing eligible manufacturing units operating in the States of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North Eastern States including Sikkim under different Industrial Promotion Schemes of the Government of India, for the residual period for which each of the units is eligible, and introduced and notified a new scheme on 5.10.2017 vide Notification dated 05.10.2017, (hereinafter referred to as the "Scheme"). This new Scheme was offered, as a measure of goodwill, only to the units which were eligible for drawing benefits under the earlier excise duty exemption/ref....
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....as it is not an issue here, since the petitioner's manufacturing unit was availing exemption of duty under the earlier Exemption Notification, and it is also not disputed by the respondents that the petitioner's manufacturing unit is an eligible unit for claiming the benefit under the new Scheme. 29. In view of the above, we will proceed to examine if the petitioner's unit is eligible, is it entitled to the benefit of budgetary support? For this purpose, we have to examine whether the petitioner's unit fulfils the conditions for the benefit of budgetary support. 30. As mentioned above, the eligible unit must be manufacturing the "specified goods" as mentioned in Para 4.2 as quoted above. 31. "Specified goods" has been defined under para 4.2 of the Scheme notification, as to mean the goods specified under exemption notifications, which were eligible for exemption under the said notifications, and which were being manufactured and cleared by the eligible unit by availing the benefit of excise duty exemption from the premises under Central Excise with a registration number, as it existed prior to migration to GST etc., which is reproduced herein below. "4.2 'Speci....
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.... 2017, which is to continue to extend some benefit by way of budgetary support to those units which had been availing excise duty exemptions for manufacturing certain goods under the earlier tax regime. Thus, if the unit had been manufacturing certain good or item of which the unit was availing the benefit of excise exemption and by clearing it from the unit, the unit would continue to get the benefit of budgetary support in respect of the said good. As a corollary, if the unit had not been manufacturing certain good or item and thus was not availing the benefit of excise exemption and clearing it from the unit upto 01.07.2017, the unit would not get the benefit of budgetary supportin respect of such items under the new Scheme. 35. Keeping the aforesaid position in mind, we will examine the case in hand. 36. In the speaking order dt. 07.12.2020 issued by the Assistant Commissioner, respondent no. 4, it has been mentioned in paragraph 10 thereof, that without having manufactured and availed area based exemption of a single rupee, in respect of goods falling under tariff headings 38089113, 38089290, 38089340, 38089350, 38089390, 380 89910 and 38089990 prior to 01.07.2017, the p....
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....it in respect of the said good to come within the meaning of "specified goods". As discussed above, the duty exemption granted under the earlier Exemption Notification was not in respect of goods broadly described under Tariff Head with 4-digit HSN code 3808 or 6-digit HSN code, but only in respect of the specific goods with 8-digit HSN code numbers classified under the broad Tariff Head of 3808 and sub-heads with 6-digit HSN code. Under the earlier Exemption Notification, it was not sufficient to manufacture any goods which may come under the definition of the broad Tariff Item with 4-digit HSN Code 3808 or 6-digit HSN code. The unit must manufacture only such items specifically mentioned with 8-digit HSN code under the broad Tariff Item with HSN Code 3808 and the sub-heads with 6-digit HSN code. It was only such item with 8-digit HSN code which was manufactured and eligible for excise duty exemption under the Exemption Notification. It will be only such items or goods in respect of which excise duty exemption was availed under the Exemption Notification, if continued to be manufactured after the Scheme of 2017 was notified, which would be eligible for claim of budgetary support u....
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.... getting the benefit of budgetary support under the Scheme. It would not suffice as contended by the petitioner that any good being manufactured now, which fall within the category of Tariff Head of 3808 would qualify for availing the budgetary support. More is required of such good to be qualified for getting the budgetary support as discussed above. 43. As observed by us, even if any unit manufactures an item now which is covered under the Tariff Head of 3808, if the same had not been manufactured earlier during the subsistence of the Exemption Notification and had not availed excise duty exemption, such good would not qualify for claim of budgetary support under the Scheme. 44. Thus, we are not able to accept a plea of the petitioner that since the petitioner's unit is manufacturing 8-digit items which fall under the broad Tariff Head of 3808, and since the petitioner was availing tax exemption in respect of some other item falling under Tariff Head of 3808, the petitioner's unit would be eligible to claim budgetary support under the Scheme. The said plea does not appear to be correct. 45. We are also not able to accept the submission of the petitioner that the Scheme c....
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.... need to define the "specified goods" as those "which were being manufactured and cleared by the eligible units by availing the benefit of excise duty exemption" in Para 4.2 of the Scheme. By identifying the "specified good" with the past activities of being manufactured and of having availed excise duty exemption, any item which was not being manufactured earlier and not having availed excise exemption will not qualify to be treated as "specified good", and thus not eligible for budgetary support. 49. The submission advanced by the petitioner that the scheme is of a beneficial nature to give support, encouragement and incentives to the industrialist to set up their units in the State of Jammu and Kashmir (now UT), to boost industrial infrastructure and the economy, and as such the scheme should be liberally construed, does not merit consideration, in view of the fact that the language used in this scheme is very clear about conditions to be fulfilled for availing the benefit of budgetary support. Had there been some ambiguity in the language under this Scheme, the said contention of the petitioner could have been considered. In view of the specific requirements of the nature of....