TaxTMI 
TaxTMI 
TaxTMI 
2023 (8) TMI 991
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.... The Noticee availing the facility of payment of Central Excise Duty on monthly installments basis as per Rule 8 of CER, 2002 as amended. 3. The Noticee was importing raw sugar and after processing refined sugar was produced as their finished goods. The Noticee either exported or cleared the refined sugar in domestic tariff area. The Noticee paid the sugar cess, Education Cess and Secondary & Higher Education Cess, at the time of import of raw sugar. 4. During the course of, scrutiny of records of the Noticee, it was observed that the Noticee had availed Cenvat credit of the sugar cess, Education Cess and Secondary & Higher Education Cess (on Sugar cess), which has been paid by them at the time of import and utilized the said credit for the purpose of payment of sugar Cess, Education Cess and Secondary & Higher Education Cess on domestic sale of refined sugar. 5. Ministry of Consumer Affairs, Food and Public Distribution (Department of Food and Public Distribution), , vide Notification No. S.O. 102 (E), dated, 07.01.2009, inter alia, exempted levy of sugar cess when such sugar was manufactured from other sugar. Relevant text of the said Notification is as under: "Sugar-Exempti....
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....cation S.O.102 (E) published in Gazette of India on 7th January, 2009 is enclosed herewith. However, the said exemption is available for clearances made after the date of issue of notification and past cases, if any, are required to be decided based upon the law as in force during relevant time." In view of the above the Noticee was not required to pay Sugar cess manufactured from such other sugar on which cess is leviable under sub section (1) of Section 3 of the said Act has been paid already and other cesses on further clearance when they have already paid the Cess. 6. The Noticee was asked, vide letter F. No. CEX/AR-III/GIM/Con/2013 dated 16.08.2013, to furnish the details of credit of sugar cess taken and utilized during July 2011 to June 2013. The Noticee, vide letter dated 19.08.2013, furnished the summary of sugar cess credit taken and utilized during the period from July 2011 to June 2013 detailed as per Annexure-A to Notice. On scrutiny of said summary, it was observed that the Noticee had availed and utilized Cenvat credit of sugar cess amounting to Rs1,94,84,774/- of which they have filed rebate claim for Rs.1,20,44,820/- and the remaining moment as ten the of Rs 74,3....
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.... to double taxation. As alleged by the department, the Appellant has contravened the provisions of Notification bearing No S.O. 102 (E) dated 07.01.2009 issued by Department of Food and Public Distribution. Based on which the department has confirmed recovery amount of Rs. 74,39,954 along with applicable interest. 10. While doing so, the learned Commissioner of Central Excise, Rajkot has ignored the vital fact that the Appellant has availed Sugar cess credit on raw sugar purchase/import and discharge sugar cess duty on sale of finished goods i.e., on white refined sugar. Same is disclosed under periodical returns filed with Central Excise. It is further submitted that the issue involved in the present case is mere technical and no revenue implication is involved. The transaction disputed by the Authority concerned is purely revenue neutral transaction. 11. The word "Cess" is generally used when the levy is allocated for particular purpose as name indicates. Cesses are in the nature of duty and not fees. The tax/duty is imposed for public purpose and is not/need not be supported by any consideration of service rendered in returns. Whereas the fee is levied for services rendered. T....
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....l" implies changes in the tax law that result in no change in revenue coming into the Government Treasury, in other words a tax proposal is revenue neutral if it neither increases nor decrease tax revenue be achieved with a commensurate increase or decrease in tax revenues. In the instant case as well the Doctrine of Revenue Neutrality is applicable, as no doubt there is contravention of provisions of notification dated 07.01.2009 however there is no revenue implications/no revenue loss to the Government. 16. The appellant has opted to avail the CENVAT credit against Sugar Cess on raw sugar which was procured from domestic/international market and utilise the same to discharge the sugar cess liability. This means the said transaction is Revenue Neutral hence there is no revenue loss to the Government Exchequer. 17. One has to consider the fact that sugar price is market driven and price remains fixed, the prices quoted by the customer includes basic price of sugar and taxes/duties as applicable. Hence, Customer is not paying any additional amount over and above the price of the sugar. Considering this fact, the department's view is incorrect, illegal, and vexatious that the a....
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....n export of goods. 21. It is settled law that once assessee derives no benefit by availing the Sugar Cess credit and utilizing the same to discharge sugar cess liability on final product then the doctrine of revenue neutrality is applicable. Further, the revenue cannot demand the liability once again after discharge of applicable liability by the appellant along with its periodical returns. 22. The Appellant would rely on the following Judgments/decisions wherein it is held that in Revenue Neutral Transactions, there will not be any evasion or contravention of the Provisions of law. i. Hon'ble Bombay High Court in the matter of Sanvijay Rolling & Engineering Private Limited V / s Commissioner of Central Excise, Nagpur, 2018(11) GSTL 344- ii. Hon'ble CESTAT Mumbai in the matter of Mahindra & Mahindra Limited, V / s Commissioner of Central Excise, Mumbai, 2019 (368) ELT 105. 23. It is not the aim of the government to discourage the assessee from discharging sugar cess liability though Credit. The Notification doesn't specify that the Assessee should not discharge sugar cess duty on final goods once he pays the sugar cess on raw material i.e. raw sugar. The assessee....
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.... of payment of duty instead of enjoying the benefits of exemption. Even otherwise also, there is no question of payment of interest arise even after discharge of sugar cess liability through credit ledger along with periodical return. 27. In this connection, appellants relied on Supreme Court Judgment in the matter of Jayaswal Neco Limited, 2015 (322) ELT 587 (SC), wherein It is held that "it was self-contained scheme dealing with various aspects-with its introduction, assessee has option to pay excise duty by availing credit of duty paid on inputs provided he had manufactured finished products making use of such inputs. Further there is no specific prohibition in Rule 173G (1) for payment through Cenvat Credit, which was recognized and valid mode of payment. In the instant case since there is no revenue loss to the Government hence the question of levy of interest U/s 11DD of Central Excise Act, 1944 does not arise. 28. Submissions on invocation of Extended period: The department has issued impugned SCN on 09.05.2014 and thereby invoked the extended period of limitations to cover the period July 2011 to June 2013 (Sugar cess credit last discharged through accumulated credit duri....
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....transactions. iv) Hon'ble CESTAT Bangalore in the matter of Tally Solutions Private Limited V/s Commissioner of Central Excise, Bangalore, 2020 (41) GSTL 520, it is held that show cause notice issued based on records maintained by the assessee hence suppression of facts cannot be alleged. 33. Regardless of the fact, the Noticee had availed the credit of said sugar cess and paid the sugar cess on clearance of refined sugar and collected the said sugar cess from their buyers/ customers which amounted to cascading effect of sugar cess. Thus, the Noticee has contravened the provisions of Notification No. S.O. 102(E), dated 7 - 1 - 2009 , and wrongly recovered from their customers/ Buyers, and thereby the Noticee has contravened the provisions of the Act. Therefore, it appears that wrongly collected sugar cess of Rs 1,94,84,774/- of which they have claimed rebate for Rs 1, 20 ,44,820/- and the remaining amount of Rs 74,39,954/-, which has been not deposited by the Noticee to the Government exchequer is liable to be recovered under section 11D of the Central Excise Act, 1944 read with Section 11 of the Central Excise Act, 1944, along with interest under Section 11DD. 34. The lear....
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....is below : "This appeal has preferred against the order passed by the CESTAT [2007 (218) E.LT. 388 (Tribunal)] holding that Sugar Cess being a duty of excise in terms of Section 3(4) of the Sugar Cess Act, Cenvat Credit Rules are also applicable to Sugar Cess and therefore Cenvat credit taken on Sugar Cess paid as countervailing duty or CVD is proper and the assessee is entitled to the said benefit of Cenvat credit. ------------------------------------------------------------------------- 12. The wordings used in Section 3 of the Act makes it clear that although a cess is levied and collected for the purpose of the Sugar Development Fund Act, 1982, it is in the nature of a duty of excise on all sugar produced by any sugar factory in India. The duly of excise levied under sub-section (1) shall be in addition to the duty of excise eviable on sugar under the Central Excise Act or any other law for the time being in force as is clear from sub-section (2). The way sub-section (2) is worded makes it clear that what is levied and collected as a cess under sub-section (1) of Section 3 is characterized as a "duty of excise levied under "the Central Excise Act". Further, sub-section (4....