TaxTMI 
TaxTMI 
TaxTMI 
2024 (1) TMI 179
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....oal under section 83 of Chapter VII of the Finance Act, 2010 [the 2010 Finance Act] read with the Clean Environment Cess Rules, 2010 [the 2010 Cess Rules], in addition to the central excise duty which was payable @ 6% ad valorem. Clean Energy Cess was renamed as Clean Environment Cess by the 2016 Finance Act. 3. Section 18(1) of the Taxation Laws (Amendment) Act, 2017 [the 2017 Taxation Amendment Act] repealed enactments specified in the third column of the Third Schedule w.e.f. 01.07.2017. Chapter VII of the 2010 Finance Act was also included in the Third Schedule. Thus, on repeal of the 2010 Finance Act w.e.f. 01.07.2017, the 2010 Cess Rules that had been framed under the said Act also stood repealed w.e.f. 01.07.2017. However, a new levy of cess, namely, GST Compensation Cess @ Rs. 400 per M.T. was made leviable w.e.f. 01.07.2017 under the provisions of the Goods and Service Tax (Compensation to States) Act, 2017 [the 2017 Compensation Act]. 4. The appellant claims that it had been paying central excise duty and CEC on the coal removed from the mines till 30.06.2017, and the statutory returns in ER-1 and Form-I were also filed for the month of June 2017. This is not disputed b....
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....ion 83(3) of the 2010 Finance Act; (ii) The contention of the appellant that CEC is leviable on removal of coal as per rule 4 of the 2010 Cess Rules is not correct. The provisions of section 83(3) of the 2010 Finance Act shall prevail over the 2010 Cess Rules. CEC is leviable on the incidence of production of coal, though it is payable on its removal; (iii) The saving clause under section 18(2) of the 2017 Taxation Amendment Act provides that the leviability of CEC accrued on the production of coal lying in stock on 30.06.2017 shall not be affected despite the repeal by section 18(1) of the said Act; and (iv) The appellant failed to file periodical returns under rule 11 of the 2010 Cess Rules and also failed to assess the liability towards CEC on stock of coal as on 30.06.2017. 9. Shri Rajeev Kumar Agarwal, learned counsel appearing for the appellant made the following submissions: (i) Liability to pay CEC did not accrue on 30.06.2017. Hence, saving clause under section 18(2) of the 2017 Taxation Amendment Act would not be applicable. CEC is payable only at the time of removal of coal in terms of rule 4 of the 2010 Cess Rules. It is an admitted position that the demand of ....
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....tion 18(2) the liability that had already accrued and the proceedings for collection of these liabilities would not be affected; (iii) The procedural requirements of assessing the liability under rule 5 of the 2010 Cess Rules and to pay cess at the time of clearance under rule 4 of the 2010 Cess Rules and to file a return under rule 11 will continue in terms of the savings clause contained in section 18(2) of the 2017 Taxation Amendment Act. To support this contention, reliance has been placed on the decision of the Supreme Court in Collector of C. Ex., Hyderabad vs. Vazir Sultan Tobacco Co. Ltd. [1996 (83) E.L.T. 3 (S.C.)]; and (iv) The appellant is not justified in claiming exemption under the notification dated 30.06.2017 as the exemption is only with respect to duty of excise which is leviable under the Central Excise Act. CEC is leviable under the 2010 Finance Act under which CEC leviable as a duty of excise. CEC is, therefore, different from the duties of excise leviable under section 3 of the Central Excise Act, 1944 [the Central Excise Act]. 11. The submissions advanced by the learned counsel for the appellant and the learned special counsel appearing for the departmen....
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.... cess for the purposes specified in sub-section (3), as it may consider necessary. (5) The cess leviable under sub-section (3) shall be in addition to any cess or duty leviable on the goods specified in the Tenth Schedule under any other law for the time being in force. (6) The cess leviable under sub-section (3) shall be for the purposes of the Union and the proceeds thereof shall not be distributed among the States and the manner of assessment, collection, utilisation and any other matter relating to cess shall be such as may be prescribed by rules. (7) The Central Government may, by notification in the Official Gazette, declare that any of the provisions of the Central Excise Act, 1944(1 of 1944), relating to levy of and exemption from duty of excise, refund, offences and penalties, confiscation and procedure relating to offences and appeals shall, with such modifications and alterations as it may consider necessary, be applicable in respect of cess levied under sub-section (3)." 15. By a Notification dated 22.06.2010, the Central Government notified 01.07.2010 as the appointed date for coming into force of the provisions of Chapter VII of the 2010 Finance Act. 16. The T....
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....sed under rule 5 and the interest under sub-rule (4) in the same manner as they are applicable for recovery of any sums payable to the Central Government. Explanation.− For the purposes of this rule, - (i) Cess liability shall be deemed to be discharged only if the amount payable is credited to the account of the Central Government by the specified date; (ii) Where the registered person deposits cess by cheque, the date of presentation of the cheque in the bank designated by the Board for this purpose shall be deemed to be the date on which the cess has been paid subject to realization of the cheque." 21. Rule 11 relates to filing of return and it is reproduced below: "Rules 11. Filing of return. - Every producer shall submit to the Jurisdictional Central Excise Officer, a return in Form-I showing the quantities of specified goods removed during the month in respect of which the payment has been made, the amount paid under rule 6 and other particulars specified in that form enclosing the evidence of payment of cess not later than 10th day of the second month, following the month in which removals were made: Provided that in the case of a producer who has obtained c....
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....or suffered or any right, title, obligation or liability already acquired, accrued or incurred or any remedy or proceeding in respect thereof, or any release or discharge of or from any debt, penalty, obligation, liability, claim or demand, or any indemnity already granted, or the proof of any past act or thing under the repealed enactment; (c) affect any principle or rule of law, or established jurisdiction, form or course of pleading, practice or procedure, or existing usage, custom, privilege, restriction, exemption, office or appointment, notwithstanding that the same respectively may have been in any manner affirmed or recognised or derived by, in or from any enactment hereby repealed; (d) revive or restore any jurisdiction, office, custom, liability, right, title, privilege, restriction, exemption, usage, practice, procedure or other matter or thing not now existing or in force. (3) The mention of particular matters in sub-section (1) shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897, with regard to the effect of repeals." 26. The Third Schedule repeals, amongst others, Chapter VII of the 2010 Finance Act w.e....
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....ates set forth in the said Schedule for the purposes of financing and promoting clean energy initiatives and for funding research in the area of clean energy. 33. Sub-section (4) of section 83 of the 2010 Finance Act provides that the proceeds of the cess levied shall first be credited to the Consolidated Fund of India. Sub-section (5) of section 83 of the 2010 Finance Act provides that the cess shall be in addition to any cess or duty leviable on the goods specified in the Tenth Schedule. The Tenth Schedule includes, amongst others, coal and the rate of duty that has been specified is Rs. 100 per tonne. This was subsequently revised to Rs. 400/- per tonne by the 2016 Finance Act. 34. Rule 4 of the 2010 Cess Rules provides that every producer shall pay the cess leviable on the removal of the specified goods in the manner provided in rule 6. Under rule 5 the producer shall himself have to assess the cess payable on the specified goods. Rule 6 deals with manner of payment. It provides that cess on the specified goods removed from the mine during a particular month shall be paid by the fifth of the second month, following the month in which the removals were made. The Explanation to....
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....ke place and yet the product may not be issued out, utilised, or marketed in which case the scheme of the Act and the Rules tend to show that no excise duty would be collected on the product. For example the glut of a particular article in the market may make it expedient for a manufacturer to hold back his product or financial circumstances may prevent the finished product to be marketed. It is in this context, therefore, that the provisions of Section 3 of the Act and Rules 9 and 49 of the Excise Rules have to be harmonised. Indeed, these provisions complement each other. Section 3 lays down the legislative policy on what products excise duty may be levied. Rule 9 is an injunction on the manufacturer that he has not to remove any excisable goods from the place of manufacture or any specified premises appurtenant thereto, whether for consumption, export or manufacture of any other commodity in or outride such place unless he first pays the excise duty leviable on those goods. Rule 49 is a direction to the excise authorities that the payment of excise duty shall not be demanded until excisable goods are about to be issued out of place or premises specified under Rule 9 or are about....
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....on raised on behalf of the Union of India that the stage of point of time at which the duty is to be levied, by reason or the provisions of the said Act and the rules, is not the point of time of manufacture or production of goods but at a subsequent stage when the goods are soughs to be removed from the factory concerned. It is therefore clear that no demand for payment of duty can be made before the goods are removed or sought to be removed. It is also clear that the rate applicable is the rate prevailing at the time of removal. In view of this position the demand notices are clearly bad." (emphasis supplied) 39. It, therefore, transpires that though cess may be attracted when the article is produced, but removal is the essence of the crystallization of the charge. There has to be removal from the specified place to attract the payment of cess and if there is no removal, there would be no question of payment of cess. 40. Section 18 of the 2017 Taxation Amendment Act, which came into force on 01.07.2017, repeals Chapter VII of the 2010 Finance Act. Thus, section 83 of the Finance Act was repealed w.e.f. 01.07.2017 and consequently, the 2010 Cess Rules, which were framed under s....
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....incurred on the manufacture of sugar in the light of the provisions of section 145A(b) of the Income Tax Act, 1961. The relevant portion of this section is reproduced below: "145A. Method of accounting in certain cases. - Notwithstanding anything to the contrary contained in Section 145, the valuation of purchase and sale of goods and inventory for the purposes of determining the income chargeable under the head "Profits and gains of business or profession" shall be - ***** (b) further adjusted to include the amount of tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation. Explanation - ******" (emphasis supplied) 44. The Bombay High Court held that the expression 'incurred' in section 145A(b) must be construed to mean liability that was actually incurred by the assessee. The issue that arose for consideration before the Bombay High Court was whether in a case where excisable goods are manufactured and lying in stock on the last day of the accounting year, the manufacturer has 'incurred' liability to pay excise duty on the manufactured goods. Th....
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....012 (278) E.L.T. 178 (Guj.)] wherein a similar view, as expressed by the Bombay High Court in Loknete Balasaheb Desai, was expressed. The relevant portions of the judgment are reproduced below: "17. If one reads Section 3(1) of the Excise Act in isolation, it appears to indicate that the charge is levied in Section 3 and the liability stands incurred upon manufacture of excisable goods at the rates set out in First Schedule to the Central Excise Tariff Act, 1985. However, though the opening portion of sub-section (1) states that there shall be levied and collected, there is no other provision for collection in the said section and the manner of collection as well as levy are found in the Rules as prescribed. It may indicate that Section 4 would be a stand-alone provision, but when one reads the said provision it becomes clear that the levy is incomplete, inasmuch as the assessee under the Excise Act is not required to discharge the liability to pay duty levied upon the manufacture of excisable goods, till such goods are removed from the factory premises, or a bonded warehouse. The test to determine as to whether the liability had been incurred or not would be as to whether a corr....
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....the purposes of collection of such impost. A State cannot be interested in a levy which does not result in inflow of revenue to the exchequer. ***** 22. Excise duty is admittedly an indirect levy. The manufacturer does not effectively pay from his own pocket. The duty of central excise is collected by a manufacturer from the purchaser, whether wholesaler or retailer. Hence at the time and place of removal of excisable goods the duty is recovered by the manufacturer from the purchaser and simultaneously paid to Revenue. The point of time of removal of excisable goods is the point of time when the liability to pay central excise duty is incurred resulting in corresponding right under law in the excise department to take steps to effect recovery if the liability is not discharged. Till that point of time liability to pay duty of central excise cannot be stated to have been incurred in law as the same is not due and payable. Reference: Wallace Flour Mills Co. Ltd. v. Collector of Central Excise, Bombay, Division-III, (1990) 186 ITR 440 (SC)= 1989 (44) E.L.T. 598 (S.C.)." (emphasis supplied) 46. The aforesaid decision of the Gujarat High Court in Narmada Chematur Petrochem would s....
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....hat is relevant here. In other words, the rate of duty as well as the valuation of goods shall be the rate and the valuation as on the date of actual "removal". This rule too opens with the expression "excisable goods". 10. Sri Vellapally contended that if the above interpretation is adopted, it may lead to an enigmatic situation. He explains his apprehension thus: the special excise duty is levied only for the period March 1, 1978 to February 28, 1979. Take a case, where the goods are manufactured on or before February 28, 1979 are removed on or after March 1, 1979, what would be the rate of duty [and which would be relevant date for valuation purposes]; the assessee may say that on the date of removal, neither the levy is in force nor are Rules 9 and 9A and, hence, he need not pay any special excise duty on such goods. We do not see any valid basis for this apprehension. In the situation contemplated by Sri Vellapally, the date of removal has to be taken as February 28, 1979. It cannot be otherwise. If Rules 9 and 9A are held inapplicable, it would logically follow that the moment the goods are manufactured, the levy becomes payable and, in the circumstances, the last date of l....