TaxTMI 
TaxTMI 
2024 (5) TMI 4
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....llant proposing to recover the wrongly utilized credit along with interest and also for imposing penalty. After due process of law the original authority confirmed the demand along with interest and imposed the penalty of Rs.1,00,00,000/- (Rupees one crore only) under Rule 15 (1) of Cenvat Credit Rules, 2004. Aggrieved by such order the appellant has filed the present appeal. 2. The Ld. Counsel Ms. Charulatha Rajaji, appeared and argued for the appellant. It is submitted that the case of the department is that appellant wrongly utilized Cenvat Credit availed on Basic Excise Duty (BED) for payment of EC and SHEC in violation of Rule 3 (7)(b) of Cenvat Credit Rules, 2004. It is explained by the Ld. Counsel that in terms of Rule 3 of Cenvat Credit Rules, 2004 a manufacturer or producer of final products or a provider of output service is allowed to take credit of duty of excise specified in the First schedule in the Excise Tariff Act leviable under the Excise Act. As per Rule 3 (4) of Cenvat Credit Rules, 2004, the Cenvat Credit may be utilized for payment of any duty of Excise on any final product. It is pointed out by Ld. Counsel that Rule 3 (4) uses the words 'any duty of Excise'.....
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.... section 91 read with section 93 of the Finance (No. 2) Act, 2004 (23 of 2004); [(via) 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);] 4.1 It is submitted that the appellant as a manufacturer has availed Cenvat Credit of the Basic Excise Duty. Though there is no error in the credit availed, the appellant cannot utilize the credit availed on Basic Excise Duty for payment of Education Cess and Secondary / Higher Education Cess. This is because Rule 3(4) says that the credit availed can be utilized for payment of 'any duty of excise'. Education Cess and Secondary /Higher Education Cess are not duties of excise levied under Central Excise Act, 1944. Section 2(A) of Central Excise Act 1944 reads as under:- 8 [2A. References of certain expressions.- In this Act, save as otherwise expressly provided and unless the context otherwise requires, references to the expressions "duty", "duties", "duty of excise" and "duties of excise" shall be construed to include a reference to "Central Value Added Tax (CENVAT)".] 5. It is argued by the LR. AR that the credit availed on Basic Excise Duty ca....
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....EA 1944. 10. The relevant Section 91 and 93 of Finance Act 2004 and 2007 under which Education Cess is levied, read as under : 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 universalised quality basic education. (2) The Central Government may, after due appropriation made by Parliament by law in this behalf, utilise, such sums of money of the Education Cess levied under Sub-section (11) of Section 2 and this Chapter for the purposes specified inSub-section (1), as it may consider necessary. 93. Education Cess on excisable goods.- (1) The Education Cess levied under Section 91, in the case of goods specified in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), being goods manufactured or produced, shall be a duty of excise (in this section referred to as the Education Cess on excisable goods), at the rate of two per cent, calculated on the aggregate of all duties of excise (includi....
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....tional duty of excise leviable under [section 85 of the Finance Act, 2005 (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 manufa....
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....hat the presumption is that when the Central Government issues a notification granting exemption from payment of excise duty under Rule 8(1) of Rules of 1944, the Central Government would have considered whether exemption should be granted and if so, to what extent and can only be with reference to the duty of excise which is then leviable, not a duty to be imposed in future. This Court in Modi Rubber Limited (supra) strongly repelled the argument that it would cover the duties to be imposed in the future not prevailing at the relevant time thus: "8. Moreover, at the date when the first notification was issued, namely, August 1, 1974, there was no special duty of excise leviable on tyres. It came to be levied on tyres with effect from the financial year 1978 under various Finance Acts enacted from year to year. It is therefore difficult to understand how the expression "duty of excise" in the notification dated August 1, 1974 could possibly be read as comprehending special duty of excise which did not exist at the date of this notification and came to be levied almost four years later. When special duty of excise was not in existence at the date of this notification, how could th....
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....al 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 notification must cover specifically the duty exempted. When a particular kind of duty is exempted, other types of duty or cess imposed by different legislation for a different purpose cannot be said to have been exempted. 42. The decision of larger bench is binding on the smaller bench has been held by this Court in several decisions such as Mahanagar Railway Vendors' Union v. Union of India & Ors. (1994) Suppl. 1 SCC 609, State of Maharashtra & Ors. v. Mana Adim Jamat Mandal, AIR 2006 SC 3446 and State of Uttar Pradesh & Ors. v. Ajay Kumar Sharma & Ors. (2016) 15 SCC 289. The decision rendered in ignorance of a binding precedent and/or ignorance of a provision has been held to be per incuriam in Su....
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....discussed and held in favour of assessee. The relevant paragraph reads as under:- 8. The second part of the substantial question of law would now arise, namely, whether CENVAT credit can be utilized towards payment of NCC duty under the CENVAT Credit Rules. 9. In this regard it is necessary to go through the CENVAT Credit Rules, particularly Rule 3(4) and Rule 3(7) thereof. 10. Rule 3(1) provides that a manufacturer or producer of a final product shall be allowed to take CENVAT credit of the NCC duty leviable under Section 136 of the Finance Act, 2001. To this extent there is no dispute between the parties. 11. Rule 3(4) of the CENVAT Credit Rules is important and this reads as follows : (4) The CENVAT credit may be utilized for payment of - (a) any duty of excise on any final product; or (b) an amount equal to CENVAT credit taken on inputs if such inputs are removed as such or after being partially processed; or (c) an amount equal to the CENVAT credit taken on capital goods if such capital goods are removed as such; or (d) an amount under sub-rule (2) of rule 16 of Central Excise Rules, 2002; or (e) service tax on any output service : Provided that while pay....
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................ (b) CENVAT credit in respect of, - (i) ................ (ii) the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001); (iii) ............... (iv) ............... (v) ................ (vi) ............... shall be utilized only towards payment of .......... the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001, ......... respectively, on any final products manufactured by the manufacturer ............. (words not necessary are deleted) Rule 3(7) provides that notwithstanding anything contained in sub-rule (1) and sub-rule (4), CENVAT credit in respect of NCC duty shall be utilized only towards payment of the NCC duty under Section 136 of the Finance Act, 2001 on any final product manufactured by the manufacturer. 13. Insofar as the assessee is concerned the contention urged was that CENVAT credit in respect of NCC duty can be utilized only for payment of NCC duty. But this does not mean that CENVAT credit on basic excise duty cannot be utilized for payment of NCC duty on the final product. Simply put, the contention is that payment of NCC duty through utilization of C....
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....ined to a particular statute and for utilization for payment of duty under that statute only. The converse, however, does not follow. That is to say that merely because CENVAT credit in respect of NCC duty can be utilized only for payment of NCC duty, it does not follow that any other credit of duty cannot be utilized for payment of NCC duty. 18. This being the position, in our opinion the Commissioner of Central Excise at Dibrugarh was in error in coming to the conclusion that CENVAT credit of basic excise duty cannot be utilized for payment of NCC duty on the final product. 19. Under the circumstances the second part of the substantial question of law must be answered in the affirmative and it must be held that while CENVAT credit of NCC duty can be utilized under the CENVAT Credit Rules only towards payment of such NCC duty, CENVAT credit obtained from other sources can be utilized for payment of NCC duty on the final product. 20. The reference is answered accordingly. 21. We may note that a preliminary objection was raised about the maintainability of the appeal, but in the view that we have taken, it is not necessary to decide that issue. 15.2 The adjudicating authori....
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.... cess was not in vogue at the relevant time imposed later on vide Section 91 of the Act of 2004 and Section 126 of the Act of 2007. The provisions of Act of 1944 and the Rules made thereunder shall be applicable to refund, and the exemption is only a reference to the source of power to exempt the NCCD, education cess, secondary and higher education cess. A notification has to be issued for providing exemption under the said source of power. In the absence of a notification containing an exemption to such additional duties in the nature of education cess and secondary and higher education cess, they cannot be said to have been exempted. The High Court was right in relying upon the decision of threeJudge Bench of this Court in Modi Rubber Limited (supra), which has been followed by another threeJudge Bench of this Court in Rita Textiles Private Limited (supra). 15.3 It can be seen that in the case of M/s Unicorn Industries, the issue under consideration was whether, the exemption granted by Notification No.71/2003 - CE dated 09.09.2003 (which is an area-based exemption for north-eastern states) would also apply to NCCD which is in the nature of a duty of excise. The Hon'ble Apex Cou....
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....t the Education Cess / Secondary Higher Education Cess being duty of Excise, there is no bar in making the payment of above Cess through MEIS Scrips which is in accordance with the Board's Circular No.02/2020 dated 10.01.2020. The relevant part of the decision of Hon'ble jurisdictional High Court is reproduced as under:- 18. Insofar as the factual matrix as has been projected by the petitioner is concerned, there could be no much controversy, as the petitioner had imported RBD Palmolein under 10 warehouse bills of entry and 52 bills of entry, for which, whatever the duty imposed against him had been paid, of course, by using the scrips issued under MEIS. This is an acceptable method for debiting the duty by using the credit scrips under MEIS. While paying such duty, using the scrips, the petitioner had paid the entire duty, which includes the education, secondary education or higher education cess to the total amount of Rs. 22,88,86,212/-, that was accepted and the clearance of the goods had also been given by the Customs. Subsequently, the Customs department has come forward to issue a show cause notice on the ground that, while paying the duty by using the scrips, the petitione....
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....was negated. 22. Here in the case in hand, it is no doubt that, the exemption Notification No. 24/2015 is dated 8-4-2015 i.e., well after the Finance Act, 2004 and 2007. In the 2004 Finance Act, Section 91 deals with education cess and Section 93 made it clear that, the education cess levied under Section 91 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. Therefore, insofar as the Central Excise is concerned, the education cess imposed under Section 91 of the Finance Act, 2004 was to be treated as a duty of excise, in view of Section 93. Similarly, a provision is available under Section 94 of the very same Finance Act, 2004, which reads thus : "94. Education Cess on imported goods. - (1) The Education Cess levied under section 91, in the case of goods specified in the First Schedule to the Customs Tariff Act, 1975, being goods imported into India, shall be a duty of customs (in this section referred to as the Education Cess on imported goods), at the rate of two per cent., calculated on the aggregate of duties of customs which are levied and collected by the Central Gov....
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.... the Secondary and Higher Education Cess on imported goods), at the rate of one per cent., calculated on the aggregate of duties of customs which are levied and collected by the Central Government in the Ministry of Finance (Department of Revenue), under section 12 of the Customs Act, 1962 and any sum chargeable on such goods under any other law for the time being in force, as an addition to, and in the same manner as, a duty of customs, but not including - (a) the additional duty referred to in sub-section (5) of section 3 of the Customs Tariff Act, 1975; (b) the safeguard duty referred to in sections 8B and 8C of the Customs Tariff Act, 1975; (c) the countervailing duty referred to in section 9 of the Customs Tariff Act, 1975; (d) the anti-dumping duty referred to in section 9A of the Customs Tariff Act, 1975; and (e) the Education Cess chargeable under section 94 of the Finance (No. 2) Act, 2004 and Secondary and Higher Education Cess on imported goods. (2) The Secondary and Higher Education Cess on imported goods shall be in addition to any other duties of customs chargeable on such goods, under the Customs Act, 1962 or any other law for the time being in force and ....
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.... the notifications, if the Customs Department come forward to take a stand that the mode of payment of the education cess even though being part of the customs duty, shall not be on the same line by using the scrip, such kind of payment can be insisted upon, provided only in future cases and not in the cases where it has already been paid and where the goods have been cleared. This was exactly been made in execution by Circular No. 2/2020, dated 10-1-2020. 26. When such a circular was issued by the Customs Department and the same having been implemented in respect of various people like the petitioner, the benefit of the said circular cannot be denied to the petitioner on the alleged reason that, the education cess or the higher and secondary education cess being a different component cannot be treated as customs duty or additional customs duty and therefore, the benefit conferred under Clause 11 of the said circular cannot be made available to the petitioner. The said view taken by the respondent/Customs Department, in the considered opinion of this Court, in view of the aforestated legal position, is untenable and unacceptable. 27. The quoting of the Hon'ble Supreme Court jud....