TaxTMI 
TaxTMI 
2024 (5) TMI 4
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce dated 15.04.2014 was issued to the appellant 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 Rul....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... section 136 of the Finance Act, 2001 (14 of 2001); (vi) the Education Cess on excisable goods leviable under 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 incl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Finance Act 2004 and Section 136 of Finance Act 2007 respectively. Therefore these cesses are not duty of excise levied under Section 3 (1) of CEA 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 e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion 91 read with section 95 of the Finance (No. 2) Act, 2004 (23 of 2004); [(via) 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); and] (vii) the additional 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 Hi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of excise leviable on tyres, it came to be introduced in 1978 under various Finance Acts. It was held that the notification could not be read as comprehending the special duty of excise on the date of the notification and came to be levied four years later. This Court also laid down that 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....x 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 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. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hether CENVAT credit availed under Cenvat Credit Rules, 2004 can be utilized for payment of such duty which is not exempted under such Notification. 15.1 Hon'ble High Court held that NCCD is nothing but a duty of Excise and in para 8 of the said judgment the question whether the CENVAT credit can be utilized for payment of NCCD was 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n under Notification No. 32/99-C.E. shall be utilized only for payment of duty on the final product in respect of which exemption under the said notification is availed of. It is clear from this that CENVAT credit of duty paid on inputs shall be utilized only for payment of duty on the final product for which exemption is availed. 12. Rule 3(7) is equally important and this reads as follows : (7) Notwithstanding anything contained in sub-rule (1) and sub-rule (4), - (a) ............... (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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ise on any final product. Therefore, CENVAT credit of NCC duty may also be utilized for payment of any duty of excise on any final product in terms of Rule 3(4) subject to Rule 3(7). 17. Rule 3(7) limits the utilization of CENVAT credit in respect of NCC duty as also other duties mentioned in Rule 3(7)(b). It provides that CENVAT credit in respect of NCC duty and other duties shall be utilized towards payment of duty of excise leviable under various statutes respectively. The use of the word "respectively" in this regard is important inasmuch as it confines the utilization of CENVAT credit obtained 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in vogue. The notification was questioned on the ground that it should have included other duties also. The notification could not have contemplated the inclusion of education cess and secondary and higher education cess imposed by the Finance Acts of 2004 and 2007 in the nature of the duty of excise. The duty on NCCD, education cess and secondary and higher education cess are in the nature of additional excise duty and it would not mean that exemption notification dated 9.9.2003 covers them particularly when there is no reference to the notification issued under the Finance Act, 2001. There was no question of granting exemption related to 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 educatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... duty to the extent of Rs.22,88,86,212/- which includes the Education Cess of Rs.66,66,582/- by using MEIS Scrips, the department by order in original dated 16.06.2020 held that the Education Cess stands unpaid as it cannot be paid through MEIS Scrips. The department thus was of the view that though Customs duty can be paid through MEIS Scrips, the Cess cannot be paid through such Scrips and has to be paid by way of cash only. The department sought to deny the payment of Cess made through MEIS Scrips by relying on the above decision of Hon'ble Apex Court in the case of M/s. Unicorn Industries Ltd. The Hon'ble jurisdictional High Court held that 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 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nal duties under the Act of 1957 and the additional duties of excise under the Act of 1978. It was further held in that judgment that, since there has been no reference to the Finance Act, 2001 by which NCCD was imposed and the Finance Acts of 2004 and 2007 were not in vogue. 21. Therefore, the Hon'ble Supreme Court has negated the plea raised therein in the said Unicorn Industries case, for the specific reason that, since the Finance Act, 2004 and 2007 are post Notification No. 71/2003, Central Excise regime, therefore, that kind of benefit unless and until is specifically included in the notification, such kind of benefit cannot be expected and therefore, it 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 c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for purposes of the Union, a cess to be called the Secondary and Higher Education Cess, to fulfil the commitment of the Government to provide and finance secondary and higher education. (2) The Central Government may, after due appropriation made by Parliament by law in this behalf, utilise, such sums of money of the secondary and Higher Education Cess levied under sub-section (12) of section 2 and this Chapter for the purposes specified in sub-section (1) as it may consider necessary. 129. (1) The Secondary and Higher Education Cess levied under section 126, 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 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 custo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder Finance Act, 2004 and 2007, respectively are to be treated as part of the duty of customs. 25. When that being the statutory declaration made by the Act of Parliament i.e., the Finance Act, 2004 and 2007, we cannot have any different view to state that there were different components. What is the duty to be imposed on the imported goods first be calculated and accordingly, 2% of education cess and 1% of secondary and higher education cess shall be levied and imposed. Hence, when the importer pay the duty, he shall also pay the cess which become part and parcel of the duty of customs. That is the reason why the total amount of Rs. 22,88,86,212/- were paid by the petitioner as duty of customs as well as education cess through the scrips of MEIS. Having accepted the same, though subsequently, in view of 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 clea....