TaxTMI 
TaxTMI 
2024 (2) TMI 1419
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....he Special Economic Zone (SEZ) and is over and above the duties of Customs already discharged at the time of removal to the DTA in terms of Section 30 of the SEZ Act, which as a part of Additional duty under Section 3(1) of the Customs Tariff Act, includes SAED, RIC as also AIDC, being Additional duties equal to the duty of excise leviable on like articles for the time being produced or manufactured in India. 1.2 The adjudicating authority has vide Order in Original No.RAJ-EXCUS000-COM-002-2023-24 dated 14-6-2023, being impugned in the present proceedings, confirmed the demand for levy and recovery of Excise duty under Section 11A read with Section 147 of Finance Act, 2002, Section 112 of Finance Act, 2018 and Section 125 of Finance Act, 2021 in the form of SAED, RIC and AIDC respectively alongwith interest thereon under Section 11AA and penalty under Rule 28 of the Central Excise Rules, 2017. This demand for Central Excise Duty has been confirmed over and above what has already been assessed and paid in terms of Section 30 of the SEZ Act, 2005 on removal of HSD from the SEZ to the DTA by rejecting the appellant's contention to the effect that the additional duty recovered under....
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....ion 3 of the Central Excise Act, 1944 stipulates that the levy and collection of Central Excise duty would not apply to goods produced or manufactured in Special Economic Zones. The said exclusion provided for in Section 3 of the Central Excise Act, 1944 equally apply to the levy under the Finance Acts in question. (d) SAED in terms of Section 147 of the Finance Act, 2002 was levied as a surcharge while RIC levied under Finance Act, 2018 and AIDC under the Finance Act, 2021 were levied as additional duty of excise. Since the basic excise duty, to which these duties were a surcharge or an additional duty, itself was not leviable as the Central Excise Act itself does not apply to goods manufactured in SEZ, the said surcharge or additional duty could also not have been levied, as the same were to be levied in addition to any other duties of excise chargeable under the Central Excise Act or any other law for the time being in force. (e) SEZ is a sui generis enclave, which is outside India for the purposes of taxation as is evident from Section 30 of the SEZ Act, 2005 read with Rule 47/48 of the Special Economic Zone Rules, 2006 which envisages that clearance from the ....
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....as having been imported into the DTA and accordingly in terms of Section 30 of the SEZ Act, subjected to duties of customs, including anti dumping duty, countervailing duty, and safeguard duty under the Customs Tariff Act, 1975. It is undisputed that the HSD in question has been subjected the levy of additional duty under Section 3 (1) of the Customs Tariff Act, which is equal to the Excise duty for the time being leviable on like article, produced or manufactured in India. As a part of the said additional duty under Section 3(1) of the Customs Tariff Act, the amount leviable in respect of SAED, RIC and AIDC under respective Finance Acts, has already been levied and collected. 4.2 Faced with the challenge of justifying how a clearance which is regarded as an import into India and applicable customs duties recovered on the same could be subjected to a levy of Central Excise duty in addition to additional duty under Section 3(1) of Customs Tariff Act, the Adjudicating Authority has in para 3.4.5.1 and 3.4.5.2 concluded that "............. consequently, it is safe to conclude that the clearance from the SEZ unit to the DTA is normal clearance of manufactured goods within India i.e.....
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....as required to be discharged. The Larger Bench rejected this contention of the Revenue on various counts, one of which being that the duty payable on goods cleared from an EOU to the DTA as to be on Par with the duties payable on goods imported from abroad into the country. It was held that the interpretation suggested by the Revenue would have the effect of goods cleared from the EOU to the DTA suffering a higher duty vis-a-vis that leviable on import of goods into the country. Such an interpretation was held to be clearly at odds with the principle that duty is payable on goods cleared into DTA from 100% EOU should be on par with duty leviable on goods imported into the country from abroad. 4.6 The ratio laid down by the Larger Bench of this Tribunal applies in all force to the present factual situation also, in as much as an SEZ is deemed to be a territory outside the customs territory of India for undertaking authorized operations. It is for this reason that on clearances from the SEZ to the DTA, duties of customs as leviable on such goods when imported into India is a required to be discharged, this being the case there cannot be any logic or rational in requiring the SEZ t....
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....moval from SEZ to the DTA had already suffered additional duty under Section 3(1), which included the duties leviable under the Finance Acts and there was no justification in once again seeking to recover the very same amount separately as a duty of excise. 4.8. Notwithstanding the above, we also find that applying the ratio laid down by the Apex Court in the case of Govind Saran Ganga Saran Vs. Commissioner of Sales Tax 1985 SUPP (SCC) 205 the levy of SAED, RIC and AIDC under the relevant Finance Acts, cannot be given effect to without the support and reference to the provisions of the Central Excise Act, 1944 and the Rules made thereunder relating to levy and collection, as made applicable in terms of Section 147(3)/112(3)/125(4) of Finance Acts 2002/2018/2021 respectively. We will first deal with this aspect as it goes to the very fulcrum of the proceedings initiated against the Appellant. For doing so we are extracting herein below the relevant provisions of the Finance Act, 2002, 2018 and 2021. Relevant extracts of Finance Act, 2002: 147. Special additional excise duty . - (1) In the case of goods specified in the Eighth Schedule, being goods manufactured, there....
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.... - (1) There shall be levied and collected, in accordance with the provisions of this section, for the purposes of the Union, an additional duty of excise, to be called Agriculture Infrastructure and Development Cess, on the goods specified in the Seventh Schedule (hereinafter referred to as scheduled goods), being the goods manufactured or produced, at the rates specified in column (3) of the said Schedule, for the purposes of financing the agriculture infrastructure and other development expenditure. (2) The Central Government may, after due appropriation made by Parliament by law in this behalf, utilise such sums of money of the Agriculture Infrastructure and Development Cess levied under this section for the purposes specified in sub-section (1), as it may consider necessary. (3) The cess leviable under sub-section (1), chargeable on the scheduled goods, shall be in addition to any other duties of excise chargeable on such goods under the Central Excise Act, 1944 (1 of 1944), or any other law for the time being in force. (4) The provisions of the Central Excise Act, 1944 (1 of 1944), and the rules and the regulations made thereunder, including those r....
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....een prescribed in an incomplete manner, inasmuch as, merely specifying that the levy is on manufacture or production is not enough, it also needs to be specified that the levy would be attracted when the production or manufacture takes place at a particular location, territory, etc., failing which the nature of levy is vague and uncertain and falls foul of the criteria laid down by the Apex Court in the case of Govind Saran Ganga Saran (supra). 4.11. It will be relevant to compare the charging provision of the aforesaid Finance Acts vis-à-vis the charging provision under the Central Excise Act, 1944, the Customs Act, 1962, Service Tax law as provided for in Chapter V of the Finance Act, 1994, as also the provisions of the levy of Goods and Services Tax under the Central Goods and Services Tax Act, 2017 and as also the Integrated Goods and Services Tax Act, 2017 and see if they define the taxable event with reference to the location/territory. For ease of comparison we are extracting the charging provision under the Central Excise Act, 1944, the Customs Act, 1962, Service Tax law as provided for in Chapter V of the Finance Act, 1994, as also Central Goods and Services Tax ....
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....[the Customs Tariff Act, 1975 (51 of 1975)], or any other law for the time being in force, on goods imported into, or exported from, India. [(2) The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government.] Service Tax-Chapter V of Finance Act, 1994 SECTION [66B. Charge of service tax on and after Finance Act, 2012. -There shall be levied a tax (hereinafter referred to as the service tax) at the rate of [fourteen per cent.] on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed.] (52) "taxable territory" means the territory to which the provisions of this Chapter apply; SECTION 64. Extent, commencement and application. - (1) This Chapter extends to the whole of India except the State of Jammu and Kashmir. (2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. (3) It shall apply to taxable services provid....
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....ory. Integrated Goods & Services Tax Act, 2017 SECTION 5. Levy and collection. - (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 of the Central Goods and Services Tax Act and at such rates, not exceeding forty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person : Provided that the integrated tax on goods [other than the goods as may be notified by the Government on the recommendations of the Council] imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 (51 of 1975) on the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962 (52 of 1962). SECTION 7. Inter-State supply. - (1) Subject to the provisions of section 10, supply of g....
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....and IGST Act also prescribe the levy is on intra-state/inter-state supply of goods or services or both. As to what constitutes intra-state/inter-state has been stipulated in Section 7 and 8 of the IGST Act. It is thus evident and elementary that every Act has to stipulate the taxable event attracting the levy. If Section 147(1) of the Finance Act, 2002, Section 112(1) of the Finance Act 2018 and Section 125(1) of the Finance Act, 2021 are read on a standalone basis, they will fall foul of the requirement of prescribing the taxable event as they do not prescribe that the production or manufacture has to happen in any particular location. In the absence of such a prescription the levy cannot be given effect to, as the taxable event itself is uncertain and vague. 4.13. It appears to us that to obviate any challenge to the levy being vague and uncertain the legislature has consciously in sub-section 3 of Section 147 of the Finance Act, 2002, Sub-section 3 of Section 112 of Finance Act 2018 and Sub-section 4 of Section 125 of the Finance Act, 2021 stipulated that the provision of the Central Excise Act 1944 and the Rules made thereunder shall, as far as may be apply in relation to le....
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....nance Act, so as to rule out the application of the provision of the Central Excise Act and the Rules made thereunder. 4.16. To us it appears that if the taxing event provided under the Central Excise Act, being production or manufacture in India, excluding the production or manufacture in Special Economic Zone is applied to the charging provisions under Section 147(1)/112(1)/125(1) of the Finance Act, 2002, 2018 and 2021 respectively, then, the taxable event under the said Finance Acts would not be vague and unascertainable and would not fall foul of the test laid down in the case of Govind Saran Ganga Saran (supra). 4.17. In our view the levy under Section 147(1)/112(1)/125(1) of the Finance Act, 2002, 2018 and 2021 respectively, applies to goods manufactured or produced in India, excluding goods produced or manufactured in the Special Economic Zones. This is the only way that the said charging sections can be made operational and effective, by reading in the provisions relating to levy and collection provided for under the Central Excise Act, 1944 and the Rules made thereunder. 4.18. We find that the adjudicating authority has not assigned any reason in the impugned ord....
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.... normal course the 8th Schedule to the Finance Act could not have been amended by the Central Government by issuing a Notification. There is also no provision to this effect directly under Section 147 of Finance Act, 2002/Section 112 of Finance Act, 2018 and Section 125 of Finance Act, 2021. It is only by virtue of the provision relating to levy and collection under the Central Excise Act and the Rules made thereunder, which have been made applicable to levy and collection under the Finance Act that the Central Government has been able to by virtue of Section 3B of the Central Excise Act, 1944 amend the 8th Schedule to the Finance Act, 2002 and increase the rate of SAED on ATF. There is absolutely no answer that the Revenue has to this submission. 4.21. We find that the Respondent has in the impugned order proceeded on a tangent by referring to Central Excise Laws (Amendment and Validation) Act, 1982 to contend that if under any Central Law, the levy and collection of the duty of excise is in terms of the provision of the Central Excise Act, 1944, then the exemption provided for in the Central Excise Act, 1944 would not ipso facto apply to the levy of duty of excise under the ot....