TaxTMI 
TaxTMI 
2024 (8) TMI 1327
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....the Finance Act 2018. 1.1 The brief facts of the case are that Respondent is a SEZ unit in Reliance Jamnagar SEZ. In the said SEZ, the Respondent manufactures Motor Spirit (MS), High Speed Diesel (HSD) and Aviation Turbine Fuel (ATF) which fall under Sub-Headings 27101241, 27101944 and 27101939 respectively of the Fourth Schedule to the Central Excise Act 1944. 1.2 The said goods manufactured in a SEZ are excluded from the charge of Excise Duty (Central Value Added Tax) levied under Section 3 (1) of the Central Excise Act 1944, which reads as follows: "3. (1) There shall be levied and collected in such manner as may be prescribed a duty of excise to be called the Central Value Added Tax (CENVAT) on all excisable goods (excluding goods produced or manufactured in special economic zones) which are produced or manufactured in India as, and at the rates, set forth in the Fourth Schedule" (emphasis supplied) 1.3 Since goods manufactured by the Respondent in SEZ unit are excluded from the charge of the Excise duty levied under said Section 3(1), the Respondent was not paying such Excise duty on the MS, HSD and ATF manufactured by the Respondent SEZ uni....
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.... c) That by Notification No.5/2022-CE dated 30-6-2022, the SAED (Surcharge) on ATF was imposed at the rate of Rs.6/- per liter by amending the Eighth Schedule to the Finance Act 2002, by insertion of Sr. No.4 in the said Eighth Schedule. Accordingly, with effect from 1-7-2022, ATF became liable to SAED at the rate of Rs.6/- per liter. d) That by Notification no.10/2022-CE dated 30-6-2022, partial exemption from AED (Road and Infrastructure Cess) in excess of Rs.1 per liter on MS and HSD, cleared for export, was granted with effect from 1-7-2022, in exercise of powers under Section 5A of the Central Excise Act 1944 read with Section 112 of the Finance Act 2018. Accordingly, with effect from 1-7-2022 the effective rate of AED on MS and HSD manufactured and cleared for export was Rs.1 per liter. e) That by Notification No.19/2022-CE dated 19-7-2022, issued in exercise of powers under Section 5A of the Central Excise Act 1944 read with Section 147 of the Finance Act 2002 and Section 112 of the Finance Act 2018, SAED on MS, HSD and ATF and AED on MS and HSD, when exported from SEZ unit, were exempted with effect from 20-7-2022. f) Based ....
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....D (Road and Infrastructure Cess). 1.8 Show Cause Notice dated 3-10-2023 was issued by the Assistant Commissioner of Central Excise, Rajkot, proposing to reject the said refund application on the ground that SAED (Surcharge) and AED (Cess) were payable on MS, HSD and ATFwith effect from 1-7-2022 under the said Notification no.4/2022-CE dated 30-6-2022, Notification No.5/2022-CE dated 30-6-2022 and Notification no.10/2022-CE dated 30-6-2022 and that it was only with effect from 20-7-2022 that Notification No.19/2022-CE dated 19-7-2022 granted exemption from the SAED (Surcharge) and AED (Cess) to MS, HSD and ATF when exported from SEZ. The Show Cause Notice further contended that the SAED (Surcharge) and AED (Cess) had been self-assessed and paid by the Respondent and that the Respondent should have filed appeal against the same to the Commissioner (Appeals) and that since no such appeal was filed, the Respondent was not entitled to claim refund of the said SAED and AED. 1.9 The Respondent replied to and contested the said Show Cause Notice by their letter dated 13-10-2023, inter alia submitting as follows: a) That the levies of the Surcharge and Cess by the....
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....eing in force as provided in Section 51 thereof. When goods manufactured in SEZ and brought into Domestic Tariff Area are treated as import and thereby subjected to Customs duty, the same cannot at the same time, be treated as having been manufactured in India and be made liable to any form of Excise duty, f) that without prejudice to the aforesaid submissions, in any event, the very issuance of Notification no. 19/2022-CE dated 19-7-2022, exempting SAED (Surcharge) and AED (Cess) on MS, HSD and ATF when exported from SEZ, is an acknowledgment and realization on the part of the Government that the said goods manufactured in a SEZ cannot be made liable to the said Surcharge and Cessand consequently the same must be considered as being clarificatory in nature, g) that the contention that the payment under protest was in nature of self-assessment and that Respondent should have preferred appeal against the self-assessment of the SAED (Surcharge) and AED (Cess) to the Commissioner (Appeals) is totally misconceived since appeal to the Commissioner (Appeals) under Section 35 of the Central Excise Act 1944 lies only against any decision or order passed under ....
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.... Here it should be appreciated that vide notification numbers 04/2022, 05/2022 and 10/2022, the government had imposed the Special Additional Excise Duty and Special Excise Duty under the provisions of export of petroleum products and the specific rate of duties were imposed on the export of these products. So, the duties were properly imposed under the notification by the Government. 2.2 It appears that after few days of the imposition of the duties on export of the petroleum products, the government had taken the stock of the situation. After analysing everything in proper manner, the government has decided to exempt the petroleum products i.e. HSD, MS and ATF from the imposition of Special Additional Excise Duty and Additional Excise Duty, when they have been exported from SEZ. The goods were exempted from these duties from 20.07.2022 and the date was clearly mentioned in the notification itself. So, the intention of the government was clear that the exemption to these duties in SEZ will be applicable from 20.07.2022. So when a specific date has been given in the notification for the implication, there cannot be taken any argument to effect that the exemption should be read a....
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...., 2002 and Additional Excise Duty was imposed under Section 112 of the Finance Act, 2018. It should be appreciated that both these finance Acts are the separate act then the Central Excise Act. The levy has been imposed by these Finance Acts is separate from the levy imposed under the Central Excise Act. These levies are independent and are not subject to Central Excise Act. 2.7 Further it is to submit that new levy can be imposed under the Finance act. Also the rates of the existing levies can be increased. Reliance is placed on the decision of Supreme Court in the case of Madurai Distt. Central Cooperative v/s The Third Income Tax Officer, Madurai dated 28.07.1975. 2.8 Further, reference is invited to the judgement of the Hon'ble High Court of Karnataka in the case of RM Dhariwal (Huf) vs Union of India dated 04.01.2022, whereby he submits that the Hon'ble court held that levy of surcharge i.e. NCCD by way of provision under the Finance Act of 2001 is not open to be questioned. 2.9 In this regard, reliance is also placed on the decision of Hon'ble High Court of Delhi in the case of Orient Papers Mills Limited Vs Deputy Director of Inspection, Customs and Ce....
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....n given to either SAED or AED. In absence of any specific exemption given to SAED and AED, the exemption granted to BED cannot be extended automatically to these duties. 2.15 The issue has already been settled by the Larger Bench of Supreme Court in the case of Unicorn Industries Vs Union of India - 2019 (370) E.L.T. 3 (S.C.), where discussed the exemption to other duties of Excise in scenario where the Basic Excise Duty is exempted and held that when notification exempts basic excise duty, other duties will not be automatically eligible to the same exemption. 2.16 Similar view had been taken by Hon'ble Supreme Court earlier too in case of Union of India VsModi Rubber Ltd 1986 (25) E.L.T. 849 (S.C.) 2.17 Reliance is further placed upon decision of Hon'ble High Court of Karnataka in case of 'Ghodawat Packers LLP Vs. Union of India' {2022(382) ELT 300 Kar)}, where it was observed by the Hon'ble Court- "NCCD is a surcharge and a type of excise duty which can be levied independently of the excise duty as contemplated under the provisions of Fourth schedule to the Central Excise Act, 1944. Thus levy of NCCD in the absence of levy of excise dut....
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....under the Finance Act, 2002 and Finance Act, 2018 and there is no restriction under the SEZ Act for imposing the Excise duty of export of the goods, there is no contradiction and no doubt about the leviability of the Excise duty on the goods cleared for export from SEZ. 2.23 First of all, it is very clear that a duty of Customs would be a duty that has been notified by the Customs Act, 1962 and similarly, a duty of excise would be a duty that has been notified by the Central Excise Act, 1944. Such duties, which have been passed by Legislation, cannot be interpreted to be inter-changed in a generalized manner between Customs and Central Excise. These are two totally different Acts and have to be seen as such. Duty of Excise is levied on the activity of manufacture and collected at the time when the goods are cleared. Hence, levy and collection of the duty are two different events and since the goods have been cleared to the export rather than the Domestic area, the nature of duty cannot be changed to Customs duty. Reliance is placed on the Judgment of Apex Court in case of 'Vazir Tobbaco Company'. 2.24 Further, it appears that the Commissioner (Appeals) has misinterpreted ....
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.... applies to the whole of India, and SEZs, being an integral part of the nation, cannot claim to be separate. In this regard, the reliance is placed on the judgement of the Hon'ble High Court of Gujarat in Essar Steel Limited Versus Union of India 2010 (249) E.L.T. 3 (Guj.). The reliance is also placed on the judgement of the Hon'ble High Court of Judicature for Andhra Pradesh in Tirupati Udyog Ltd Versus Union of India 2011 (272) E.L.T. 209 (A.P.). 2.28 The Commissioner (Appeals) in his order has held that the Notification should be applied retrospectively. He had recorded that there was the continuous policy of the government not to impose any tax on the export undertaken by the SEZ. There was no intention of government to impose duty on SEZ export. That was the reason on realising, the government had issued the exemption notification and waived the duty on the goods exported by SEZ, where the goods exported by the domestic Units were continued to subject of export duty. 2.29 The argument taken by the respondent looks attractive, but fails on merit. First, it was the conscious decision of the government to impose the export duty on the petroleum goods cleared f....
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....f produces an intelligible result. Where the legislative intention is clear from the language, the court should give effect to it and the court should not seek to amend the law in garb of the interpretation. In this regard reliance is placed on the larger bench judgment of Hon'ble Supreme Court in the case of 'Commissioner of Customs, Mumbai Vs Dilip Kumar & Company' (2018 (361) ELT 577 SC). 2.33 Further it is also the settled law that the principles of 'Casus Omissus' cannot be applied by the courts while interpreting the provisions of statute. In this regard, reliance is placed on the decision of Hon'ble Supreme court in the case of 'Padmasundara Rao (dead) and ors Vs State of Tamilnadu and ors (2002 (3) SCC 533) and on the decision of Hon'ble High Court of Madras in the case of The Commissioner of Income Tax Vs TVS Lean Logistics Ltd. 2.34 Commissioner (Appeals) has heavily relied upon the decision of the Hon'ble Supreme Court in the case of Govind Saran Ganga Saran, wherein it was held that for there to be a valid levy, four aspects viz. (i) character or nature of impost attracting the taxable event (ii) person on whom levy is imposed....
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.... favour of the state. In this regard reliance is placed on the larger bench judgment of Hon'ble Supreme Court in the case of 'Commissioner of Customs, Mumbai Vs Dilip Kumar & Company' (2018 (361) ELT 577 SC) (relevant paras 40, 41 & 52). 2.38 In view of the above submissions, the order passed by the Commissioner (Appeals) suffers with the legal infirmities and bad in law, where he has wrongly allowed the appeal filed by the respondent. Hence, the Hon'ble Tribunal is requested to allow the appeal filed by the department against the order-in-appeal and restore the OIO passed by the AC in this matter. 2.39 He placed reliance upon the following judgements, some of which were also discussed in foregoing paras:- • Madurai Distt Central Cooperative Bank Ltd...vs The Third Income-Tax Officer, Madurai Passed by Hon'ble SC in appeal No 1795 of 1970 • All India Fedn. Of Tax Practitioners v UOI - 2007 (7) STR 625 (SC) • 1983(14) ELT 2270 (Kar)- Passed by Hon'ble High Court of Karnataka in the case of British Physical Laboratories India Ltd Vs AC, DRI • 1984(16) ELT 47(Ker)- Passed by Hon'ble High Court ....
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....uting the tax liability. If those components are not clearly and definitely ascertainable and if there is any uncertainty or vagueness about them, levy of tax cannot exist in law. b) If the levy of SAED (Surcharge) under Section 147 of Finance Act 2002 and AED (Cess) under Section 112 of Finance Act 2018 are viewed in isolation on standalone basis, the said levies lack the completeness and certainty in respect of three of the said four components viz. taxable event, person on whom the levy is imposed and Measure. The said Sections therefore, under subsection (3) thereof, expressly refer to and adopt the provisions of the Central Excise Act and Rules relating to levy of Excise duty under the said Act and make the same applicable to levy of the Surcharge and Cess under the said two Finance Acts and thereby give completeness and certainty to all the said components. The provisions of the Central Excise Act relating to levy of Excise duty under the said Act having been made applicable to levy of the Surcharge and Cess under the said two Finance Acts, it would follow that the exclusion of goods manufactured in SEZ from the charge/ levy under the Central Excise Act 1944 wo....
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....tral Excise Act provides that the duty levied shall be collected as prescribed under the Rules and the Rule 4 of the Central Excise Rules 2017 specifies the person on whom the levy is imposed as every person who produces or manufactures any excisable goods. Section 4 of the Central Excise Act specifies the measure of tax as the value of the goods as defined therein, f) Accordingly, the four components of the two taxes (Surcharge and Cess) levied under Sections 147 of the Finance Act 2002 and 112 of the Finance Act 2018 become clear, definite and certain by reason of the adoption under Sections 147 (3) and 112 (3) of the provisions of the Central Excise Act and Rules made thereunder relating to levy and collection of the Excise duty thereunder and by applying the same to the levy and collection of the said Surcharge and cess respectively, g) The result of such application of the provisions of the Central Excise Act and Rules made thereunder relating to levy of the Excise duty to the levy of the said Surcharge and cess is that the scope of levy of the said Surcharge and Cess cannot cover goods manufactured in SEZ since the same are excluded from the char....
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....factured in SEZ are excluded from the scope of levy/ charge of the said SAED (Surcharge) and AED (Cess), the same would not be payable, irrespective of whether the removal from SEZ is for Domestic Tariff Area or for export from SEZ. 3.5 As regards the further argument of learned Authorized representative that it is not open to the Tribunal to declare any provision to be ultra vires, it is submitted that the Tribunal has nowhere in the said decision declared any provision to be ultra vires and the Tribunal has merely on interpretation of the provisions of Section 147 of Finance Act 2002 and Section 112 of Finance Act 2018 held that the SAED (Surcharge) and AED (cess) levied by the said provisions do not cover within their scope, goods manufactured in SEZ. Decision of Five Judges Bench of Hon'ble Supreme Court in the case of Ujagar Prints v UOI - 1988 (38) ELT 535 (SC) clearly supports the Respondent's case: 3.6 Briefly stated, the facts in this case were that the definition of "manufacture" in Section 2 (f) of the Central Excise Act 1944 was widened by Amending Act of 1980 to cover the processes of Bleaching, Dyeing, Printing, Sizing, Mercerizing, etc. Section 3....
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....ods manufactured in SEZ. 3.10 Learned Authorized representative for department sought to rely in this behalf on the decision in Pioneer Silk Mills P. Ltd v UOI - 1995 (80) ELT 507, which has distinguished the said decision of the Hon'ble Supreme Court in Ujagar Prints v UOI. It is submitted that the reliance placed on the decision in Pioneer Silk Mills is totally misplaced. The issue in the said decision was whether the provisions of the Central Excise Act 1944 relating to confiscation of goods and imposition of penalty were borrowed and made applicable by the Additional Duties Act for the purposes of additional duty of excise. It was held by the Hon'ble Court in Pioneer Silk Mills P. Ltd case that when the Additional Duties Act borrowed the provisions of the Central Excise Act 1944 relating to levy and collection, that did not make the provisions of Central Excise Act 1944 relating to confiscation of goods and imposition of penalty applicable for purposes of the Additional duty. The present case is not one relating to confiscation and penalty but relates to levy of duty to which the ratio of decision in Ujagar Prints squarely applies. 3.11 Notification No.5/2022-CE dat....
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....tter of the charge under Section 3(1) of the Central Excise Act 1944. Since goods manufactured in SEZ are excluded from the scope of the charge under said Section 3(1), such goods cannot be subject-matter of surcharge under Section 147 (1) of the Finance Act 2002. 3.15 In support of the submission that a Surcharge is an additional tax in the nature of an increment to what is subjected to a charge in the Principal Act, reliance is placed on the decision of the Hon'ble Supreme Court in the case of Ashok Service Centre and ors v State of Orissa - (1983) 2 SCC 82. In support of his case, he also placed reliance on the following judgments:- • Md. Safi v State of Bengal - AIR 1951 Cal 97 • Sarojini Tea Co P. Ltd v Collector - (1992) 2 SCC 156 • Maheshwari Mills Ltd v UOI- 1992 (58) ELT 9 (Guj) 3.16 It also follows from a conjoint reading of Articles 270 and 271 of the Constitution of India, that a Surcharge is an increase in an existing duty or tax. Article 270 provides that all duties and taxes referred to in the Union List (with a few exceptions which are not relevant for our purpose) shall be levied and collected by the Gover....
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....he levy and collection of the Krishi Kalyan Cess on taxable services, as they apply in relation to the levy and collection of tax on such taxable services under the said Chapter or the rules made thereunder, as the case may be. 3.21 It cannot be contended and it never has been contended by the department that since there is no restriction or exclusion in Section 161 of the Finance Act 2016 about the applicability of Krishi Kalyan cess on services provided in Jammu and Kashmir or on negative list services, it would be open to the department to levy Krishi Kalyan Cess on services provided in Jammu and Kashmir or on negative list of services. The department has never demanded Krishi Kalyan Cess on services provided in Jammu and Kashmir or on negative list of services. This is for the obvious reason that Section 161 (5) of the Finance Act 2016 has adopted and borrowed the provisions of Chapter V of the Finance Act 1994 relating to levy of service tax and made them applicable to levy of Krishi Kalyan Cess. By reason of the provisions of said Chapter V relating to levy of Service tax having been made applicable to levy of Krishi Kalyan Cess, it would follow that whatever is excluded f....
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....tification. Since on an analysis of the provisions of the said Sections 147 and 112, as set out herein above, it is evident and clear that the said goods manufactured in SEZ and removed for export from SEZ are not at all subject to the levy of the said Surcharge and Cess, the question of payment of the said Surcharge and Cess on the said goods manufactured in and removed for export from SEZ does not arise at all. It is wholly material that the said exemption Notification No. 19/2022 purports to exempt the said goods from the said Surcharge and Cess from 20-7-2022. When the said goods manufactured in SEZ are not at all subject to the levy of the said Surcharge and Cess, no exemption Notification for the same is at all required. 3.27 In support of the aforesaid submissions, reliance is placed on the decision of the Hon'ble Supreme Court in the case of CCE v Larsen and Toubro Limited - 2015 (39) STR 913. Alternate Submissions: SEZ Act 2005 is a complete code in itself and has overriding effect on other laws: 3.28 Without prejudice to the aforesaid submissions, even if one takes a view that exception provided in Section 3(1) to goods produced or manufactured in ....
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....hering the intention behind the Governmental action. In any case, there is nothing to suggest that such domestic shortage lasted only for 19 days. In fact, the said facility under Rule 19 to export without payment of duty, which is required in the case of Non-SEZ units only, continued to remain withdrawn even after 19-7-2022, which would, if any cognizance could be taken of the Press Reports, suggest that the domestic shortage in respect of the said goods continued. The very fact that despite such continued domestic shortage, the said exemption Notification was issued in respect of the said goods manufactured in and exported from SEZ, in fact is an acceptance and acknowledgement by the Government that goods manufactured in SEZ cannot be subject-matter of levy of any form of Excise duty. Therefore, the said Notification must be considered to be clarificatory in nature and therefore retrospective. It is made clear that this submission is only in alternative and without prejudice to the primary submission that the said goods manufactured in SEZ are outside the scope of the very levy of the said SAED (Surcharge) and AED (Road and Infrastructure Cess) and therefore no exemption notifica....
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....n Exemption Notification granting exemption from Central Excise duty levied under Section 3 (1) of the Central Excise Act 1944 does not ipso facto result in exemption from the said SAED and AED in absence of specific Notification granting exemption from the said SAED and AED. 3.34 It is submitted that it has never been the case of the Respondent that the goods manufactured in SEZ were exempt from the excise duty levied under said Section 3 (1). For exempting any goods from excise duty by issuance of an exemption Notification, they must first be subject to the charge/ levy of excise duty under said Section 3(1). It has been the specific case of the Respondent that goods manufactured in SEZ were excluded from the charge under said Section 3 (1) and therefore not covered by the charge under said Section 3 (1) and it has never been the case of the Respondent that the goods manufactured in SEZ were exempted by some Notification issued under the Central Excise Act 1944. Consequently, the arguments of the department proceed on an incorrect understanding of the Respondent's case and hence the decisions relied upon by learned Authorized representative in support of such arguments a....
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....nt of duty, against bond/LUT. According to the revenue, this facility having being withdrawn vide Notification No. 2/22-CE dated 30.06.2022, the levy stood attracted. This contention of the Revenue overlooks that the non-levy of ED/SAED/AD was on account of the exception provided for in section 3(1) from the charge of central excise duty to the goods manufactured in the SEZ, and not by virtue of Rule 19 of the CER, 2017. There has been no amendment to section 3(1) and the exception provided therein from the charge of excise duty to goods manufactured in SEZ continues. The amendment to the Rule cannot, by any stretch of imagination, imply levy on SEZ units when the provisions of section 3(1) remained unchanged 3.39 Reliance placed by learned Authorized representative on Notification No.8/2022-CE dated 30-6-2022 is totally misplaced. The said Notification has no relevance whatever to the present case. The very fact that the said Notification grants exemption from the Basic Excise duty levied under Section 3 (1) of the Central Excise Act 1944, itself means that it applies to goods which are covered by the levy/ charge under said Section 3 (1). The very fact that goods manufac....
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....rt of this total income viz. Banking income was granted exemption from payment of income tax under Section 81 (a). The Finance Act 1963 imposed Surcharge on the Residual income of the Co-operative Bank. Accordingly, the Surcharge was on income which was subject to charge under Section 4 of the Income tax and the Surcharge was not on income which was excluded from the charge. The Residual Income for the purpose of Surcharge, however, was so defined that it had the effect of levy of Surcharge on a portion of the Banking income which was exempt. This was challenged by the assessee by contending that Surcharge could not have been imposed on part of the Banking income which was exempt from Income tax. This contention was rejected by the Hon'ble Supreme Court. This decision has no application in the present case since in the present case the goods manufactured in SEZ are not exempted from excise duty but are excluded from the very charge of excise duty and therefore cannot be liable to surcharge as held in Ashok Service Centre. 3.43 The decisions in Associated Cement Co Ltd v Director of Inspection and Orient Paper Mills Ltd v Dy Dir of Inspection- 1982 (10) ELT 247 relied upon by lea....
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....n any manner. There can be no doubt that as held in the said Para 21, a Finance Act can introduce a new distinct charge. That in fact is what Chapter V of the Finance Act 1994 did by introducing Service tax, with which Supreme Court was concerned in that case. However, that is not the issue here. In the present case the SAED (Surcharge) and AED (Cess) imposed by Sections 147 and 112 of Finance Acts 2002 and 2018, respectively are in the nature of additional duties of excise (increment in the existing duty of excise) and the said Sections have borrowed and made applicable the provisions of the Central Excise Act 1944 relating to levy of Central Excise duty to the levy of the said SAED and AED. Such was not the case with Chapter V of the Finance Act 1994 by which Service tax was introduced, with which Supreme Court was concerned in the said case. Reliance placed by Learned AR for department on Proviso to Section 5A of the Central Excise Act 1944 is untenable: 3.46 Learned Authorized Representative for department relied upon Clause (i) of the Proviso to Section 5A (1) of the Central Excise Act 1944, which provides that an exemption Notification issued under Section 5A (1) shall ....
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.... in respect of SEZ unit is correct and if not whether the respondent are eligible for the refund of the duty which has already been paid by the respondent. To buttress the whole issue first it is necessary to read the relevant Statutory Provisions, Notifications and Rules etc. in this regard. Accordingly, Section 147 of the Finance Act 2002 and Section 112 of the Finance Act 2018 are reproduced below:- THE FINANCE ACT, 2002 An Act to give effect to the financial proposals of the Central Government for the financial year 2002-2003. BE it enacted by Parliament in the Fifty-third Year of the Republic of India as follows :- CHAPTER I PRELIMINARY 1. Short title and commencement. - (1) This Act may be called the Finance Act, 2002. (2) Save as otherwise provided in this Act, sections 2 to 116 shall be deemed to have come into force on the 1st day of April, 2002. ------------------------------------------------------------------------------ 147. Special additional excise duty. - (1) In the case of goods specified in the Eighth Schedule, being goods manufact....
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....rliament in the Sixty-ninth Year of the Republic of India as follows :- CHAPTER I PRELIMINARY 1.Short title and commencement. - (1) This Act may be called the Finance Act, 2018. (2) Save as otherwise provided in this Act, sections 2 to 55 shall come into force on the 1st day of April, 2018. ************ NOTES:- 1. As Corrected Vide CORRIGENDA THE FINANCE ACT. 2018 No. 18 OF 2018 Dated 03-04-2018, before it was read as, "[28th March, 2018.] ------------------------------------------------------------------- 112. Road and Infrastructure Cess on excisable goods. - (1)There shall be levied and collected, in accordance with the provisions of this Chapter, for the purposes of the Union, an additional duty of excise, to be called the Road and Infrastructure Cess, on the goods specified in the Sixth Schedule (hereinafter referred to as scheduled goods), being the goods manufactured or produced, at the rates specified in the said Schedule for the purpose of financing infrastructure projects. The (2) cess leviable under sub-section (1), chargeable on the sche....
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....owever, with effect from 01.07.2022 Rule 19 of Central Excise Rules,2017 was amended and as per the amended Rule vide Notification No.02/2022-CE dated 30.06.2022, the goods namely MS, HSD and ATF were excluded from the scope of Rule, 19. Accordingly, it is the contention of the revenue that the export of the said goods also liable for payment of special additional excise duty and additional excise duty on MS, HSD and ATF. By Notification No.04/2022-CE dated 30.06.2022 partial exemption was granted from SAED (surcharge) in excess of Rs.5 per litre and in excess of Rs.12 per litre on HSD cleared for export w.e.f 01.07.2022. Similarly special additional excise duty (surcharge) on ATF was imposed at the rate of Rs.6 per litre by amending the 8th Schedule to Finance Act, 2002. By inception of serial No.4, the said 8th Schedule accordingly w.e.f. 01.07.2022 ATF became liable to SAED at the rate of Rs.6 per litre. As regard the additional excise duty (road and infrastructure cess) partial exemption was granted vide Notification No.10/2022 dated 30.06.2022 in excess Rs.1 per litre on MS and HSD cleared for export. Thereafter, by Notification No.19/2022-CE dated 19.07.2022 the aforesaid dut....
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....; in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 to be levied.- (1) There shall be levied and collected in such manner as may be prescribed,- (a) a duty of excise to be called the Central Value Added Tax (CENVAT), on all excisable goods(excluded goods produced or manufactured in special economic zones) which are produced or manufactured in India as, and at the rates, set forth in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); (b) a special duty of excise, in addition to the duty of excise specified in clause (a) above, on excisable goods (excluding goods produced or manufactured in special economic zones) specified in the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) which are produced or manufactured in India, as, and at the rates, set forth in the said Second Schedule: Provided that the duties of excise which shall be levied and collected on any excisable goods which are produced or manufactured,- ^1 (i) Omitted (ii) by a hundred per cent export-oriented undertaking and brought to any other place i....
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....me class or description- (i) produced or manufactured by different classes of producers or manufacturers; or (ii) sold to different classes of buyers: Provided that in fixing different tariff values in respect of excisable goods falling under sub-clause (i) or sub-clause (ii), regard shall be had to the sale prices charged by the different classes of producers or manufacturers or, as the case may be, the normal practice of the wholesale trade in such goods." From the above Section 3 which is Parent Act for levy of Excise duty clearly provides that the duties of excise to be called as central value added tax shall be levied and collected on all excisable goods which are produced or manufactured in India. However, it clearly eschewed the goods produced or manufactured in Special Economic Zone. The levy of SAED and AED cannot be made in isolation in terms of Section 147 of the Act, 2002 and Section 112 of Finance Act, 2018 without applying the provision of Section 3 of the Central Excise Act as per the mandate given in sub Section (3) of Section 147 and Section 112 of the Finance Act, 2002 and 2018 respectively. Accordingly when we do conjo....
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.... under Section 3(1) thereof, for levy of Additional Sales tax on "Every dealer" and there was no provision restricting the additional sales tax to single point levy. Section 3 (3) of the said Additional Sales Tax Act provided that the provisions of the Orissa Sales Tax Act 1947 (Principal Act) shall, mutatis mutandis apply in relation to the said additional tax as they apply in relation to the tax under the principal Act. The contention on behalf of the State was that since Section 3(1) of the said Additional Sales tax Act, mentioned "Every Dealer" and did not exclude a Dealer whose turnover in a fiscal year was Rs.50,000/- and below, the additional sales tax would be payable by every dealer irrespective of his turnover. It was also contended that since the said Additional Sales Tax Act did not confine the levy to single point levy, it was open to the State to levy the additional sales at multi points. Both the contentions were rejected by the Hon'ble Supreme Court. In Para 17 of the judgment, the Hon'ble Supreme court held that the Additional sales tax was in the nature of a Surcharge over and above what was due and payable by an assessee under the principal Act and therefore the ....
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.... Gujarat High Court in the case of Maheshwari Mills Ltd v UOI- 1992 (58) ELT 9 (Guj), in which the Hon'ble High Court has held that the Additional Duties of Excise (Textiles and Textiles Articles) Act 1978 which imposed additional duty of excise had to be read together with the Central Excise Act 1944 in view of Section 3 (3) of the Additional Duties Act which provided that the provisions of the Central Excise Act 1944 and the rules there under, shall so far as may be apply in relation to levy and collection of the additional duty as they apply in relation to the levy of the excise duty. 4.6 The Revenue has heavily relied upon the exemption Notification No.19/2022-CE dated 19.07.2022 whereby specific exemption was granted to excisable goods when exported from the units located in special economic zone that shows that even the goods manufactured and exported from SEZ for the period of 01.07.2022 to 19.07.2022 was liable to duties of SAED and AED. In this regard we find that before applying the Notification, first the provisions of levy has to be seen which is the foundation for any levy, the foundation of any levy of duties of excise is provided under Section 3 of the Centr....
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....3= 1970 SCR (1) 479= AIR 1970 SUPREME COURT 1453 In view of the above judgments, it is trite law that the subordinate legislation cannot traverse beyond the spirit of the primary legislation. Therefore, even though the Notification No.19/2022-CE dated 19.07.2022 specifically mentioned the exemption for SEZ unit from payment of SAED and AED on MS, HSD and ATF when exported from the SEZ but in the primary legislation i.e. Section 3 of the Central Excise Act read with Section 147 of Finance Act 2002 and Section 112 of Finance Act, 2018 when there is no levy on the SEZ unit as the same was excluded in Section 3 of Central Excise Act 1944, the Notification No.19/2022-CE cannot suggest that there was levy of SAED and AED in respect of MS, HSD and ATF during the period 01.07.2022 to 19.07.2022. It is settled law that when the levy itself lacks, merely by notification, the levy cannot be created. This our view is supported by the Hon'ble Supreme Court judgment in the case of CCE v Larsen and Toubro Limited - 2015 (39) STR 913. In this case the Hon'ble Supreme Court held that there was no charging provision in the Finance Act 1994 levying service tax on Works Contract prior to 1st June 2....
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....a unit in the Special Economic Zone and has manufactured and cleared High Speed Diesel to the DTA, interalia on payment of applicable duties of Customs in terms of Section 30 of the SEZ Act, 2005 (which as a part of Additional duty of customs leviable under Section 3(1) of the Customs Tariff Act, 1975, includes the levy of SAED, RIC and AIDC). The question that we need to deliberate and decide upon is whether the said levy of SAED, RIC & AIDC could be once again imposed and recovered by the Central Excise field formation, as a duty of excise. 4.1 We find it surprise that the Adjudicating Authority who is an integral part of the department of Revenue has conveniently ignored the fact that any goods removed from the SEZ to the DTA are regarded to 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 a....
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.... 4.5 In fact, a similar predicament was considered by the larger Bench of this Tribunal in the case of Kumar Architect Pvt. Ltd Vs. CCE reported in 2013 (290) ELT 372, in respect of clearances made by a 100% EOU to the DTA. The Revenue had in that case urged that education Cess and secondary and higher education cess is to be paid thrice over, when goods are cleared from EOU to the DTA. Once as a part of additional duty under Section 3 (1), the second time as a part of customs duty, since what was to be paid by an EOU was an amount equal to the duty of customs, as if the goods were imported. The third cess was sought to be levied on the premise that EOU being within India the major of the duty was the customs duty however, what was leviable was excise duty and on this Excise duty cess was 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 ....
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....w that a deeming provision has to be given entire place i.e. if the SEZ is deemed to be a territory outside the customs territory and the good cleared to the DTA there from as imports then the removal from the SEZ to the DTA cannot be considered as a normal clearance of manufactured goods within India, especially in light of Section 51 of the SEZ Act which has the effect of the SEZ Act overriding anything in consistent in any other law for the time being in force. The law with regard to the deeming fiction is that 'in case of any deeming fiction in statute, it's full legal effect must be given, one cannot go behind such deeming fiction in law and imagine contrary.' We are therefore of the view that, removal from SEZ to the DTA being an import, the Adjudicating Authority had no justification in ignoring the fact that the removal 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 Cour....
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.... 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. (3) The provisions of the Central Excise Act, 1944 (1 of 1944) and the rules made thereunder, including those relating to assessment, non-levy, short-levy, refunds, exemptions, interest, appeals, offences and penalties shall, as far as may be, apply in relation to the levy and collection of the cessleviable under this section in respect of scheduled goods as they apply in relation to the levy and collection of the duties of excise on scheduled goods under the said Act or the rules, as the case may be. Relevant extracts of Finance Act, 2021: 125. Agriculture Infrastructure and Development Cess on excisable goods. - (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 spec....
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....first component viz., the taxable event, the provisions of the Finance Act are not by themselves sufficient to sustain the levies. It can be seen that while Section 147 of the Finance Act, 2002 prescribes that the duty being levied is on goods manufactured and Section 112 of the Finance Act, 2018 as also Section 125 of the Finance Act, 2021 prescribes that the duty being levied is on goods manufactured or produced. It appears to us that by merely prescribing that the tax is on manufacture, the first component that enters into the concept of tax is not achieved. The charging provision needs to provide the event attracting the levy to tax for example, manufacture or production of goods in a given geographical location or territory. In our view, if the Finance Acts, in question are read on a standalone basis the taxable event has been 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 fou....
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....at the highest of those rates. Explanation 2. - For the purposes of this sub-section, - (i) "hundred per cent. export-oriented undertaking" means an undertaking which has been approved as a hundred per cent. export-oriented undertaking by the Board appointed in this behalf by the Central Government in exercise of the powers conferred by section 14 of the Industries (Development and Regulation) Act, 1951 (65 of 1951), and the rules made under that Act; (ii) "Special Economic Zone" shall have the meaning assigned to it in clause (za) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005). Customs Act, 1962 SECTION 12. Dutiable goods. - (1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under [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-Cha....
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....Provided that the intra-State supply of services shall not include supply of services to or by a Special Economic Zone developer or a Special Economic Zone unit. Explanation 1. - For the purposes of this Act, where a person has, - (i) an establishment in India and any other establishment outside India; (ii) an establishment in a State or Union territory and any other establishment outside that State or Union territory; or (iii) an establishment in a State or Union territory and any other establishment [* * *] registered within that State or Union territory, then such establishments shall be treated as establishments of distinct persons. Explanation 2. - A person carrying on a business through a branch or an agency or a representational office in any territory shall be treated as having an establishment in that territory. 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 liqu....
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.... 4.12. It is evident from a perusal of the charging provisions of the Central Excise Act, Customs Act, Chapter V of Finance Act, etc that they intertwine categorically the taxable event attracting the levy with reference to its territorial coverage. For instance, the Central Excise Act, provides that the Central Excise duty shall be levied and collected on all excisable goods produced or manufactured in India (excluding goods produced or manufactured in Special Economic Zones). Likewise, the Customs Act stipulates that the duty of customs is leviable on goods imported into or exported from, India. On the other hand, Chapter V of the Finance Act 1994 which governed the levy of Service tax provided that tax shall be levied on services provided or agreed to be provided in the taxable territory, the said expression has been defined to mean the whole of India except the State of Jammu and Kashmir. Similarly, the CGST 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 t....
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....ct, between the provisions of the Central Excise Act, and the Rules made thereunder vis-à-vis the Finance Acts, referred to above, the provisions relating to levy and collection of Central Excise duty under the Central Excise Act 1944 and the Rules made thereunder would equally apply to the levy under the relevant Finance Act. In case there is any inconsistency or conflict between the two, the provisions of the Central Excise Act 1944 or the Rules made thereunder would not apply. 4.15. It now needs to be seen whether the provisions of the Finance Act levying SAED, RIC and AIDC under Section 147(1)/112(1)/125(1) would cease to be uncertain and vague with respect to the taxable event if the provisions of the Central Excise Act, 1944 and the Rules made thereunder are applied to the levy and collection to the said duties under the respective Finance Act and further whether there is any inconsistency between the Central Excise Act vis-à-vis the Finance 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, ....
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....rease duty of excise. - (1) Where, in respect of any goods, the Central Government is satisfied that the duty leviable thereon under section 3 should be increased and that circumstances exist which render it necessary to take immediate action, the Central Government may, by notification in the Official Gazette, amend the Fourth Schedule to substitute the rate of duty specified therein in respect of such goods in the following manner, namely :- (a) in a case where the rate of duty as specified in the Fourth Schedule as in force immediately before the issue of such notification is nil, a rate of duty not exceeding fifty per cent. ad valorem expressed in any form or method; (b) in any other case, a rate of duty which shall not be more than twice the rate of duty specified in respect of such goods in the Fourth Schedule as in force immediately before the issue of the said notification : 4.20. It is relevant to note here that normally to amend the tariff is vested only with the Parliament. In the 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 ....
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.... 1944 can be resorted to while construing the provisions governing levy and collection of duty under the three Finance Acts viz: SAED under the Finance Act 2002; RIC under the Finance Act 2018 and AIDC under the Finance Act, 2021. In our view the judgement in the case of Unicorn infact supports the case of the appellant inasmuch as the Apex Court held that while construing the levy and collection provisions with respect to Education cess under the Finance Act, 2004 as also NCCD under the Finance Act, 2001 and Additional Excise duty (Pan Masala and Tobacco Products) under Finance Act, 2005, to which also the provision regarding levy and collection under the Central Excise Act, 1944 and the Rules made thereunder has been made applicable, that provision of Section 5A of the Central Excise Act, 1944 providing for exemption from the levy could have been applied if the Central Government so choose. 4.23. In the case of Unicorn, since there was no exemption issue qua the levy of Education cess, NCCD as also Additional Excise duty (Pan Masala and Tobacco Products) that the exemption issued under the Central Excise Act, was only in respect of Central Excise duty and according....
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....at whether the levy of SAED and AED can be made on the SEZ unit. Therefore the ratio of the above decision is applicable in the facts and issue involved in the present case. 4.10 Without prejudice to the above, we find that the respondent is governed by the SEZ Act, 2005. As per Section 26 of the SEZ Act, 2005, the SEZ unit is entitled for various exemptions. The SEZ unit in India is a territory deemed to be out of India, therefore any goods manufactured in SEZ is not liable for any duty of excise by virtue of exclusion provided under Section 3 (1) (a) of Central Excise Act, 1944. Therefore, if at all any duty is leviable it is custom duty either for clearance in DTA or for export. The said Section 26 is reproduced below:- "SECTION 26. Exemptions, drawbacks and concessions to every Developer and entrepreneur. (1) Subject to provisions of sub-section (2), every Developer and the entrepreneur shall be entitled to the following exemptions drawbacks and concessions, namely (a) exemption from any duty of customs, under the Customs Act 1952 (52 of 1962) or the Customs Tariff Act, 1975 (51 of 1975) or any other law for the time being in force on goods imported i....
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....n if it is assumed that the goods cleared from the SEZ is liable to any duty which is equal to the custom duty, these duties of SAED and AED on export of goods from SEZ are exempted in view of the above section 26 read with Section 30 of SEZ Act, 2005. The provision of Section 147 of Finance Act, 2002 and Section 112 of the Finance Act, 2018 shall not have effect over the SEZ Act. The relevant Section 51 of the SEZ Act, 2005 reads as under:- "SECTION 51. Act to have overriding effect. (1) The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act." 4.11 From the plain reading of the above Section 51 of SEZ Act, 2005, it makes clear that the provision of SEZ Act shall have overriding effect on any law or Act in respect of the provision which is inconsistent with the provision of SEZ Act. In the present case, the SEZ Act exempts all duties in respect of the goods manufactured in the SEZ whereas the Revenue contented that Section 147 of Finance Act 2002 and Section 112 of Finance Act, 2018 are independent....