TaxTMI 
TaxTMI 
2025 (3) TMI 1522
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....roduction Cess ("RE Cess" and/or "PE Cess"), Primary Education Cess, ("PED Cess"), PWD Road Cess, ("Road Cess"), Asansol Mines Board of Health Cess ("Health Cess"). On the ground that these components are not excludible, the Dept issues 11 periodical Show Cause Notices for the period March 2011 to June 2017. After due process of law, the Adjudicating Authority passed 6 Orders-in-Original, confirming the Excise Duty and interest thereon along with penalty. Being aggrieved by the impugned Orders-in-Original, the appellant has filed the present Appeals before the Tribunal. 2. The Ld. Counsel, appearing on behalf of the appellant takes a preliminary stand towards the delayed adjudication and passing of the Orders in Original, on the following grounds : 2.1 At the outset, it is submitted that recently on 25.11.2024 the Principal Bench of Hon'ble CESTAT at New Delhi in the case of Kopertek Metals Pvt Ltd vs. Com of CGST, New Delhi (Final Order no. 59511-59720 of 2024 in Excise Appeal no. 52178 of 2022) has held that where the adjudication orders have not been passed within the timeline as prescribed in Section 11A(11) of the CEA, the same cannot be legally sustained. 2.2 The pro....
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.... by issuing the impugned SCNs. 3.3 The Appellant, in the adjudication proceedings had relied on the Hon'ble Seven Judges judgment of the Supreme Court in India Cement Limited v State of Tamil Nadu, (1990) 1 SCC 12 ("India Cement") to contend that Royalty is the nature of "tax" and therefore not includible in transaction value. The Appellant further submitted that SED is recovered as a "duty of excise" and therefore not includible in transaction value. Further, all other levies on which demand has been raised were in the nature of "tax" and hence not includible. It was submitted during the adjudication proceedings that the decision of the Hon'ble Supreme Court in the case of India Cements (supra) wherein it was held that royalty is a tax was pronounced by a Seven Judges Bench whereas the judgement in Kesoram Industries was pronounced by a Five Judges Bench and therefore the Larger Bench judgment in India Cement's case would be binding on all the authorities below. 3.4 The Ld. Commissioner in his adjudication orders observed that Royalty and other levies are not "taxes" and therefore includible in the transaction value. With respect to Royalty, reliance has been placed by the L....
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....odi Bohra Community v State of Maharashtra, (2005) 2 SCC 673. 3.7 It is submitted that this judgment was pronounced on 30th March 2011 (before the issuance of the SCN's impugned in the present appeals) and duly noted that a Bench of smaller quorum, if it doubts the judgment of the Bench of Larger quorum, it has to request the Chief Justice of the Hon'ble Supreme Court to place the matter before a Larger quorum than the Bench whose decision has come up for consideration and doubted. 3.8 The Ld. Adjudicating Authority neither considered the judgment in case of Mineral Area Development Authority and Ors., (2011) 4 SCC 450 nor the judgment of judgment of Central Board of Dawoodi Bohra Community v State of Maharashtra, (2005) 2 SCC 673 relied therein. 3.9 In Central Board of Dawoodi Bohra Community (supra), the Five Judges Bench of the Hon'ble Supreme Court explained in detail the course available to the Smaller Bench of the Supreme Court in case it doubts the view taken by the Larger Bench. The relevant observations made in Para 12 of the judgment are reproduced hereinunder: 12. Having carefully considered the submissions made by the learned Senior Counsel for the par....
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....h May 1962 the Ld. Three Judges Bench of the Hon'ble Supreme Court gave paramount importance to the principle of judicial discipline and held that any notice issued by an Authority signifying the launching of proceedings contrary to the law laid down by the High Court would be invalid and the proceedings themselves would be without jurisdiction. The relevant observations made in Para 31 are reproduced hereunder: Section 167(8) of the Sea Customs Act can be invoked only if an order issued under s. 3 of the Act was infringed during the course of the import or export. The division Bench of the High Court held that a contravention of a condition imposed by a licence issued under the Act is not an offence under s. 5 of the Act. This raises the question whether an administrative tribunal can ignore the law declared by the highest court in the State and initiate proceedings in direct violation of the law so declared. Under Art. 215, every High Court shall be a court of record and shall have all the powers of such a court including the power to punish for contempt of itself. Under Art. 226, it has a plenary power to issue orders or writs for the enforcement of the fundamental righ....
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.... a "Tribunal" subject to the supervisory jurisdiction of this court under article 227 of the Constitution. Hence, he is bound to obey the law declared by this court. The apex court of the country in no uncertain terms held that the law declared by a High Court is binding on all subordinate courts and Tribunals within the territory to which it exercises the jurisdiction. In Bhopal Sugar Industries Ltd. v. ITO [1960] 40 ITR 618 (SC), the Income-tax Officer (subordinate authority) refused to carryout clear and unambiguous directions of the Income-tax Appellate Tribunal (superior authority). Deprecating it, their Lordships of the Supreme Court observed (page 622): "Such refusal is in effect a denial of justice, and is furthermore destructive of one of the basic principles in the administration of justice based as it is in this country on a hierarchy of courts. If a subordinate Tribunal refuses to carry out directions given to it by a superior Tribunal in the exercise of its appellate powers, the result will be chaos in the administration of justice...." 3.14 In this context they rely on the judgment of the Hon'ble Bombay High Court in M/s United Sprits Limited v St....
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....t would apply in the facts of this case. Merely because the Supreme Court in a case of M/s Nirmalkumar Parsan Vs. Commissioner Commercial Taxes and others (supra) and this Court in a case of Commissioner of Sales Tax Maharashtra State Vs. M/s Radhasons International (supra) took different view much later, on the basis of such different view taken subsequently the assessing officer could not press in service the later judgment. We are respectfully bound by the principles laid down by the Hon'ble Supreme Court in a case of Ram Bai Vs. Commissioner of Income Tax (supra). 3.15 The Appellant submits that based on the advice of Coal India Limited, the holding company of the Appellant, the differential excise duty amounting (including Edu Cess and SHE Cess) was paid under protest on the value pertaining to 'Royalty' and 'Stowing Excise Duty' for the prior period from March 2011 to February 2013 and thereafter from March 2013 excise duty was being regularly paid on royalty and SED, reflected in the excise invoices and such duty was reported in monthly ER-1 returns but under protest. 4. Submissions on observations made in the impugned Order w.r.t. SED 4.1 Stowing Ex....
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.... humbly submitted that the Stowing Excise Duty is a duty of excise which is clearly in nature of a "tax" and clearly not includible in transaction value for the purpose of computation of excise duty. 5. Submissions on RE Cess, PE Cess and PED Cess, Road Cess being included in computation of Transaction Value 5.1 The Appellant is collecting above levies from their buyers on account of 'Rural Employment and Production Cess', Primary Education Cess', 'PWD Road Cess' and 'Asansol Mines Board of Health Cess' which are not included in the transaction value for the purpose of assessment and payment of Central Excise Duty. 5.2 'Rural Employment (RE Cess) and Production Cess (PE Cess) is collected at specific rate on the annual value of 'coal bearing land' under the provision of West Bengal Rural Employment and Production Act, 1976. 5.3 'Primary Education Cess' (PED Cess) is collected at specific rate on the value of 'coal bearing land' under the provision of West Bengal Primary Education Act, 1973'. 5.4 The PWD Road Cess (Road Cess) is collected under the Cess Act 1880. 5.5 The appellant submits that RE Cess, PE ....
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....ntra vires the Constitution." 5.7 The above judgment has been reaffirmed by the Nine Judges Bench of the Hon'ble Supreme Court in Mineral Area Development Authority vs. Steel Authority of India (2024) 21 Centax 378 (SC) on 25.07.2024. 5.8 In view of the above submissions, we submit that the demand of excised duty on RE Cess, PE Cess, PED Cess and Road Cess is not sustainable in law. 6 Submissions on 'Asansol Mines Board of Health Cess' 6.1 The 'Asansol Mines Board of Health Cess' (Health Cess) is collected under West Bengal Mining Settlement (Health and Welfare) Act, 1964. 6.2 AMBH Cess (Health Cess) is charged @ Rs 1/- per ton as per provisions is laid down under Section 23(2)(i) of West Bengal Mining Settlements (Health & Welfare) Act, 1964, which extends to the whole of West Bengal as per Section 1(2) of the Act. It is a statutory levy which is collected from the customers on coal sales bills and deposited with state Government and is liable to be considered as classified under "other taxes". 6.3 Further, the Hon'ble Supreme Court in Kesoram supra has held that Taxes on mineral rights lie within the legislative competence of the State Legislatur....
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.... 1 year I month E/95912/2016 18.09.2015 29.02.2016 6 Months E/75060/2018 14.02.2016 12.09.2017 1 year 7 months E/75061/2018 18.10.2016 12.09.2017 11 Months E/75062/2018 16.03.2017 12.09.2017 6 Months E/77239/2019 07.08.2018 26.06.2019 11 Months E/75506-75507 / 2020 10.03.2014 31.07.2020 6 years 4 months 24.03.2014 31.07.2020 6 years 4 months 11.03.2014 31.07.2020 6 years 4 months 25.03.2014 31.07.2020 6 years 4 months 23.12.2015 31.07.2020 4 years 7 months 16.03.2016 18.03.2016 31.07.2020 31.07.2020 4 years 4 months 4 years 4 months 04.02.2016 31.07.2020 4 years 5 months 02.02.2016 31.07.2020 4 years 5 months 04.02.2026 31.07.2020 4 years 5 months 14.08.2014 31.07.2020 5 years 11 months 14.08.2014 31.07.2020 5 years 11 months 14.08.2014 31.07.2020 5 years 11 months 14.08.2014 31.07.2020 5 years 11 months 23.04.2014 31.07.2020 6 years 3 months 14.08.2014 31.07.2020 5 years 11 months 26.09.2014 31.07.2020 5 years 10 m....
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.... 2018 04.02.2016 April, 2015 to Sept, 2015 47,82,21,967 01-03/COMMR/BOL/17-18 dt. 12.09.2017 1,50,08,61,545 Yes 7 E- 75061 of 2018 18.10.2016 Oct, 2015 to March, 2016 56,53,71,353 Yes 8 E- 75062 of 2018 16.03.2017 April, 2016 to Sept, 2016 45,72,68,225 No 9 E- 77239 of 2019 07.08.2018 Oct, 2016 to June, 2017 89,44,62,210 04/COMMR/BOL/19-20 dt. 26.06.2019 89,44,62,210 Yes 10 E- 75506 of 2020 14.08.2014 March, 2011 to Feb, 2013 5,35,68,495 22-39/Central Excise/Pr. Commr/RAN/2020 dt. 31.07.2020 5,35,68,495 Yes 11 E- 75507 of 2020 26.09.2014 March, 2011 to Feb, 2013 5,53,09,019 22-39/Central Excise/Pr. Commr/RAN/2020 dt. 31.07.2020 5,53,09,019 Yes Grand Total 6,47,61,23,304 11. As per the appellant, the ratio laid down in the case of Kopertek Metals Pvt Ltd Vs CCGST - Final Order No.59511-59720/2024 dated 25.11.2024, is required to be applied in case of most of the adjudicated SCNs. By doing so, the confirmed demand in respect of 8 or 9 SCNs would get set aside on this count / ground alone and ....
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....ng under sub-section (1). However, in respect of cases falling under sub-section (4) or sub-section (5), the Central Excise Officer shall determine the amount of duty within one year from the date of notice, where it is possible to do so. The show cause notice in this appeal was issued under subsection (4) of section 11A. Thus, the Central Excise Officer had to determine the amount of duty within one year from the date of notice, where it was possible to do so. 11. What is important to note is that the show cause notice that was issued on 28.04.2015 was required to be adjudicated latest by 27.04.2016; 12. It was incumbent upon the Adjudicating Authority to determine the amount of duty within one year from 28.04.2015, where it was possible to do so. The discussion and findings in the impugned order start from paragraph 117 but no reason has been given in the impugned order by the Adjudicating Authority for not being able to determine the duty within the stipulated period of one year from the date of issuance of the show cause notice. 20. It would be seen from the aforesaid judgment of the Delhi High Court in Swatch Group that the High Court made it amply c....
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....nature of the Statute, rights and liabilities thereunder and other relevant factors. 27. The show cause notice, in the present case, was issued on 28.04.2015. It called upon the noticees to show cause within thirty days from the date of receipt of notice, failing which it was specifically provided that the matter would be adjudicated ex parte without any further communication. It is seen that the period one year from 28.04.2015 expired on 27.04.2016. Even if cause was not shown by the noticees to the said notice, the Adjudicating Authority should have proceeded to decide the matter ex parte, but what is seen is that the Adjudicating Authority even let this statutory time limit of one year pass without even adhering to the stipulation contained in the show cause notice that the matter would be decided ex parte even if no cause is shown within thirty days. It appears that it is only on 07.09.2016 i.e. almost after a period of five months after the expiry of one year that the first hearing was fixed by the Adjudicating Authority on 07.09.2016. 42. The aforesaid discussion would lead to the inevitable conclusion that the impugned order would have to be set aside only ....
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....ciple would apply equally to cases falling either under the Customs Act, the 1994 Act or the CGST Act. 86. When we revert to the facts that obtain in this batch, we find that the respondents have clearly failed to establish the existence of an insurmountable constraint which operated and which could be acknowledged in law as impeding their power to conclude pending adjudications. 14. It would also be important to compare the language used under the unamended Section 11A (11) of the Central Excise Act 1944, Section 28(9) of the Customs Act 1962 and Central Excise Manual. Central Excise Act 1944 : Section 11A(11) The Central Excise Officer shall determine the amount of duty of excise under sub-section (10) - (a) within six months from the date of notice where it is possible to do so, in respect of cases falling under sub-section (1); (b) within one year from the date of notice, where it is possible to do so, in respect of cases falling under sub-section (4) or sub-section (5). Customs Act 1962 : Section 28 (9) :The proper officer shall determine the amount of duty or interest under sub-section (8),- (a) within six m....
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.... officer "shall" determine the amount of duty within six months or within one year, as the case may be, from the date of notice. It only provides certain degree of inbuilt flexibility by incorporating the words "where it is possible to do so". 33. The phrases "as far as possible" and "as far as practicable" appear in other statutes as well came up for consideration before the Apex Court in C.N. Paramasivam and Another v. Sunrise Plaza: (2013) 9 SCC 460/[2013] 30 taxmann.com 320 (SC). It is observed that the words "possible" and "practicable" are more or less interchangeable along with the other words such as feasible, performable etc. The incorporation of such words gives certain degree of flexibility to the Department such as if some circumstances or insurmountable exigencies arise, which makes the recourse unpracticable or not possible, the authorities can deviate from what was required to be done in terms of the statute. When the challenge is laid to the act of the authorities deviating from the rule, the onus shifts on the authority to prove that it was not practicable or possible to follow the rule. The same is to be adjudicated on the facts and circumstances of each ....
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....pply or otherwise the Tribunal's order in the case of Kopertek Metals. 20. Another objection was on account of two more orders passed by the Delhi Tribunal on similar issue, in the case of M/s Picasso Digital Media Pvt Ltd Vs Commissioner. CGST, East Delhi [2024(2) TMI 1160- CESTAT-New Delhi] and M/s Citicorp Finance India Limited Vs Commissioner of Service Tax, Delhi-11 [2023 (11) TMI 891-CESTAT NEW Delhi, wherein the Tribunal has refused to entertain the request of the appellant to consider the delay in passing the Order in Original for setting aside the Order. As per Revenue, the Tribunal should have referred the matter to the Larger Bench rather than passing a different order on the same issue. 21. On going through the Picasso case, we find that the issue therein was Service Tax demand for the period April 2006 to March 2011 for which show cause notice dated 21.10.2011 was issued and the Order in Original dated 02.05.2022 was passed. We find that only by of amendment brought by Finance Act 2014 (with effect from 6.8.2014), the Section 73 (4B), was inserted to specify the timeframe for adjudication of the Service Tax matters. Hence, there was no time-frame applicable for A....
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....g dates are given below : Sl. No. Appeal No. SCN dated Period of dispute Beyond Sec 11A(11) (covered by Kopertex Metal) PH Dated Remarks OIO No. 1 E- 75694 of 2015 19.06.2013 March, 2011 to June, 2012 Yes 25.02.2015 1st & 2nd SCN called for PH after 2 years, which was duly attended 16-18/COMMR/BOL/15 dt. 31.03.2015 2 E- 75695 of 2015 01.08.2013 July, 2012 to March, 2013 Yes 3 E- 75696 of 2015 31.07.2014 April, 2013 to March, 2014 No 4 E- 75911 of 2016 25.02.2015 April, 2014 to Sept, 2014 Yes 04.02.2016 39-40/COMMR/BOL/15 dt. 29.02.2016 5 E- 75912 of 2016 18.09.2015 Oct, 2014 to March, 2015 No 6 E- 75060 of 2018 04.02.2016 April, 2015 to Sept, 2015 Yes 05.09.2017 01-03/COMMR/BOL/17-18 dt. 12.09.2017 7 E- 75061 of 2018 18.10.2016 Oct, 2015 to March, 2016 Yes 8 E- 75062 of 2018 16.03.2017 April, 2016 to Sept, 2016 No 9 E- 77239 of 2019 07.08.2018 Oct, 2016 to June, 2017 Yes 28.05.2019 04/COMMR/BOL/19-20 dt. 26.06.2019 10 E- 75506 of 2020 14.08.2014 March, 2011 ....
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....complete the proceedings. In this case, the Order in Original has been passed on 31.03.2015, thereby exceeding the time-frame of 6 months. Therefore, it is prayed that even in respect of the demand pertaining the normal period under this SCN, the ratio of Kopertek may be applied and the confirmed demand may be set aside. 28. We find force in the appellant's argument that having issued the first two SCNs in the normal course, the Revenue could not have resorted to invoking the extended provisions while issuing the third SCN, which is on identical issue, being on account of periodical demand. We find that similar issue was before the Hon'ble Supreme Court in the case of Nizam Sugar Factory Vs Collector of Central Excise - Civil Appeal No.2747/2001= Judgement dated April 20, 2006 as reported in 2008 (9) STR 314 (SC). The Hon'ble Apex Court has held as under : 6. Without going into the question regarding Classification and marketability and leaving the same open, we intend to dispose of the appeals on the point of limitation only. This Court in the case of P & B Pharmaceuticals (P) Ltd. v. Collector of Central Excise reported in (2003) 3 SCC 599 = 2003 (153) ELT 14(SC) has ....
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....d period of limitation could be invoked where the Department has earlier issued show cause notices in respect of the same subject-matter. It has been held that in such circumstances, it could not be said that there was any wilful suppression or mis-statement and that therefore, the extended period under Section 11A could not be invoked." 8. Similarly, this judgment was again followed in the case of Hyderabad Polymers (P) Ltd. v. Commissioner of Central Excise, Hyderabad reported in [2004 (166) ELT 151(SC)]. It was observed in para 6: ".......... On the ratio laid down in this judgment it must be held that once the earlier Show Cause Notice, on similar issue has been dropped, it can no longer be said that there is any suppression. The extended period of limitation would thus not be available. We are unable to accept the submission that earlier Show Cause Notice was for a subsequent period and / or it cannot be taken into consideration as it is not known when that Show Cause Notice was dropped. If the Department wanted to take up such contentions it is for them to show that that Show Cause Notice was not relevant and was not applicable. The Department has not brough....
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....d Appeals [Appeal Nos. E/75696/2015, E/75912/2016 & E/75062/2018] thereof, we are required to consider the same on merits. 32. The appellant has mainly argued on the ground that in terms of Section 11 A, the Show Cause Notice could not have been issued, since there was no short payment when the goods were cleared. For this stand they submit they were relying on the case of the 7 Member Supreme Court Bench decision rendered in 1990, in the case of India Cements, wherein it was held that the "Royalty" is a tax. Hence, the "Tax" component is excludible while arriving at the Assessable Value. As per the appellants, the 5 Member Bench of the Supreme Court in the case of Kesoram, rendered in 2004, could neither have doubted the decision of the 7 Member Bench deciding the India Cements case, nor could have they over-ruled the same. The 5 Member Bench was required to follow the decision of 7 Member Bench's decision or if they were not in agreement, they should have referred the matter to the Chief Justice of India to constitute a larger Bench to decide the issue. Subsequently in MADA case, the 3 Member Bench of Supreme Court noted the divergent views taken in the 7 Member Bench of India....
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....le of "latter the better", without going into the details of the quorum of the Benches. Hence, holding the belief that they are following the correct case law, the Revenue has not considered the case law of Kamalakshi and other cited decisions about the effect of the binding precedents. Therefore, in this case, the balance weighs with the Revenue rather than with the appellant. This argument of the appellant would be useful towards their submissions only about bonafide belief and to overcome the extended period provisions. Upto that stage this will help the appellant but not for the very core issue of SCN proceedings. Therefore, we hold that the Revenue was not at fault in invoking the provisions of Section 11 A and issuing the SCN in view of their interpretation that the AV adopted had resulted in short-payment of Excise Duty. 35. As on date, the issue as to whether "Royalty" is tax of not, stands clearly held against the appellant in view of the 9 Member Supreme Court decision in the case of Mineral Area Development Authority Vs Steel Authority of India (2024) 21 Centax 313(SC) [MADA for short]. Therefore, on merits the appellants do not have any case. Accordingly, we hold tha....
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....nection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. 38. We have seen the earlier paragraphs that the levy is being termed as "Duty of Excise" and also being treated as such. It is also not disputed that in the case of the goods in question, the Stowing Excise Duty is being paid by the appellant. The Revenue cannot take a contorted and narrow view that only when the Duty of Excise is paid as Central Excise Duty, such exclusion is available. It is to be noted that the word used is "duty of excise" along with "sales tax" and "other taxes", which would clarify that if these are paid to State Govt or to any other agency also, the transaction value should exclude the same. Considering these provisions, we set aside the confirmed demand in respect of the Stowing Excise Duty and allow the Appea....
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....15 January, 2004 Appeal Civil 1532 of 1993 and others - the Three Member Bench by way of Majority judgement held as under : The Result: - Individual cases (A) Coal Matters The amendments incorporated by the West Bengal Taxation Laws (Amendment) Act 1992 w.e.f. 1.4.1992 into the provisions of the West Bengal Primary Education Act 1973 and the West Bengal Rural Employment and Production Act 1976 classify the land into three categories: (i) coal-bearing land, (ii) mineral bearing land (other than coal bearing land) or quarry and (iii) land other than the preceding two categories. These three are well-defined classifications by reference to the user or quality and the nature of product which it is capable of yielding. The cess is levied on the land. The method of quantifying the tax is by reference to the annual value thereof. It is well-known that one of the major factors contributing to the value of the land is what it produces or is capable of producing. Merely because the quantum of coal produced and dispatched or the, quantum of mineral produced and dispatched from the land is the factor taken into consideration for determining the value of the land, it ....
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....e following conclusions: (a) Royalty is not a tax. Royalty is a contractual consideration paid by the mining lessee to the lessor for enjoyment of mineral rights. The liability to pay royalty arises out of the contractual conditions of the mining lease. The payments made to the Government cannot be deemed to be a tax merely because the statute provides for their recovery as arrears; (b) Entry 50 of List II does not constitute an exception to the position of law laid down in M PV Sundararamier (supra). The legislative power to tax mineral rights vests with the State legislatures. Parliament does not have legislative competence to tax mineral rights under Entry 54 of List I, it being a general entry. Since the power to tax mineral rights is enumerated in Entry 50 of List II, Parliament cannot use its residuary powers with respect to that subject-matter; (e) The State legislatures have legislative competence under Article 246 read with Entry 49 of List II to tax lands which comprise of mines and quarries. Mineral- bearing land falls within the description of "lands" under Entry 49 of List II; 39.3 In the 9 Member Supreme Court judgement, it has finally be....