2019 (12) TMI 286 - SUPREME COURT

Interpretation of term "basic excise duty".

Briefly the issue in the present matter relates to interpretation of term "excise duty", whether an exemption notification of basic excise duty in respect of industrial units in north east India and particularly "Sikkim" would include levy of "NCCD" i.e.National Calamity Contingent Duty (NCCD) within its ambit.

Facts: 

The Appellant i.e.M/s. Unicorn Industries established a unit in Sikkim in 2006 manufacturing “Indian Mouth Freshener” an excisable commodity under Central Excise Tariff Act, 1985.

The duties recovered from the above included Basic Excise Duty @ 37.5 % ad valorem, National Calamity Contingent Duty (NCCD) @ 23% ad valorem, Additional Excise Duty (Pan Masala & Tobacco Products) @ 5.5% ad valorem and Education Cess @ 2% ad valorem.

Issue:

Whether the above mentioned NCCD, education cess, and secondary and higher education cess form part of the basic excise duty. Contradictory interpretations were given by the high courts and in particular hon'ble Sikkim High Court at Gangtok. 

Held that:

As decided by the hon'ble apex court, a smaller bench could not disagree with the view taken by a larger bench. When a particular kind of duty is exempted, other types of duty or cess imposed by different legislation or for a different purpose cannot be said to have been exempted.

The hon'ble court upheld the reasoning in UNION OF INDIA AND OTHERS Versus MODI RUBBER LIMITED AND OTHERS - 1986 (8) TMI 60 - Supreme Court In fact as the hon'ble apex court observed, these judgments were not put up before the hon'ble benches of the high court for consideration. 

Held that when a particular kind of duty is exempted, other types of duty or cess imposed by different legislation for a different purpose cannot be said to have been exempted.

Accordingly the term "basic excise duty" was given a strict and a literal construction to mean only the above term i.e. basic excise duty. 
The term excluded National Calamity Contingent Duty (NCCD). 

Hence it is quite evident, that now we may lay this legal question at peace, as to the interpretation of term excise duty. It cannot, in the circumstances, bear an extended meaning to include special excise duty, additional excise duty and auxiliary excise duty.

Interpretation of basic excise duty: exemptions do not extend to separately enacted cesses or ancillary excise levies. An exemption of basic excise duty must be given a strict, literal construction limited to that duty alone; it does not extend to duties or cesses-such as National Calamity Contingent Duty, education cesses, additional or auxiliary excise duties-that are imposed by different legislation or for different purposes.