2012 (5) TMI 621 - HC - Central Excise

Summary

Issues Involved:

1. Entitlement to exemption from excise duty under various notifications and policies.
2. Withdrawal of Cenvat credit benefits.
3. Applicability of National Calamity Contingent Duty (NCCD), Education Cess, and Secondary and Higher Education Cess.
4. Interpretation of exemption notifications in light of subsequent Finance Acts.

Summary of Judgment:

1. Entitlement to Exemption from Excise Duty:
The petitioners, M/s. Unicorn Industries and M/s. Akshay Ispat and Ferro Alloys Pvt. Ltd., established their units based on the Industrial Policy Resolution (IPR) of the Government of India and subsequent notifications, which granted a 10-year exemption from income tax and excise duty. The goods manufactured by the petitioners were not listed in Annexure-I of the exemption notification, thus qualifying for the exemption. The exemption was also applicable to the duty paid by utilizing Cenvat credit under the Cenvat Credit Rules, 2002. However, the exemption for Pan Masala was withdrawn by Notification No. 21/2007-C.E., dated 25-4-2007, which included it in the Negative List.

2. Withdrawal of Cenvat Credit Benefits:
The petitioners were availing Cenvat credit benefits, which were withdrawn by Notification No. 23/2008-C.E., dated 27-3-2008, and Notification No. 37/2008-C.E., dated 10-6-2008. The petitioners challenged these withdrawals, and the court quashed the impugned notifications with some directions.

3. Applicability of NCCD, Education Cess, and Secondary and Higher Education Cess:
The petitioners claimed re-credit/refund of NCCD, Education Cess, and Secondary and Higher Education Cess, believing these to be components of excise duty and thus within the purview of the exemption policy. However, the court found that these duties, though collected as excise duties, were not in essence excise duties but surcharges for specific purposes (e.g., disaster relief, education funding). The court held that these duties were not covered by the exemption notifications, which only applied to basic excise duty and additional duties specified under certain acts.

4. Interpretation of Exemption Notifications:
The court examined the nature of levies under the Finance Acts and concluded that the exemption notifications did not intend to grant exemption from duties imposed by future statutes. The exemption was limited to duties existing at the time of the notification. The court referenced the Supreme Court's decision in Union of India v. Modi Rubber Ltd., which held that exemptions are confined to duties in existence at the time of the notification and do not extend to future levies.

Conclusion:
The court dismissed the writ petitions, ruling that the petitioners were not entitled to exemptions from NCCD, Education Cess, and Secondary and Higher Education Cess, as these were not covered by the exemption notifications. The demands raised by the respondents for these duties were upheld.