TMI Blog2014 (1) TMI 1572X X X X Extracts X X X X X X X X Extracts X X X X ..... as been given out under Section 91 of the Act. The very fact that the surcharge is collected as part of levy under three different enactments goes to show that scheme of levy of Education Cess was by way of collecting special funds for the purpose of Government project towards providing and financing universalised quality of basic education by enhancing the burden of Central Excise Duty, Customs Duty, and Service Tax by way of charging surcharge to be collected for the purpose of Union. But, it was made clear that in respect of all the three taxes, the surcharge collected along with the tax will bear the same character of respective taxes to which surcharge was appended and was to be governed by the respective enactments under which Education Cess in the form of surcharge is levied & collected. The Section 93 specifically says that Education Cess levied under Section 91 shall be a duty of excise. Section 91 also stipulates that these shall be levied and collected as surcharge, a cess to be called Education Cess. Hon’ble High Court observed that it was made clear that in respect of these taxes the surcharge collected along with tax will bear the same character of respective ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mangalore. TABLE Sl. No. RA/F. No. Name of the Applicant Name of the Respondent No. and Date of Order-in-Appeal (1) (2) (3) (4) (5) 1. 198/133/2009- RA-CX CCE, Mysore M/s. TVS Motor Co. Ltd. 215/2009, dated 1-6-2009 2. 195/335/2008- RA-CX M/s. TVS Motor Co. Ltd. CCE, Mysore 21/2008, dated 22-5-2008 3. 195/541/2008- RA-CX M/s. TVS Motor Co. Ltd. CCE, Mysore 223/2008, dated 4-11-2008 4. 195/415/2011- RA-CX M/s. TVS Motor Co. Ltd. CCE, Mysore 6/2011, dated 21-1-2011 2. Brief facts of these cases at Sl. Nos. 2 3 above are that M/s. TVS Motor Co. Ltd., the manufacturer of Motor Cycles/Two Wheelers falling under Chapter 87 of Central Excise Tariff Act, 1985 exported the goods on payment of Central Excise duty and Automobile Cess and filed rebate claims. The adjudicating authority under the impugned Orders-in-Original, rejected the part of rebate claims relating to Automobile Cess, SHE cess and the rebate claim of goods exported after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relating to refund of duty shall be applicable to the levy and collection of cess. That a perusal of the above Section and Rules, it is evident that Central Excise Act, 1944 and its Rules will apply in relation to levy and collection of cess as they apply in relation to the duty of excise. 3.3 The applicant rely on the case of Central Excise, Patna v. Tata Engineering and Locomotive Co. reported in 1997 (92) E.L.T. 303 (S.C.), wherein the issue was the valuation of Automobile Cess. It was held by the Hon ble Apex Court that value of motor vehicles for the purpose of levy of cess is to be computed as per provisions of Central Excise Act, 1944 and not as per the value defined in Section 9(1) of the Industries (Development and Regulation) Act, 1951, since the Automobile Cess is to be levied and calculated as if it was excise duty. 3.4 Further, the Hon ble Apex Court with respect to Jute Cess in the case of Barnagore Jute Factory Co. v. Inspector of Central Excise reported in 1992 (57) E.L.T. 3 (S.C.), has held that levy and collection of cess on jute manufactures should be considered as a duty of excise when the machinery provisions of the Central Excise Act and Rules were made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Automobile Cess is deemed to be covered by the expression duty on excise used in Section 11B of the Central Excise Act, 1944. 3.10 Once it is clear that Automobile Cess, Education Cess on Automobile Cess, Secondary and Higher Education Cess on Automobile Cess is nothing hut duty of excise, the applicants submit that the expression duty paid on excisable goods used in Rule 18 of the Central Excise Rules, 2002 would also include Automobile Cess, Education Cess on Automobile Cess, Secondary and Higher Education Cess on Automobile Cess also. Consequently, rebate of Automobile Cess, Education Cess on Automobile Cess, Secondary and Higher Education Cess on Automobile Cess is squarely covered by Sl. No. (a) of the Explanation to Notification 19/2004-C.E. (N.T.), dated 6-9-2004. 3.11 Without prejudice to the above submissions, the applicants submit that the expression duty used in Rule 18 of the Central Excise Rules, 2002 should be interpreted to included only duty levied under Section 3 of the Central Exicse Act, 1944 in terms of Rule 2(e) ibid. Consequently, any notification issued under Rule 18 cannot grant rebate of any duty other than duty levied under Section 3 of the Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e clauses in the Act/Bill with Section 11B provides a clear view that rebate of such Education Cess or Secondary Higher Education Cess paid even during the intervening period (i.e. where there is no reference to these cesses in the relevant notifications under Rules 18 and 19 of Central Excise Rules, 2002) should be allowed to the applicant. 3.13 The applicants submit that issue of show cause notice by the Assistant Commissioner for the purpose of reviewing his earlier orders suo motu is not maintainable when the earlier Orders-in-Original granting rebate claims was not reviewed by the appropriate authority. 3.14 The applicants took up to Part I of Chapter 8 of the Supplementary Instructions, 2005 which refers to Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 issued by the Board. In its para 1(iii), it mentions that the excisable goods shall be exported within six months from the date on which they are cleared for export from the factory of manufacture or warehouse. This date will be indicated on the ARE-1 and invoice issued for the purpose . Hence, the date of ARE-1 and the date of invoice, which was prepared by the Hosur unit while clearing the goods for export, are re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o erred in allowing the appeal with regard to the condition of time limit of six months from date of clearance for export of goods laid down under para 2(b) of the Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 by considering the same to be a technical and procedural lapse. 4.6 Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 lays down the procedure for grant of rebate under Rule 18 of Central Excise Rules, 2002. The Notification lays down conditions and limitations. One of the conditions is that Central Excise Rules, 2002 read with the Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 issued thereunder. 5. These three revision applications were decided vide GOI Revision Order Nos. 1214-1216/2010-CX, dated 7-7-2010 in favour of department by holding that rebate of Automobile Cess paid of export goods is not admissible under Rule 18 of Central Excise Rules, 2002 since Automobile Cess is not covered under Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004, for the purpose of granting rebate. M/s. TVS Motors Company challenged the said GOI Order by way of W.P. No. 2495/2011 before Hon ble Karnataka High Court, Bangalore Bench. Hon ble High Court vide its order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate under Rule 18 even before Education Cess was expressly included in Explanation 1 with effect from 6-9-2004. The said decision of the Hon ble Rajasthan High Court has been affirmed by the Hon ble Supreme Court vide Order dated 29-7-2007. 7.2 The definition of duty as per Explanation 1(a) to the aforesaid notification would be satisfied if : (i) The levy in question is a duty of excise ; and (ii) The duty must be collected under the Central Excise Act, 1944. It is pertinent to point out that the condition is only that the duty must be collected under the Central Excise Act, 1944. The explanation has not used the phrase levied under the Central Excise Act, 1944. Hence, even if a duty of excise is not levied under the Central Excise Act, 1944, but is merely collected under the said Act, still the same would be available as rebate. It is submitted that Automobile Cess is a duty of excise. In this regard, it is pertinent to point out that Section 9 of the Industries (Development and Regulation) Act, 1951, in terms of which Automobile Cess is levied, expressly provides that the same shall be a duty of excise. Section 9 is reproduced below : 9. Imposition of cess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry. It is submitted that when the goods are to be exported the Company consolidates the requirement of goods both from the Mysore and Hosur units. The clearance of goods from the Mysore unit to the Hosur unit after the payment of excise duties (inclusive of Excise duty, Education Cess, Automobile Cess, Education Cess on Automobile Cess, Secondary Higher Education Cess on Automobile Cess) caters to both the needs of domestic and international markets. At the time of clearance from the Mysore factory, the Company is not acquainted as to which goods would be exported or sold to the local market by the Hosur unit. This is the main reason why duty is paid by Mysore factory when goods are sent to Hosur even though they are aware that some of these goods will be exported from Hosur. Thus, at the time of clearance from the Mysore unit, there was no ARE-1 prepared but the goods were just transferred to the Hosur unit on payment of full duty. The ARE-1s are prepared when the goods are to be exported from the Hosur unit. Reliance is placed on Part I of Chapter 8 of the Supplementary Instructions, 2005 which refers to Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 issued by the Board. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by this single order. 11. Government first takes up the issue of admissibility of rebate of Automobile Cess paid on exported goods. In this regard, Government observes that rebate of duty paid on exported goods is to be allowed as per statutory provision contained in the Rules 18 of Central Excise Rules, 2002 read with Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004. The duties to be rebated are specified in Explanation-I of Notification No. 19/2004-C.E. (N.T.). The said Explanation-I is extracted below for the sake of proper understanding of issue : Explanation-I - duty for the purpose of this notification means duties of excise collected under the following enactments, namely : (a) the Central Excise Act, 1944 (1 of 1944); (b) the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957); (c) the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978); (d) the National Calamity Contingent duty leviable under Section 136 of the Finance Act, 2001 (14 of 2001), as amended by Section 169 of the Finance Act, 2003 (32 of 2003) and further amended by Section 3 of the Finance Act, 2004 (13 of 2004); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to collection of duty of excise on manufacture of automobiles. The definition of Cess makes it quite clear that Cess is levied and collected in terms of Notification No. S.O. 932(E), dated 28-12-1983 of Department of Heavy Industry issued under Section 9(1) of the Act. So the statutory authority to levy and collect the cess is Notification No. 932(E), dated 28-12-1983 which was superceded by S.O. No. 247(E), dated 22-3-1990 and not the Central Excise Act. In view of Rule 2(c) of Automobile Cess Rules, 1984, the contention of exporter that cess is collected under Central Excise Act is not tenable. The duties of excise collected under Central Excise Act can only be rebated in respect of goods exported. In this case the Automobile Cess is not specified as duty in Explanation-I of Notification No. 19/2004-C.E. (N.T.), hence rebate of such cess paid is not admissible. 11.2 The Commissioner (Appeals) in his Order-in-Appeal No. 215/2009, dated 1-6-2009 (against which department has filed revision application No. 198/133/2009), has allowed the rebate claim of Automobile Cess by relying on C.B.E. C. Circular No. 262/1/2007-CX.8, dated 8-10-2007. Government notes that said circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of Cess on export under Bond - Reg. Attention is invited to Board s letter of even number dated 20-3-2007 on the above subject. In para 3 of this letter, it was clarified that where goods are exported under bond, without payment of duty, the applicable Cess is liable to be paid unless it is exempted by a notification. In this regard, references have been received wherein it is stated that as per Order S.O. 247(E), dated 22-3-1990 issued by the Department of Industrial Development, the Automobile Cess is not levied on goods exported. In view of this S.O., it was requested to re-examine the instructions dated 20-3-2007. 2. The matter has been examined. In the instructions dated 20-3-2007, it was clarified that where goods are exported under bond, without payment of duty, the applicable Cess is liable to be paid unless it is exempted by a notification. S.O. 247(E), dated 22-3-1990 is issued by the Government of India (Department of Industrial Development). This S.O. is also a notification and therefore, it would be covered by word notification used in the Board s letter dated 20-3-2007. 11.5 In the said Circular dated 20-3-2007, C.B.E. C. has clarified in unam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be profitable to notice Sections 91, 92 93 under which Education Cess was levied, which read as under :- 91. Education Cess. - (1) Without prejudice to the provisions of sub-section (11) of Section 2, there shall be levied and collected, in accordance with the provisions of this Chapter as surcharge for purposes of the Union, a cess to be called the Education Cess, to fulfill the commitment of the Government to provide and finance universalised quality basic education. (2) The Central Government may, after due appropriation made by Parliament by law in this behalf, utilise, such sums of money of the Education Cess levied under sub-section (11) of Section 2 and this Chapter for the purposes specified in sub-section (1), as it may consider necessary. 92. Definition. - The words and expressions used in this Chapter and defined in the Central Excise Act, 1944 (1 of 1944), the Customs Act, 1962 (52 of 1962) or chapter V of the Finance Act, 1994 (32 of 1994), shall have the meanings respectively assigned to them in those Acts Chapter, as the case may be. 93. Education Cess on excisable goods. - (1) The Education Cess levied under Section 91, in the case of goods specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of customs Duty and under Section 95 Education Cess levied and collected as part of Service Tax. In other words, levy of surcharge under Sections 93, 94 and 95 on respective taxes was the levy for the purpose of Union and was to be utilised by the Union to fulfil the commitment of the Central Government to provide and finance universalised quality of basic education, as has been given out under Section 91 of the Act. 15. The very fact that the surcharge is collected as part of levy under three different enactments goes to show that scheme of levy of Education Cess was by way of collecting special funds for the purpose of Government project towards providing and financing universalised quality of basic education by enhancing the burden of Central Excise Duty, Customs Duty, and Service Tax by way of charging surcharge to be collected for the purpose of Union. But, it was made clear that in respect of all the three taxes, the surcharge collected along with the tax will bear the same character of respective taxes to which surcharge was appended and was to be governed by the respective enactments under which Education Cess in the form of surcharge is levied collected. 16. Appa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate special Excise Duty collected under Finance Act, and did not need a separate Notification in that regard. The position may have been different if the Education Cess would have been collected not as surcharge but as an independent levy and matter would have been left to be considered independently for the purpose of providing rebate in respect thereof The Notification dated 6-9-2004 had included the definition of Excise Duty only in consonance with the meaning of Excise Duty as was existing on the date Notification was issued, even if Explanation would not have been there the term Duty of Excise in ordinary circumstance would have included the surcharge levied as Education Cess in terms of Section 93 of the Act of 2004. Government finds that the Hon ble High Court had examined the issue of admissibility of rebate claim of Education Cess in the context of Sections 91, 92 and 93 of the Finance Act, 1994. The Section 93 specifically says that Education Cess levied under Section 91 shall be a duty of excise. Section 91 also stipulates that these shall be levied and collected as surcharge, a cess to be called Education Cess. Hon ble High Court observed that it was made clear tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted from factory of manufacture or warehouse. This date will be indicated on the ARE-1 and invoice issued for this purpose. The applicant stated that the date of ARE-1 and date of invoice, which was prepared by the Hosur unit while clearing the goods for export are relevant for the purpose of calculating the period of six months. Government finds that the provisions of Para 1(iii) of the Part I of Chapter 8 of Supplementary Instructions, 2005 and condition 2(b) of Notification No. 19/2004-C.E. (N.T.) stipulate that excisable goods shall be exported within six months from the date on which they were cleared for export from the factory of manufacture or warehouse. In this case initially goods were not cleared for export but it was a stock transfer to their own unit at Hosur on payment of duty. Since the goods are exported from Hosur unit on ARE-1/Invoice, the said goods are cleared for export on the date of preparation of ARE-1 at Hosur unit. Since the goods are exported within six months of their clearance from Hosur unit (date of ARE-1/invoices), the allegation of violation of condition 2(b) of the Notification No. 19/2004-C.E. (N.T.) does not survive and hence, rebate claims ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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