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Riba Textiles Limited Versus The Customs, Excise & Service Tax Appellate Tribunal, New Delhi and another

2015 (5) TMI 881 - PUNJAB & HARYANA HIGH COURT

Denial of Exemption claim - 100% EOU - additional duty of excise under the Finance Act, 1999 - Scope of Notification No.22/2003 - Held that:- In the notification under section 5-A(1) of the Central Excise Act, 1944, the Government exempted the duty of excise leviable thereon under the provisions specified therein, namely, Central Excise Act, 1944, Additional Duties of Excise (Goods of Special Importance) Act, 1957 and the Additional Duties of Excise (Textile and Textile Articles) Act, 1978. The .....

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No.62 of 2013 (O&M), CEA No.63 of 2013 (O&M), CEA No.64 of 2013 (O&M) - Dated:- 21-4-2015 - MR. S.J. VAZIFDAR AND MR. G.S. SANDHAWALIA, JJ. Mr. Akshay Bhan, Senior Advocate with Mr. Alok Mittal, Advocate for the appellant Mr. Kamal Sehgal, Advocate for the respondent JUDGEMENT S.J. VAZIFDAR, ACTING CHIEF JUSTICE: These appeals raise a common question of law and are, therefore, disposed of by a common judgment. We will refer to the facts from CEA No.62 of 2013 for convenience. 2. The appeals are .....

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.2007 and 08.05.2012, in as much as the provisions of the Notification No.22/2003 exempts the excise duty so imposed upon the appellant. (b) Whether the impugned orders are not supported by law and are thus illegal, arbitrary and void. 4. We, however, admit the appeal on the following substantial question of law framed as under:- Whether the appellant is entitled to exemption from additional duty of excise under the Finance Act, 1999 in view of a notification dated 31.03.2003 issued under Sectio .....

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s under:- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section (3) of section 3 of Additional Duties of Excise (Textile and Textile Articles) Act, 1978 (40 of 1978), the Central Government being satisfied, that it is necessary in the public interest so to do, hereby exempts,- ……. &h .....

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le of, (i) the duty of excise leviable thereon under section 3 of Central Excise Act, 1944 (1 of 1944); (ii) the additional duty of excise, if any, leviable thereon under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957); and (iii) the additional duty of excise, if any, leviable thereon under section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), subject to following conditions, namely:- …&hellip .....

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fund on the ground that the said notification issued on 31.03.2003 also exempted the AED levied on HSD under Section 133 of the Finance Act, 1999. The appellant contended that it paid the AED by mistake. The appellant was afforded a hearing in respect of the application. The application was rejected. The rejection was confirmed by the first appellate authority and by the impugned order of the CESTAT. 7. The appellant s contention that the exemption notification dated 31.03.2003 issued under the .....

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d to in subsection (1), shall be in addition to any other duties of excise chargeable on such goods under the Central Excise Act, or any other law for the time being in force. (3) The provisions of the Central Excise Act and the rules made thereunder, including those relating to refunds and exemptions from duties, shall, as far as may be, apply in relation to the levy and collection of the additional duty of excise leviable under this section in respect of any goods as they apply in relation to .....

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4) SCC 66-Union of India and others vs. M/s Modi Rubber Ltd. The facts and the legal provisions of that case are similar to those in the case before us. The question in that case related to the construction of the expression duty of excise in two notifications issued under Rule 8 of the Central Excise Rules, 1944. Rule 8 is similar to Section 5(A) of the Excise Act, 1944. The said notification in the case before us uses the same expression. Under Rule 8, the Central Government was entitled by no .....

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cles from so much of the duty of excise leviable thereon as was in excess of 55% ad valorem. It is the words in this notification duty of excise that fell for consideration of the Supreme Court. A further notification was issued in respect of other type of tyres as well which also used the same expression duty of excise . Since 1963 special duty of excise was levied inter alia on tyres by various Finance Acts passed from time to time. The question was whether the expression was limited only to b .....

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uty of excise under the Central Excises Act as amended from time to time, read with any notification for the time being in force issued by the Central Government in relation to the duty so chargeable there shall be levied and collected a special duty of excise equal to five per cent of the amount so chargeable on such goods. (2) Sub-section (1) shall cease to have effect after the 31st day of March, 1980, except as respects things done or omitted to be done before such cesser; and Section 6 of t .....

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e, apply in relation to the levy and collection of the special duties of excise leviable under this section in respect of any goods as they apply in relation to the levy and collection of the duties of excise on such goods under that Act or those rules as the case may be. Sub-sections (3) and (4) are similar to sub-sections (2) and (3) of Section 133 of the Finance Act, 1999, which are relevant in the matter before us. On the assumption that the notification issued under Rule 8(1) granted partia .....

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eme Court held in paragraphs 7 and 9 of the judgment in Union of India and others vs. M/s Modi Rubber Ltd. (supra) as under:- 7. Both these notifications, as the opening part shows, are issued under Rule 8(1) of the Central Excise Rules, 1944 and since the definition of duty in Rule 2, clause (v) must necessarily be projected in Rule 8(1) and the expression duty of excise in Rule 8(1) must be read in the light of that definition, the same expression used in these two notifications issued under R .....

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Act, 1944, it must be held to cover all duties of excise whether leviable under the Central Excises and Salt Act, 1944 or under any other enactment. The respondents sought to support this contention by pointing out that whenever the Central Government wanted to confine the exemption granted under a notification to the duty of excise leviable under the Central Excises and Salt Act, 1944, the Central Government made its intention abundantly clear by using appropriate words of limitation such as d .....

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otification No. 23/55-C.E. dated April 29, 1955 and similar other notifications. But, here said the respondents, no such words of limitation are used in the two notifications in question and the expression duty of excise must, therefore, be read according to its plain natural meaning as including all duties of excise, including special duty of excise and auxiliary duty of excise. Now, it is no doubt true that in these various notifications referred to above, the Central Government has, while gra .....

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in the absence of such words of specificity, the expression duty of excise standing by itself must be read as referring to all duties of excise. It is not uncommon to find that the legislature sometimes, with a view to making its intention clear beyond doubt, uses language ex abundanti cautela though it may not be strictly necessary and even without it the same intention can be spelt out as a matter of judicial construction and this would be more so in case of subordinate legislation by the exe .....

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s relied upon by the respondents. But, that does not necessarily lead to the inference that the expression duty of excise in these notifications was intended to refer to all duties of excise including special and auxiliary duties of excise. The absence of these words does not absolve us from the obligation to interpret the expression duty of excise in these notifications. We have still to construe this expression - what is its meaning and import - and that has to be done bearing in mind the cont .....

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ip; ……. ……. 9. We have already pointed out, and this is one of the principal arguments against the contention of the respondents, that by reason of the definition of duty in clause (v) of Rule 2 which must be read in Rule 8(1), the expression duty of excise in the notifications dated August 1, 1974 and March 1, 1981 must be construed as duty of excise payable under the Central Excises and Salt Act, 1944. The respondents sought to combat this conclusion by relying on s .....

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al Excises and Salt Act, 1944. It was urged on behalf of the respondents that by reason of this provision, Rule 8(1) relating to exemption from duty of excise became applicable in relation to the levy and collection of special duty of excise and exemption from payment of special duty of excise could therefore be granted by the Central Government under Rule 8(1) in the same manner in which it could be granted in relation to the duty of excise payable under the Central Excises and Salt Act, 1944. .....

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ately be construed as comprehending special duty of excise. This argument is, in our opinion, not well founded and cannot be sustained. It is obvious that when a notification granting exemption from duty of excise is issued by the Central Government in exercise of the power under Rule 8(1) simpliciter, without anything more, it must, by reason of the definition of duty contained in Rule 2 clause (v) which according to the well recognised canons of construction would be projected in Rule 8(1), be .....

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32 or other similar provision. The reference to the source of power in such a case would not be just to Rule 8(1), since it does not of its own force and on its own language apply to granting of exemption in respect of special duty of excise, but the reference would have to be to Rule 8(1) read with sub-section (4) of Section 32 or other similar provision. It is significant to note that during all these years, whenever exemption is sought to be granted by the Central Government from payment of s .....

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, 1978 where exemption is granted in respect of certain excisable goods from the whole of the special duty of excise leviable thereon under sub clause (1) of clause 37 of the Finance Bill, 1978 . The source of the power recited in this notification is sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 read with sub-clause (5) of clause 37 of the Finance Bill, 1978 . So also in the Notification bearing No. 29/79 dated March 1, 1979 exempting unmanufactured tobacco from the whole of the duty .....

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ect of special duty of excise or additional duty of excise and in each of these notifications, we find that the source of power is described as sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 read with the relevant provision of the statute levying special duty of excise or additional duty of excise by which the provisions of the Central Excises and Salt Act, 1944 and the Rules made thereunder including those relating to exemption from duty are made applicable. Moreover the exemption gra .....

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uty levied under such statute, the exemption must be read as limited to the duty of excise payable under the Central Excises and Salt Act, 1944 and cannot cover such special, auxiliary or other kind of duty of excise. The notifications in the present case were issued under sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 simpliciter without reference to any other statute and hence the exemption granted under these two notifications must be construed as limited only to the duty of excise .....

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xemption only in respect of the enactments specified in the notification. The Finance Act of 1999 was not one of them. A plain reading of the notification itself makes it clear that the exemption was not to operate in respect of the additional excise duty levied under the Finance Act, 1999. 11. The judgment squarely applies to the case before us in almost every respect. It is also pertinent to note that the notification is dated 31.03.2003. It was preceded by similar notifications commencing fro .....

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. It came to be levied on tyres with effect from the financial year 1978 under various Finance Acts enacted from year to year. It is therefore difficult to understand how the expression duty of excise in the notification dated August 1, 1974 could possibly be read as comprehending special duty of excise which did not exist at the date of this notification and came to be levied almost four years later. When special duty of excise was not in existence at the date of this notification, how could th .....

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