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M/s TVS Motor Co Ltd Versus Union of India, Commissioner of Central Excise, Joint Secretary Government of India

2015 (7) TMI 136 - KARNATAKA HIGH COURT

Denial of rebate claim on export of goods - whether payment of CESS would constitute duty and eligible for refund claim - Automobile Cess, Education Cess on Automobile Cess and Secondary and Higher Education Cess (for short SHE Cess) on Automobile Cess - Rule 18 of central excise Rules, 2002, read with notification No.19/04 -CE(NT) dated 06.09.2004 - Held that:- For purpose of levy of Automobile Cess, "value" as defined in section 9(1) of Industries (Development and Regulation) Act, 1951 would n .....

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numerated under Explanation-I. As to whether Automobile Cess, Education Cess on Automobile Cess and SHE Cess on Automobile Cess levied pursuant to levy of excise duty and paid on the goods exported can also be construed as duty and entitled to rebate or the authorities were right in rejecting the rebate claimed by petitioner on the ground that it is not a duty specified in Explanation-I to the notification or Cess levied and paid falls outside the purview of exemption Notification is the issue i .....

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ession "duty", "duties", "duty of excise" and "duties of excise" was to be construed to include a reference to "Central Value Added Tax (CENVAT)". Thus, intention of the legislature is clear and an unambiguous.

An exporter in order to claim the benefit flowing from the notification No.19/04 -CE (NT) dated 06.09.2004 will have to establish that the rebate claimed is in respect of the "duty" collected under the enactments enumerated thereunder and in the instant case, petitioner has cle .....

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.12.1983 which came to be superseded by SO No.247(E) dated 22.03.1990 and therefore it has be necessarily held that Automobile Cess collected is "duty of excise" in terms of the provisions of the Central Excise Act, 1944 and thereby, Automobile Cess, Education Cess on Automobile Cess and SHE Cess on Automobile Cess is a "duty of excise" and is part of the duties paid by the petitioner and thereby petitioner is entitled to the rebate. - impugned order No.401- 404/2013 dated 20.05.2013 - Annexure .....

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ssed by fifth respondent being set aside whereunder claim of the petitioner for refund of Automobile Cess, Education Cess on Automobile Cess and Secondary and Higher Education Cess (for short SHE Cess) on Automobile Cess paid along with customs duty on the goods exported outside the country has been denied on the ground it falls outside the purview of exemption notification No.19/04 -CE(NT) dated 06.09.2004. FACTUAL MATRIX: 2. Petitioner is engaged in the manufacture of motor cycles/two wheelers .....

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d were exported to various countries and had issued the disclaimer certificate to enable the petitioner to claim rebate of duty paid on two wheelers in respect of which petitioner had paid duty at the time of removal of the goods. Hence, petitioner filed a rebate claim under Rule 18 of the Central Excise Rules, 2002 in respect of the duty paid on clearance of the goods which came to be exported from Hosur plant. The jurisdictional Range Officer by his report interalia stated that the rebate clai .....

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4 -CE(NT) dated 06.09.2014. Aggrieved by the said order, petitioner filed appeal and the appellate authority by order dated 22.05.2008 (Annexure-D) remanded the matter insofar as rebate/disallowance and dismissed remaining appeals. Aggrieved by this order, petitioner filed revision petition before the Ministry of Finance (Department of Revenue) which related to the period October, 2005 to May, 2007, June, 2007 to December, 2007. Fifth respondent passed an order on 07.07.2010 upholding the orders .....

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ined reading of the notification under the Central Excise Rules, 2002 and Automobile Cess Rules specifies that the manner of levying, collecting and refund as applicable to the duty are applicable to the Automobile Cess. This aspect of the matter is not considered in the Order dated 07.07.2010. (b) In identical circumstances, the Rajasthan High Court, while interpreting the education cess levied under the excisable goods, allowed rebate on cess though not covered under the Notification for the r .....

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ed by petitioner. Appellate authority by order dated 01.06.2009 (Annexure-M) allowed the appeal. Pursuant to the said order, third respondent granted refund of Automobile Cess, Education Cess and SHE Cess to the petitioner by order dated 13.07.2009. Aggrieved by this order dated 01.06.2009 Department filed a revision application in reference No.198/133/09- RA-CX before the Ministry of Finance (Department of Revenue). Hence, show cause notice dated 17.05.2010 came to be issued to the petitioner t .....

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.06.2009 before the revisional authority and demanded the petitioner to refund the rebate granted. Reply came to be submitted to the said show cause notice which came to be adjudicated by upholding the show cause notice and appeal filed against said order came to be rejected vide order dated 09.08.2012. Revision petition filed against said order before fifth respondent is said to be pending. 6. The revisional authority by order dated 07.07.2010 (Annexure-S) allowed the appeal filed by the Depart .....

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utomobile Cess vide Annexure-Z. However, for the period 01.03.2007 to 07.03.2007 the revision application filed by the petitioner on the ground of violation of condition No.2(b) was answered in favour of the petitioner The details of the above factual matrix can be condensed as per the Tabular column noted herein below: Sl. No. RA/F. No. Name of Applicant Name of the Respondent Amt. of Rebate/Duty Paid Period of dispute No. and Date of order-in-appeal Rebate of Automobile Cess involved (1) (2) ( .....

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09 06/2011 dated 21.1.11 8. I have heard the arguments of Sriyuths Shivadass, learned Advocate appearing for petitioner and N.R.Bhaskar, learned Standing Counsel appearing for respondents. 9. It is the contention of Sri Shivadass, learned counsel appearing for petitioner that Automobile Cess, Education Cess on Automobile Cess and Secondary and Higher Education Cess on Automobile Cess is levied under Section 9 of the Industries (Development & Regulation) Act, 1951 read with Rule 3 of Automobi .....

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y that provisions of Central Excise Act alone would be applicable and this is an erroneous finding and contrary to the law laid down by the Hon'ble Apex Court in (1997) 92 ELT 303 (SC) and (1992) 57 ELT 3 (SC). It is further contended that Automobile Cess, Education Cess on Automobile Cess, Secondary and Higher Education Cess on Automobile Cess being one of the duties of excise being paid on the goods exported, rebate of Cess cannot be rejected on the ground that it does not find a mention i .....

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at Section 2A was introduced which provided that references to the expression 'duty', 'duties', 'duty of excise' and 'duties of exercise' shall be construed to include a reference to CENVAT and as such, there was no distinction in these phrases can be attributed. 11. On this premise, it is contended that Automobile Cess, Education Cess on Automobile Cess, Secondary and Higher Education Cess on Automobile Cess is a duty of excise and is part of the duties paid by t .....

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learned counsel appearing for respondent would support the impugned order passed by 5th respondent by contending that duties of excise collected under the Central Excise Act can only be rebated in respect of goods exported and Automobile Cess, Education Cess and SHE Cess is not specified as duty in Explanation-I of Notification No.19/04 -CE(NT) and as such rebate of such Cess paid would not be admissible. Hence, he prays for dismissal of these writ petitions. In support of his submission he has .....

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Central Excise Tariff Act, 1985. Petitioner is having two units namely one at Mysore and one at Hosur. The vehicles on being manufactured at Mysore was transferred from their Mysore Unit to Hosur Unit on payment of excise duties. Subsequently two wheelers were exported to various countries from Hosur Unit. The Hosur Plant of petitioner has issued the disclaimer certificate in favour of their Mysore Unit to enable the petitioner to claim rebate of duty paid on two wheelers exported in respect of .....

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earance and as such question of unjust enrichment does not arise. After orders being passed by the original authority for different periods it has resulted in appeals being filed and ultimately the revisional authority namely 5th respondent has disallowed the rebate claimed by the petitioner by order dated 20.05.2013 Annexure-Z which is impugned in the present writ petitions. It is to be noted at this juncture itself that claim for rebate of Automobile Cess as indicated at Sl.No.1 to 3 of column .....

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In this background, it would be necessary and appropriate to extract relevant statutory provisions which have direct bearing on the issue. Hence, they are extracted herein below. Section 9 of the Industries (Development and Regulation) Act, 1951 reads as under: 9. Imposition of Cess on Scheduled Industries in certain cases. - (1) There may be levied and collected as a cess for the purpose of this Act on all goods manufactured or produced in any such scheduled industry as may be specified in this .....

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ty are sold or are capable of being sold for delivery at the place of manufacture and at the time of their removal therefrom, without any abatement or deduction whatever except trade discount and the amount of duty then payable. (2) The cess shall be payable at such intervals within such time and in such manner as may be prescribed, and any rules made in this behalf may provide for the grant of a rebate for prompt payment of the cess. (3) The said cess may be recovered in the same manner as an a .....

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industries in respect of which the Development Council is established; (b) to promote improvements in design and quality with reference to the products of such industry or group of industries; (c) to provide for the training of technicians and labour in such industry or group of industries; (d) to meet such expenses in the exercise of its functions and its administrative expenses as may be prescribed." Rule 2 & 3 of Automobile Cess Rules, 1984 reads as under: "Rule 2 : Definitions. .....

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se relating to refund of duty, shall, so far as may be, apply in relation to the levy and collection of the cess as they apply in relation to the levy and collection of the duty of excise on manufacture of automobiles under the Act and the Rules." Rule 18 of Central Excise Rules, 2002: Rule 18. Rebate of duty - Where any goods are exported, the Central Government may, by notification, grant rebate of duty paid on such excisable goods or duty paid on materials used in the manufacture or proc .....

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Industries (Development and Regulation) Act, 1951 read with Rule 3 of Automobile Cess Rules, 1984. A bare perusal of Rule 3 of Automobile Cess Rules, 1984 indicates that provisions of Central Excise Act, 1944 and the Rules made thereunder including those relating to refund of duty has been made applicable to the levy and collection of Cess. 17. Perusal of the above referred section and rules would prima facie indicate that provisions of Central Excise Act, 1944 and Rules made thereunder will ap .....

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In exercise of power vested under Rule 18 of Rules 2002 Central Government has issued notification No.19/2004 -CE(NT)dated 06.09.2004 granting rebate of whole of the duty paid on excisable goods falling under First Schedule to CETA exported to any country other than Nepal and Bhutan, subject to the conditions, limitations and procedures specified thereunder. A perusal of said notification dated 6.9.2004 would indicate that "duty" for the purposes of said notification would mean as spe .....

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ance 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); (e) special excise duty collected under a Finance Act; (f) additional duty of excise as levied under section 157 of the Finance Act, 2003 (32 of 2003); (g) Education Cess on excisable goods as levied under clause 81 read with clause 83 of the Finance (No.2) Bill, 2004. (h) the additional duty of excise leviable under clause 85 of the .....

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ating to levy and collection of Cess came to be considered by the Hon'ble Apex Court in the case of COLLECTOR OF CENTRAL EXCISE, PATNA VS TATA ENGINEERING AND LOCOMOTIVE COMPANY reported in 1997(92 (ELT) 303 SC and held as under: "3. Learned counsel for the assessee submits that the value of the motor vehicle for the purposes of the levy of the cess has to be calculated in the manner laid down in the Central Excises and Salt Act, 1944, for which purpose he places reliance upon Rule 3 of .....

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e by the Central Government of the function of fixing the rate of the cess. The legislature, by the proviso to Section 9(1), has laid down the limits of the Central Government discretion in fixing such rate, namely, that such rate shall not exceed two annas per cent of the value of the goods. It is for this purpose that the Explanation in Section 9(1) defines the expression "value" and states that it shall be deemed to be the wholesale cash price for which such goods of the like kind a .....

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ly to the valuation of goods to be made for the purposes of computation of the cess under the said notification. In other words, in calculating 1/8 per cent ad valorem, the value of the goods is not to be determined as set out in the Explanation to Section 9(1). For this purpose, what is relevant is Rule 3 of the Automobile Cess Rules, 1984, which states that the provisions of the Central Excises and Salt Act shall apply so far as may be in relation to the levy and collection of the cess. The ca .....

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9(1) of Industries (Development and Regulation) Act, 1951 would not apply insofar as it applies to the valuation of goods to be made for the purposes of computation of Automobile Cess, Education Cess on Automobile Cess, SHE Cess on Automobile Cess to be levied and calculated as if it was excise duty as prescribed under Rule 3 of Automobile Cess Rules, 1984. 21. The Hon'ble Apex Court in the case of BARANGORE JUTE FACTORY COMPANY VS INSPECTOR OF CENTRAL EXCISE reported in 1992(57) ELT 3(SC) h .....

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section 9 is a duty of excise. Section 9 says so in so many words. The explanation to subsection (1) of section 9 defines the expression 'value' in practically the same terms as it is defined in the Central Excise Act. And Rule 3 of the Jute Cess Rules provides that except as otherwise provided in the said rules, the provisions of Central Excise Act and the rules made thereunder "shall, so far as may be, apply in relation to the levy and collection of the cess as they apply in relat .....

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indra and Mahindra. The facts of that case are: xxx well settled proposition that "if a subsequent act xxx at all" But, the language of Rule 3 of Jute Cess Rules is altogether different. It indicates a continuing applicability of the provisions of the Central Excise Act and the Rules. What was levied was a 'duty of excise' and it was to be levied and collected in accordance with the provisions of the Central Excise Act and the Rules. The effect is as if the words 'for the t .....

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planation-I of the Notification 19/2004 acquires significance, whereunder the word "duty" has been defined for the purposes of said Notification to mean duties of excise collected under the enactments enumerated under Explanation-I. As to whether Automobile Cess, Education Cess on Automobile Cess and SHE Cess on Automobile Cess levied pursuant to levy of excise duty and paid on the goods exported can also be construed as duty and entitled to rebate or the authorities were right in reje .....

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ty of excise" were used interchangeably. For instance language employed in Section 3 was:- "There shall be levied and collected as may be prescribed,- duties of excise on all excisable goods , other than….." Whereas Phraseology used in section 4(1) read as under: "Where under this Act, duty of excise is chargeable on any excisable goods with reference to value, such value ………." With effect from 12.05.2000 Section 3 of Central Excise Act, 1944 .....

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th reference to their value, then on such removal……." (Emphasis supplied) 24. Thus, it would indicate that the phrase "duties of excise" and "duty of excise" were used interchangeably namely sometimes in plural and sometimes in singular i.e., prior to 12.05.2000. However, said phraseology came to be substituted by new phrase viz., 'CENVAT' with effect from 12.05.2000. In order to overcome the difficulty of replacing these words in entire Central Exc .....

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al Excise Act, 1944 by replacing the phrases earlier used in the Act with the words 'CENVAT', and (ii) Not to create any distinction between various phrases used in Central Excise Act, 1944. Thus, it would clearly indicate that there can be no distinction between the phrases 'duty', 'duties', "duty of excise" and "duties of excise". 25. The rebate of duty to be paid on exported goods is allowable under Rule 18 of the Central Excise Rules, 2002 read wit .....

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uot;, Education Cess and SHE Cess are not specified as duty under Explanation-I to notification and therefore such rebate claimed by petitioner came to be denied. 26. The levy of "Automobile Cess" is traceable to the charging Section namely, Section 9 of The Industries (Development and Regulation), Act, 1951. 27. Pursuant to above said power, Central Government by notification No.247(E) (Ministry of Finance) dated 22.03.1990 issued notification specifying the classes of goods manufactu .....

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t of applicability of Central Excise Act and Rules made thereunder. In other words, under Rule 3 the provisions of Central Excise Act and Rules made thereunder has been held to be applicable so far as they apply in relation to the levy and collection of duty of excise on manufacture of automobiles under the Act and the Rules. 29. The rebate has been claimed under Rule 18 Central Excise Rules, 2002 as noted hereinabove, which is in pursuance to exemption notification No.19/2004 CE(NT) dated 06.09 .....

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ading of Rule 3 of Automobile Cess Rules would indicate that provisions relating to collection of duty are indeed applicable to the Automobile Cess levied under the notification No.923(E) dated 28.12.1983 which notification came to be superseded by notification SO No.247(E) dated 22.03.1990 and as such, the Automobile Cess has been collected as a duty of excise in terms of the provisions of Central Excise Act. Thus, reference to Central Excise Act, 1944 in the notification dated 06.09.2004 would .....

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t in a different manner, Rule 18 does not indicate that rebate can be granted in respect of any duty other than duty levied under Section 3 of the Central Excise Act, 1944. As such, the Automobile Cess, Education Cess on Automobile Cess and SHE Cess on Automobile Cess though not expressly specified under notification dated 06.09.2004 would encompass within its sweep to include these Cess within the definition of phrase 'duty'. 32. Yet another factor which requires to be noticed is, Secti .....

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cise Act, 1944 is applicable for the collection of Cess as a duty of excise . Thereby, 'Cess' is a duty of excise collected in terms of Central Excise Act, 1944. Hence, this Court is in respectful agreement with the view expressed by Rajasthan High Court in Banswara Syntex Limited. 33. The High Court of Rajasthan in the case of BANSWARA SYNTEX LTD., VS. UNION OF INDIA reported in (2007) 216 ELT 16 (Raj.) while examining as to whether Education Cess levied on excisable goods would bear th .....

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ss levied on excisable goods was directed to be Duty of Excise itself and has to be collected as excise Duty in addition to Excise Duty otherwise chargeable under Central Excise Act or any other law. 13. Under sub-section (3) xxxx Central Excise Rules. 14. Similar provision has been xxxx 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 .....

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under which Education Cess in the form of surcharge is levied & collected. 16. Apparently, when at the time of collection, surcharge has taken the character of parent levy, whatever may be the object behind it, it becomes subject to the provision relating to the Excise Duty applicable to it in the manner of collecting the same obligation of the tax payer in respect of its discharge as well as exemption concession by way of rebate attached with such levies. This aspect has been made clear by .....

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able and collected under Finance Act, 2004 and fell within the ambit of clause (3) of Explanation, appended to Notification dated 26-06-2001. Consequently, rebate became available on collection of surcharge on Excise Duty under Finance Act, 2004 in terms of existing Notification dated 26-06-2001 immediately. Later Notification including the Education Cess in enumerative definition in the circumstances was only clarificatory and by way of abundant caution, but not a new rebate in relation to Exci .....

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ion 93 as a whole, it becomes clear that existing Notification providing exemption to the Duty of Excise is otherwise applicable to Education Cess also w.e.f. it became payable as part of the Duty of Excise or at any 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 consi .....

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ld that impugned orders of Central Government as revisional authority and appellate order of Commissioner (Appeals) are patently erroneous and deserve to be quashed. 21. Accordingly, writ petition is allowed, impugned orders are set aside to the extent the petitioner has been denied the claim to rebate on surcharge on Excise Duty appropriated by Union of India as Education Cess for funding Universalised quality basic education programme but was paid by the petitioner only as Duty of Excise w.e.f .....

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f rebate claim of Education Cess which came to be considered by the Hon'ble High Court of Rajasthan was in the context of Section 91, 92 and 93 of Finance Act, 1994 and Section 93 of the Finance Act specifically says that Education Cess levied under section 91 shall be a duty of excise. However, the revisional authority has lost sight of the fact that Education Cess collected in Banswara Syntex Limited Case was as part of customs duty under three different enactment which indicated that the .....

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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. In that view of the matter, this court is of the considered view that revisional authority erred in arriving at a conclusion that the ratio laid down by the Rajasthan High Court would be inapplicable to the facts on hand. 35. Yet another factor which cannot go unno .....

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duty of excise paid on excisable goods exported out of India. 36. A Division Bench of this Court in the case of COMMISSIONER OF CENTRAL EXCISE, CUS. & S.T., BELGAUM VS. SHREE RENUKA SUGARS LTD., reported in (2014) 302 ELT 33 while examining as to whether "Sugar Cess" levied and collected under the Central Excise Act, 1944 is to be treated as levy and collection of duty of excise on sugar, has held 'Sugar Cess' is duty of excise as defined under Section 3 of the Central Exc .....

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me being in force as is clear from sub-section (2). The way sub-section (2) is worded makes it clear that what is levied and collected as a cess under sub-section (1) of Section 3 is characterized as a "duty of excise" levied under "the Central Excise Act". Further, subsection (4) makes it clear that the provisions of the Central excise Act and the Rules made thereunder including those relating to refunds and exemptions from duty shall, so far as may be, apply in relation to .....

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tory Co. v. Inspector of Central Excise, 1992 (57) E.L.T. 3 (S.C.), wherein the observations made by Lord Esher M.R. in 1886 31 Chancellary Division 607/615 were refereed to in para 18 of the judgment which reads as under: "If a subsequent Act brings into itself by reference some of the clauses of a former Act, the legal effect of that Act, as has been held, is to write those Sections into the new Act just as if they had been actually written in it with the pen or printed in it, and, the mo .....

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be and does not become a part of the Consolidated Fund. It should be earmarked and set apart for the purpose of services for which it is levied. Then only it should be described as a fee and not tax. If the cess levied and collected is credited to the Consolidated Fund of India and it has to be appropriated by the Parliament by law and then only the said amount could be credited to the Fund, it ceases to be a fee and partakes the character of a duty or a tax. 27. In the instant case, Section 4 o .....

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re is no quid pro quo between the cess levied and collected and the services rendered for such payment. On the contrary, the proceeds are credited to the Consolidated Fund of India which is meant to be utilized for all public purposes, may be including the purpose contemplated under the Sugar Development Fund Act, 1982. In the light of the aforesaid statutory provisions, the cess imposed under the Act is a duty of excise of a tax. The contention that it is a fee and the assessee is not entitled .....

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