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2017 (2) TMI 716 - CESTAT NEW DELHI

2017 (2) TMI 716 - CESTAT NEW DELHI - TMI - Area based exemption - whether the appellant is liable to pay NCCD, Education Cess and Secondary Higher Education Cess inspite of the exemption N/N. 50/2003? - reliance placed in the case of CCE, Dibrugarh Vs. Prag Bosimi Synthetics Ltd. [2013 (11) TMI 487 - GAUHATI HIGH COURT] - Held that: - NCCD, Education Cess, Secondary Higher Education Cess which are levied under separate statutory enactments cannot be granted exemption under the notification. - a .....

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he cenvat credit of duties paid on the inputs. Consequently, there is no question of set-off of such credits towards the liability for NCCD Education Cess and Secondary Higher Education Cess - appeal dismissed - decided against appellant. - Ex. Appeal No. 3575, 3983 of 2010, Ex. Appeal No. 1042 of 2012, Ex. Appeal No. 56758 of 2013 & 56585 of 2013 And Excise Appeal No.3890 of 2010 - A/50208-50213/2017-EX[DB] - Dated:- 11-1-2017 - Mr. (Dr.) Satish Chandra, President And Mr. V. Padmanabhan, Member .....

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hand). During the relevant period, they were enjoying the area based exemption under Notification No. 50/2003-CE dated 10.06.2003. The dispute relates to the demands raised on the appellant in respect of payment of National Calamity Contingent Duty (NCCD) for different periods. NCCD is levied under Section 136 of the Finance Act, 2001. As per the Revenue, the notification in question grants exemption only from the payment of duty in respect of basic excise duty payable in terms of Central Excise .....

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ugh to admit that the issue for demanding NCCD, Education Cess and Secondary Higher Education Cess stands settled against the appellant as per the ratio laid-down by the following case laws: i) Bajaj Auto Ltd. Vs. Union of India and three Others - (Writ Petition No. 2222 of 2011 (M/s) decided by the High Court of Uttarakhand at Nainital ii) CCE, Dibrugarh Vs. Prag Bosimi Synthetics Ltd. - 2013 (295) ELT 682 (Gm.) However, he agitated that their request made in reply to the show cause notices tha .....

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part of the substantial question of law would now arise, namely, whether CENVAT credit can be utilised towards payment of NCC duty under the CENVAT Credit Rules. 9. In this regard it is necessary to go through the CENVAT Credit Rules, particularly Rule 3(4) and Rule 3(7) thereof. 10. Rule 3 (1) provides that a manufacturer or producer of a final product shall be allowed to take CENVAT credit of the NCC duty leviable under Section 136 of the Finance Act, 2001. To this extent there is no dispute b .....

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e Rules, 2002; or (e) service tad on any output service: Provided that while payment duty of excise or service tax, as the case may be, the CENVAT credit shall be utilised only to the extent such credit is available on the last day of the month or quarter, as the case may be, for payment of duty or tax relating to that month or the quarter, as the case may be: Provided further that the CENVAT credit of the duty, or service tax, paid on the inputs, or input services, used in the manufacture of fi .....

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4th November, 2002], (v) No. 57/2002-CE, dated 14th November, 2002 (G.S.R. 765(E), dated the 14th November, 2002]; (iv) 56/2003-CE, dated the 25th June, 2003 [G.S.R. 513 (E), dated the 25th June, 2003]; and (vii) No. 71/2003-Central Excise, dated the 9th September, 2003 [G.S.R. 717(E), dated the 9th September, 2003] Shall, respectively, be utilised only for payment of duty on final products, in respect of which exemption under the said respectively notifications is availed of Rule 3(4) provides .....

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n respect of which exemption under the said notification is availed of It is clear from this that CENVAT credit of duty paid on inputs shall be utilised only for payment of duty on the final product for which exemption is availed . 4. He submits that as per the ratio laid-down by the Guwahati High Court, cenvat credit of the basic excise duty can be utilised for payment of any duty on the final product. The contention is that payment of NCCD, Education Cess, Secondary Higher Education Cess throu .....

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of NCC duty may also be utilised for payment of any duty of excise on any final product in terms of Rule 3(4) subject to Rule 3(7). 17. Rule 3 (7) limits the utilisation of CENVAT credit in respect of NCC duty as also other duties mentioned in Rule 3(7)(b). It provides that CENVAT credit in respect of NCC duty and other duties shall be utilised towards payment of duty of excise leviable under various statutes respectively. The use of the word respectively" in this regard is important inasmu .....

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ies by resorting to use of the Rule 6 of the Cenvat Credit Rules, 2004. He submits that the exempted goods have been defined in Section 2(d) as under: "(d) "exempted goods" means excisable goods which are exempt from the whole of the duty of excise leviable thereon, and includes goods which are chargeable to "Nil" rate of duty and goods in respect of which the benefit of an exemption under notification No.1/2011-CE, dated the 1St March, 2011 is availed;". It is the .....

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he demands the cenvat credit paid on inputs may kindly be allowed. He submits that in Appeal Nos. E/3575/2010 & E/3890/2010, the adjudicating authority has not discussed this point though the issue was raised in the reply to the show cause notice. In all other appeals the issue was discussed but claim was- denied by the adjudicating authority. 6. To counter it, Id. AR Sh. Yogesh Agarwal appearing for Revenue submits that the Area Based exemption notification No. 50/2003 dated 10.06.2003 rela .....

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above. Accordingly, NCCD, Education Cess, Secondary Higher Education Cess which are levied under separate statutory enactments cannot be granted exemption under the notification. He accordingly supported the orders passed by the Id. Commissioner and prayed that the same may be upheld. Coming to the contention of the Id. Counsel for the appellant that they should be allowed to set-off the cenvat credit available on inputs towards discharging the above three types of duties, he opposed the same. I .....

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nasmuch as no excise duty is payable in view of the area based exemption Notification No. 50/2003. He finally submitted that since the cenvat credit is not allowed to be taken under Rule 6 of the Cenvat Credit Rule, the appellant will not be entitled to utilise such credits to discharge the liability in respect of NCCD, Education Cess, Secondary Higher Education Cess. 8. Heard both sides, perused records. Notification No. 50/2003 dated 10.06.2003 in question grants exemption to goods other than .....

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ce Acts. Ld. Commissioner has decided in all the impugned orders that the appellant will not be entitled to exemption for the above three types of duties inspite of enjoying the benefit of exemption under Notification No. 50/2003. From the detailed submissions made by the Id. Counsel for the appellant, it emerges that the issue already stands decided against the appellant and the Id. Counsel has fairly admitted the same. He has conceded that the issue stands decided against them by both the High .....

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G of the Central Excise Act, 1944 the following substantial question of law has been framed for consideration:- "Whether NCC Duty (National Calamity Contingent duty) is a duty exempted under Notification No. 32/99-CE, dated 8.7.1999 and, if not, whether CENVAT Credit under the CENVAT Credit Rules, 2004, can be utilised, towards payment of such duty, which is not exempted under the said Notification. 2. The substantial question of law is really n two parts: The first part being whether NCC d .....

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CC duty is by way of a surcharge and is a duty of excise. NCC duty is chargeable on goods specified in Seventh Schedule of the Finance Act and is in addition to any other duties of excise chargeable on such goods under the Central Excise Act, 1944 for short "the Excise Act"). In terms of Section 136(3) of the Finance Act the provisions of the Excise Act and the Rules made thereunder relating to refunds and exemptions from duties etc., apply in relation to the levy and collection of NCC .....

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of Special Importance) Act, 1957 and subsection (3) of Section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978. By virtue of this notification the Central Government has exempted goods specified in the First and Second Schedules to the Central Excise Tariff Act from so much of the duty of excise or additional duty of excise, as the case may be, leviable thereon under any of the said Acts as is equivalent to the amount of duty paid by the manufacturer of goods othe .....

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C duty which is levied as a surcharge under the provisions of the Finance Act, 2001. 7. Consequently, insofar as the first part of the substantial question of law framed above is concerned, it must be answered in the negative which is to say that NCC duty, even though it is a duty of excise, is not exempted under Notification No. 32/99-CE. The operation of this notification is limited . 9. It is to be noted that the decision of the Gauhati High Court has been rendered in the context of Notificat .....

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9;s argument is that in the case of Prag Bosimi the Hon'ble Gauhati High Court has allowed such adjustments. In fact, the High Court in that case held that whereas NCCD credit may be utilised only to discharge liability of NCCD on final product, but the cenvat credit may be utilised to discharge NCCD liability. Accordingly, the Id. Counsel has pleaded vehemently to allow similar benefit. 11. We are of the view that this finding of the Hon'ble Gauhati High Court cannot be extended to the .....

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