TMI Blog2017 (11) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... is Education Cess is to be levied @ 2% and calculated on the aggregate of all duties of excise which are levied and collected by the Central Government under the provisions of Central Excise Act, 1944 or under any other law for the time being in force. Sub-section (3) of Section 93 provides that the provisions of the Central Excise Act, 1944 and the rules made thereunder, including those related to refunds and duties etc. shall as far as may be applied in relation to levy and collection of Education Cess on excisable goods. A conjoint reading of these provisions would amply demonstrate that Education Cess as a surcharge, is levied @ 2% on the duties of excise which are payable under the Act. It can, therefore, be clearly inferred that when there is no excise duty payable, as it is exempted, there would not be any Education Cess as well, inasmuch as Education Cess @ 2% is to be calculated on the aggregate of duties of excise. There cannot be any surcharge when basic duty itself is Nil. When two views are possible, one which favours the assessees has to be adopted - there were divergent views in case laws cited, the one which favors the assessee has been followed - reliance placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , CIVIL APPEAL NO. 8332 OF 2010, CIVIL APPEAL NO. 8329 OF 2010, CIVIL APPEAL NO. 8178 OF 2012, CIVIL APPEAL NO. 813 OF 2013, CIVIL APPEAL NO. 7605 OF 2012, CIVIL APPEAL NO. 8181 OF 2012, CIVIL APPEAL NO. 8180 OF 2012, CIVIL APPEAL NO. 811 OF 2013, CIVIL APPEAL NO. 8185 OF 2012, CIVIL APPEAL NO. 8186 OF 2012, CIVIL APPEAL NO. 8179 OF 2012, CIVIL APPEAL NO. 7876 OF 2012, CIVIL APPEAL NO. 8182 OF 2012, CIVIL APPEAL NOS. 8504-8509 OF 2012, CIVIL APPEAL NOS. 1445-1446 OF 2011, CIVIL APPEAL NOS. 1443-1444 OF 2011, CIVIL APPEAL NO. 720 OF 2012, CIVIL APPEAL NO. 18443-18446 OF 2017, (ARISING OUT OF SLP (C) NOS. 35647-35650 OF 2011), CIVIL APPEAL NO.4321-4322 OF 2013, CIVIL APPEAL NO.4292-4319 OF 2013 AND CIVIL APPEAL NO.4323-4325 OF 2013 For the Parties : Mr. Rakesh Dahiya, AOR, Mr. Mohd. Irshad Hanif, AOR, Mr. Pratap Venugopal, Adv., Ms. Surekha Raman, Adv., Mr. Anuj Sarma, Adv., Ms. Kanika Kalaiyarasan, Adv., M/S. K J John And Co, AOR, Mr. Rajesh Kumar, AOR, Mr. Mukesh Kumar Maroria, AOR, Mrs. Anil Katiyar, AOR, Mr. Anil K. Jha, AOR, Mr. R. K. Ojha, Adv., Mr. Ravindra Keshavrao Adsure, AOR, Dr. Kailash Chand, AOR, Mr. B. Krishna Prasad, AOR, Mr. Arvind Kumar Sharma, AOR, Mr. Abhiman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise duty paid by these manufacturers, the Education Cess and the Higher Education Cess that were paid by the manufacturers along therewith were not refunded. The dispute, thus, which arises for consideration in these appeals is as to whether the Education Cess and Higher Education Cess which were paid along with the excise duty was also liable to be refunded along with the central excise duty in terms of the exemption notifications. This is the issue which is common in all these appeals and the factual background in which the matter has travelled up to this Court is also almost the same. Therefore, for the sake of convenience, purpose would be served in tracing the factual events from Civil Appeal Nos. 2781-2790 of 2010. 4) The appellant in these appeals is M/s. SRD Nutrients Private Limited (hereinafter referred to as the assessee ). It is engaged in the manufacture and clearance of Malted Milk Food (Horlicks) using sweetened milk powder since April 12, 2008 and has set up its factory in the State of Assam. This unit is duly registered with the Central Excise Department. 5) Industrial Policy dated April 01, 2007 for the North-Eastern States, including the State of Assam, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n shall be available subject to the condition that, the manufacturer first utilises whole of the CENVAT credit available to him on the last day of the month under consideration for payment of duty on goods cleared during such and pays only the balance amount in cash. 3. The exemption contained in this notification shall be given effect to in the following manner, namely:- (a) the manufacturer shall submit a statement of the duty paid other than the amount of duty paid by utilisation of CENVAT credit under the CENVAT credit Rules, 2004, to the Assistant Commissioner or the Deputy Commissioner of Central Excise, as the case may be, by the 7th of the next month in which the duty has been paid other than the amount of duty paid by utilization of CENVAT credit under the CENVAT Credit Rules, 2004; (b) the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, after such verification, as may be deemed by utilisation of CENVAT credit under the CENVAT Credit Rules, 2004, during the month under consideration to the manufacturer by the 15th of the next month. Provided that in cases, where the exemption contained in this notificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (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 or 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 in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), being goods manufactured or produced, shall be a duty of excise (in this section referred to as the Education Cess on excisable goods), at the rate of two per cent, calculated on the aggregate of all duties of excise (including special duty of excise or any other duty of excise but excluding Education Cess on excisable goods) which are levied and collected by the Central Government in the Ministry of Finance (Department of Revenue), under the provisions of the Central Excise Act, 1944 (1 of 1944) or under any other law for the time being in force. (2) The Education Cess on excisable goods shall be in addition to any other duties of exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lier judgment in Cyrus Surfactants Pvt. Ltd. case has also been considered. 12) In the aforesaid backdrop, learned counsel for the appellant was vehement in his criticism of the view taken by the Tribunal. His first submission was that in case the Division Bench of the Tribunal in Jindal Drugs Ltd. decided to differ from the view taken by earlier Division Bench in Cyrus Surfactants Pvt. Ltd. , an appropriate course of action was to refer the matter to the larger Bench. That apart, submitted the learned counsel, the view taken in Cyrus Surfactants Pvt. Ltd. needs to be approved. In this behalf, he argued that reading of the exemption Notification dated April 25, 2007 would make it clear that there was 100% exemption granted by the said Notification from levy of excise duty which was clear from the reading of para 1 thereof. Para 2 of the Notification simply laid down the mechanism as to how the said exemption was to be applied, with the specification that the duty was to be paid first after adjusting the CENVAT credit and thereafter claim for refund was to be made. He further submitted that Education Cess was levied @ 2% on the excise duty. When the levy of excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected mean here? Words cannot be construed effectively without reference to their context. The setting colours the sense of the word. The spirit of the provision lends force to the construction that collected means collected and kept as his by the trader. If the dealer merely gathered the sum by way of tax and kept it in suspense account because of dispute about taxability or was ready to return it if eventually it was not taxable, it was not collected. Collected', in an Australian Customs Tariff Act, was held by Griffith, C.J., not to include money deposited under an agreement that if it was not legally payable it will be returned' : (Words Phrases, p.274). We therefore semanticise collected not to cover amounts gathered tentatively to be given back if found non-exigible from the dealer. 15) Rebutting the aforesaid arguments of the appellants, Mr. Yashank P. Adhyaru, learned senior counsel appearing for the Revenue commended this Court to approve the view taken by the Tribunal in Jindal Drugs Ltd. case which has been accepted by the High Court as well. His argument was that the exemption notification exempts only the excise duty. However, duty has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on excisable goods is leviable on goods manufactured prior to imposition of Cess but cleared after imposition of such cess? Clarification: Education Cess on Excisable goods is a new levy. In similar cases, it has been held by the Supreme Court that if a levy is not there at the time the goods are manufactured or produced in India, it cannot be levied at the stage of removal of the said goods. Thus, Education Cess is not leviable on excisable goods manufactured prior to imposition of cess but cleared after imposition of such cess. Issue No. (2): Whether goods that are fully exempted from excise duty/customs duty or are cleared without payment of excise duty/customs duty (such as clearance under bond or fulfillment of certain conditions) would be subjected to Cess Clarification: The Education Cess is leviable at the rate of two per cent of the aggregate of all duties of excise/customs (excluding certain duties of customs like anti dumping duty, safe guard duty etc.), levied and collected . If goods are fully exempted from excise duty or customs duty, are chargeable to NIL duty or are cleared without payment of duty under specified procedure such as clearance u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iple, where education cess has been refunded to exporters along with service tax, by virtue of exemption notifications where 'whole of service tax' is exempt, the same need not be recovered. 4. Field formations may be instructed accordingly. 5. Please acknowledge the receipt ofthis circular: Hindi version to follow. 18) No doubt, it clarified the position in relation to the exemption from payment of service tax that was given vide Notification No. 41/2007-SCT dated August 06, 2007. We have gone through that Notification as well, which is pari material with Notification dated April 25, 2007. What is important is that this Circular dated April 08, 2011 refers to the judgment of the Tribunal in Balasore Alloys Ltd. v. CCE, Customs and Service Tax, BBSR-I (2010-TIOL-1659-CESTAT-KOL) which was a decision rendered in favour of the Revenue as it was held therein that the Education Cess and Higher Education Cess would not be refunded while giving back the exempted service tax. Notwithstanding the same, the Circular mentions that the said order of the Tribunal is in consistent with the policy intention of the Government to exempt Education Cess in addition to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Tariff Act, 1985. Further, this Education Cess is to be levied @ 2% and calculated on the aggregate of all duties of excise which are levied and collected by the Central Government under the provisions of Central Excise Act, 1944 or under any other law for the time being in force. Sub-section (3) of Section 93 provides that the provisions of the Central Excise Act, 1944 and the rules made thereunder, including those related to refunds and duties etc. shall as far as may be applied in relation to levy and collection of Education Cess on excisable goods. A conjoint reading of these provisions would amply demonstrate that Education Cess as a surcharge, is levied @ 2% on the duties of excise which are payable under the Act. It can, therefore, be clearly inferred that when there is no excise duty payable, as it is exempted, there would not be any Education Cess as well, inasmuch as Education Cess @ 2% is to be calculated on the aggregate of duties of excise. There cannot be any surcharge when basic duty itself is Nil. 22) It is rightly pointed out by the learned counsel for the appellants that the CESTAT in the earlier two judgments given in Bharat Box Factory Ltd. and Cyr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Cess chargeable and collected under Finance Act, 2004 and fell within the ambit of clause (3) of Explanation appended to Notification dated 26/6/2001. Consequently, rebate became available on collection of surcharge on Excise Duty under Finance Act, 2004 in terms of existing Notification dated 26/6/2001 immediately. Later Notification including the Education Cess in enumerative definition in the circumstances was only clarificatory and by way of abandoned caution, but not a new rebate in relation to Excise Duty or any part thereof as statutorily pronounced as well as specified Excise Duty levied and collected under the Finance Act. We are in agreement with the aforesaid reasons accorded by the Rajasthan High Court, since it is in consonance with the legal principle enunciated by this Court. For this purpose, we may refer to the judgment in the case of Collector of Central Excise, Patna v. Tata Engineering and Locomotive Co. 1997 (92) ELT 303 (SC). In that case, issue pertained to valuation of cess which was levied @ 1/8 per cent of ad valorem value of the central excise duty. The Court held that the calculation of 1/8 per cent ad valorem of the motor vehicle ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
