TMI Blog2018 (1) TMI 770X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption in respect of the goods specified in the first and the second schedule to the Central Excise Tariff Act, 1985, other than certain goods, which were mentioned, with which, we are not concerned. The exemption was from whole of the duty of excise or additional duty of excise, which were levied under the said Acts. The power to exempt payment of NCCD and the cesses in terms of the Act and the Rules are certainly available in relation to NCCD and the cesses, but they remain levies under the concerned Finance Acts. Since they are part of the basket of levies embraced under Rule 3(1) making up the aggregate of the CENVAT credit, subject to any restriction or limitation, which may be found elsewhere, there can be no doubt that the assessee can make use of the basic excise duty under the Act for payment of the NCCD or the cesses on the final product. A perusal of the provisions of Section 11AC as it stood would show that the fact of payment of the duty may not help the appellant to contend that it can extricate itself from the liability to pay penalty under Section 11AC, if the appellant is otherwise liable to pay penalty under the said provision. The appellant has not paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C and SHEC were demanded along with interest and also penalty under Section 11AC of the Central Excise Act, 1944 (hereinafter referred to as the Act). 3. The show causes from which the Appeals ultimately arise are related to various periods. The first period was from April, 2008 to 2009 and finally, the last period was from September, 2011 to 2012. The Appellant has a case that the appellant, for various periods, made payment of NCCD, EC and SHEC in some cases prior to issuance of the notices and in other cases, immediately, on receipt of the notice. 4. In short the case of the appellant appears to be that it was entitled to exemption in respect of NCCD, EC and SHEC under Notification No. 50 of 2003. Alternatively, it appears also the appellant set up a case that it is anyway entitled to avail the benefit of CENVAT Credit in the form of basic excise duty and additional duty paid on the inputs for payment of NCCD, EC and SHEC on the final product and thus resisted the notices. The Authority repelled the contentions and passed orders calling upon it to pay NCCD, EC and SHEC along with the interest and also penalty in a sum representing 100 per cent of the duty purporting to act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d.) and Superfine Syntex Pvt. Ltd. vs. Commissioner of Central Excise, Surat-I reported in 2009 (237) ELT 292 (Tri.-Ahmd.). It is contended that in neither of these judgments, there is any reference to the earlier judgments, which were in favour of the assessee. It is illegal on the part of the CESTAT to take a different view as compared to the earlier CESTAT judgments, without referring the matter to a larger Bench. However, in the case of Nava Petrochemicals Ltd. vs. Commissioner of Central Excise, Ahmedabad reported in 2010 (254) ELT 165 (Tri.-Ahmd.), the CESTAT took the view in an interim order that the subsequent CESTAT judgments, which were against the assessee, were per incuriam as they did not consider the earlier judgments of the CESTAT. 9. It is the case of the counsel for the appellant that the appellant always bona fide entertained the belief that the appellant was entitled to the benefit of exemption under Exemption Notification No. 50 of 2003 in regard to NCCD, EC and SHEC. He would submit that, however, at the subsequent stage of litigation, the claim for exemption in regard to NCCD and the cesses was not pursued in the light of the judgment of the Gauhati High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Union of India and others vs. M/s Modi Rubber Ltd. reported in AIR 1986 SC 1992. It is his contention that the Hon ble Apex Court in the aforesaid judgment has categorically declared that when exemption is granted from duty of excise, the words duty of excise can only be understood as the duty of excise under Section 3 of the Act and it would not include any other duty. Therefore, he would submit that in the definition of the words exempted goods in Rule 2(d) of the CENVAT Credit Rules, it refers to the goods being exempted from excise duty leviable thereon. The words duty of excise must be understood as imposing basic duty of excise. Therefore, and so understood having regard to the unambiguous terms of Rule 6 of the CENVAT Credit Rules, insofar as under Notification No. 50 of 2003, the products of the appellant had been exempted from the basic excise duty and the appellant also availed of the benefit of the Notification, the inquiry ends there. He would submit that the decision of the Gauhati High Court cannot be enlisted in support of the appellant s contention as it did not consider the effect of Rule 6 of the CENVAT Credit Rules. He also adopted the line of rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nced their commercial production on or after the 7th day of January, 2003; (b) industrial units existing before the 7th day of January, 2003, but which have undertaken substantial expansion by way of increase in installed capacity by not less than twenty five per cent, on or after the 7th day of January, 2003. 3. The exemption contained in this notification shall apply to any of the said units for a period not exceeding ten years from the date of publication of this notification in the Official Gazette or from the date of commencement of commercial production, whichever is later. 14. There is no dispute that the appellant has availed the benefit of said Notification. It be noted that under the same, the Authority has granted exemption from the whole of the duties payable under the enactments mentioned therein. In other words, it is not a case of partial exemption. There is no dispute that the appellant proceeded to clear the final products without payment of NCCD, EC and SHEC. 14. The first question, which we must decide, is whether the appellant is justified in contending that the appellant is entitled to get the benefit of CENVAT credit in respect of the basic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om paying NCCD and cesses under Notification No. 50 of 2003, appellant does not persevere in the said line of argument, obviously having regard to the judgment of the Gauhati High Court in Commissioner of Central Excise, Dibrugarh vs. Prag Bosimi Synthetics Ltd. reported in 2013 (295) ELT 682 (Gau.) and of this Court in the case of Bajaj Auto vs. Union of India reported in 2017(1) U.D. 375. 16. Therefore, he would submit that the Court may proceed on the basis that he is not entitled to exemption from payment of NCCD and the cesses, but that would axiomatically involve resurrect of the levy of NCCD and the cesses on the final product. This would mean that the final product of the appellant is not exempted from NCCD and other cesses. Necessarily, this would render the provision of Rule 6 inapplicable. In this regard, he drew our attention to the definition of the word exempted goods in 2(d), which reads as under: 2(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; 17. He would also submit that a survey of the provisions contained in Rules 3 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake the survey of the specific provisions. 19. Section 3 of the Central Excise Act, inter alia, reads as follows: SECTION 3. Duties specified in [First Schedule and the Second Schedule] to the Central Excise Tariff Act, 1985] to be levied.- (1) [There shall be levied and collected in such manner as may be prescribed,- (a) [a duty of excise to be called the Central Value Added Tax (CENVAT) on all excisable goods [(excluding goods produced or manufactured in special economic zones)] which are produced or manufactured in India as, and at the rates, set forth in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986);] (b) a special duty of excise, in addition to the duty of excise specified in clause (a) above, on excisable goods [(excluding goods produced or manufactured in special economic zones)] specified in the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) which are produced or manufactured in India, as, and at the rates, set forth in the said Second Schedule.] 20. Section 5A clothes the Authorities with the power of exemption and the same reads as follows: SECTION [5A. Power to grant exemption from duty of excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise Tariff Act, 1985, other than certain goods, which were mentioned, with which, we are not concerned. The exemption was from whole of the duty of excise or additional duty of excise, which were levied under the said Acts. 22. It is next important to immediately notice the judgment of the Hon ble Apex Court in the case of Union of India and others vs. M/s Modi Rubber Ltd. reported in AIR 1986 SC 1992. The said case involved consideration of the expression duty of excise employed in the Notification issued under Rule 8 of the Excise Rules. The question was, whether it was confined to the basic duty on excise under the Act or it covered special duty of excise levied under various Finance Acts, additional duty of excise levied under the Additional Duty of Excise (Goods of Special Importance) Act, 1957 and any other kind of duty of excise levied under a Central enactment. The Court proceeded to hold as follows: 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) m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Government has in some notifications specifically referred to the excise duty in respect of which exemption is granted as duty of excise leviable under the Central Excises and Salt Act, 1944, it does not follow that 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 isnot 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 Executive. The officer drafting a particular piece of subordinate legislation in the Executive Department may employ words with a view to leaving no scope for possible doubt as to its intention or sometimes even for greater completeness, though these words may not add anything to the meaning and scope of the subordinate legislation. Here, in the present Notifications, the words duty of excise leviable under the Central Excises and Salt Act, 1944 do not find a place as in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such levy may be made and without taking into account the situation which may be prevailing then. It is only when a new duty of excise is levied, whether special duty of excise or auxiliary duty of excise or any other kind of duty of excise, that a question could arise whether any particular article should be exempted from payment of such duty of excise and the Central Government would then have to apply its mind to this question and having regard to the nature and extent of such duty of excise and the object and purpose for which it is levied and the economic situation including supply and demand position then prevailing, decide whether exemption from payment of such excise duty should be granted and if so, to what extent. It would be absurd to suggest that by issuing the Notification dated 1st August 1974 the Central Government intended to grant exemption not only in respect of excise duty then prevailing but also in respect of all future duties of excise which may be levied from time to time. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and Salt Act, 1944. Undoubtedly, by reason of sub-section (4) of section 32 of the Finance Act, 1979 and similar provision in the other Finance Acts, Rule 8(1) would become applicable empowering the Central Government to grant exemption from payment of special duty of excise, but when the Central Government exercises this power, it would be doing so under Rule 8(1) read with sub- section (4) of section 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 32or 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 special duty of excise or additional duty of excise, the recital of the source of power in the notification granting exemption has invariably been to Rule 8(1) read with the relevant provision of the statute levying special duty of excise or additional duty of excise, by which the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 payable under the Central Excise and Salt Act, 1944. 23. Having adverted to the said judgment, we must now proceed to advert to the claim for CENVAT credit. CENVAT Credit Rules 2004 have been made under Section 37 of the Act. They have been made in supersession of Rules of 2002, inter alia. Rule 2 (c) defines the Excise Act , which means the Central Excise Act, 1944. Rule 2(d) defines the exempted goods , which has already been extracted. 24. Final product is defined in Rule 2(h) as the excisable goods manufactured or produced from input or using the input service. 25. Rule 2 (k) defines the word input . 26. Rule 3 comes under the heading CENVAT credit . Relevant provisions of the said Rule read as under: 3. CENVAT credit. - (1) A manufacturer or producer of final products or a [provider of output service] shall be allowed to take credit (hereinafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A of the Finance Act] (ixb) the service tax leviable under section 66B of the Finance Act; (x) the Education Cess on taxable services leviable under section 91 read with section 95 of the Finance (NO. 2) Act, 2004 (23 of 2004); [(xa) the Secondary and Higher Education cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007); and] [(xi) the additional duty of excise leviable under [section 85 of Finance Act, 2005 (18 of 2005),]]: paid on- (i) any input or capital goods received in the factory of manufacture of final product or [by] the provider of output service on or after the 10th day of September, 2004; and (ii) any input service received by the manufacturer of final product or by the provider of output services on or after the 10th day of September, 2004, including the said duties, or tax, or cess paid onany input or input service, as the case may be, used in the manufacture of intermediate products, by a job-worker availing the benefit of exemption specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 214/86-Central Excise, dated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CENVAT credit of the duty, or service tax, paid on the inputs, or input services, used in the manufacture of final products cleared after availing of the exemption under the following notifications of Government of India in the Ministry of Finance (Department of Revenue),- Notifications omitted. shall, respectively, be utilized only for payment of duty on final products, in respect of which exemption under the said respective notification is availed of: Provided also that no credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, [***] shall be utilized for payment of service tax on any output service: Provided also that the CENVAT credit of any duty specified in sub-rule (1), except the National Calamity Contingent duty in item (v) thereof, shall not be utilized for payment of the said National Calamity Contingent duty on goods falling under tariff items 8517 12 10 and 8517 12 90 respectively of the First Schedule of the Central Excise Tariff:] Provided also that the CENVAT credit of any duty specified in sub-rule (1) shall not be utilized for payment of the Clean Energy cess leviable under section 83 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 007 (22 of 2007) or the additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of 2003), or the education cess on taxable services leviable under section 91 read with section 95 of the said Finance (No.2) Act, 2004 (23 of 2004), or the Secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007), or the additional duty of excise leviable under section 85 of the Finance Act, 2005 (18 of 2005) respectively, on any final products manufactured by the manufacturer or for payment of such duty on inputs themselves, if such inputs are removed as such or after being partially processed or on any output service:] [Provided that the credit of the education cess on excisable goods and the education cess on taxable services can be utilized, either for payment of the education cess on excisable goods or for the payment of the education cess on taxable services :] Provided further that the credit of the Secondary and Higher Education Cess on excisable goods and the Secondary and Higher Education Cess on taxable services can be utilized, either for payment of the Secondary and Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned. It is quite clear that all these imposts are component parts of CENVAT credit. In Rule 3(2) again, the expression used is the duty paid . Furthermore, in Rule 3(4)(a), which deals with how the CENVAT credit may be utilized, it is declared that it may be employed for payment of any duty of excise . In the first proviso to Rule 3(4), the words duty of excise are not preceded either by the word the or any . The proviso appears to declare that the CENVAT credit can be utilized only to the extent such credit is available on the last day of the month or quarter for payment of duty or tax. In fact, the words duty of excise are not repeated in the last portion of the proviso; it is abbreviated as duty . Similarly in the second proviso to Rule 3(4), the word duty is preceded by the word any . This is by way of proscribing utilization of CENVAT credit, where benefit of exemption under the Notification of 1/2011-C.E. dated 1.3.2011 is availed. In the third proviso again, the expression CENVAT credit of the duty, inter alia, paid on the inputs in respect of certain products is adverted to. Similarly, a perusal of Rule 3(7), which begins with a non-obstante clause viz-a- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 fulfil the commitment of the Government to provide and finance universalized quality basic education. (2) The Central Government may, after due appropriation made by Parliament by law in this behalf, utilize, 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. 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 or excise but excluding Education Cess on excisable goods) which are levied and collected by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ministry of Finance (Department of Revenue), under the provisions of the Central Excise Act, 1944 or under any other law for the time being in force. (2) The Secondary and Higher Education Cess on excisable goods shall be in addition to any other duties of excise chargeable on such goods, under the Central Excise Act, 1944 or any other law for the time being in force and the Education Cess chargeable under section 93 of the Finance (No. 2) Act, 2004. (3) The provisions of the Central Excise Act, 1944 and the rules made thereunder, including those relating to refunds and exemptions from duties and imposition of penalty shall, as far as may be, apply in relation to the levy and collection of the Secondary and Higher Education Cess on excisable goods as they apply in relation to the levy and collection of the duties of excise on such goods under the Central Excise Act, 1944 or the rules made thereunder, as the case may be. 31. A perusal of Rule 3(1) unravels the mind of the Rule- maker as to the component parts of the CENVAT credit. In Rule 3(4)(a), the Rule-maker has unambiguously declared that the amounts standing to the credit of CENVAT can be utilized for payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of any duty specified in sub-rule (1), except the National Calamity Contingent duty in item (v) thereof, shall not be utilized for payment of the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001):] 33. After substitution of the said proviso in the year 2016, the rule-maker has totally proscribed the utilization of any part of the CENVAT credit, except the NCCD duty for payment of NCCD on any final product. Under Rule 3(7)(b), CENVAT credit, consisting of NCCD and the cesses, is to be utilized for payment of the corresponding duties on the final products only. No doubt, this is subject to the two provisos, which are contained therein. It is also true that the use of the word in singular need not be restricted to the singular and can comprehend also the plural. As to whether it would so embrace the plural, is a matter to be discerned from the context, as also, the purpose of the enactment, besides the phraseology of the statute otherwise. 34. Here, however, we are concerned with the import of the words exempted goods and the effect of the Notification issued under the Act granting absolute exemption from payment of the dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his factory or premises. (ii) Excise duty must have been levied on the final product. If there is no duty levied on the final product, there would not be any question of grant of any relief because in that case there would not be any cascading effect on the duty imposed. 37. In the case of Escorts Limited vs. Commissioner of Central Excise, Delhi reported in 2004(171) E.L.T. 145 (S.C.), the appellants were manufacturer of tractors. They paid duties on certain inputs used in the manufacture of certain parts. Those parts were then cleared to another factory of the appellants, without payment of duty, claiming benefit of Notification No. 217/86-C.E., dated 2nd April, 1986. The parts were then used to manufacture tractors on which duty was paid. The CESTAT took the view that as the parts were cleared from the factory, where they were manufactured, to another factory of the appellants, which was located in a different premises and was separately registered under the Central Excise Law, the finished products are the parts, and, therefore, as no duty was paid on the parts, MODVAT credit was not available. The Apex Court took the view that the intermediate products would be part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed, whereunder they are referred to as the duties of excise. The NCCD and the cesses would also be part of duties of excise under Rule 2 (d) and also Rule 6 of the CENVAT Credit Rules. 40. It is undoubtedly true that if the basic excise duty is paid on inputs, then it can be used ordinarily to pay the basic excise duty on the final product. We must consider, what is the scope of the expression exempt from whole of the duty . We have noticed that Section 5A of the Act empowers the Authority to grant exemption from whole or part of the duties. The expression whole of the duty cannot, but be given its due importance. Rule 6 of the CENVAT Credit Rules, in our view, would not apply in a case, where the Notification granting exemption does not grant exemption from whole of the duty. In other words, if there is only a partial exemption, then Rule 6 of the CENVAT Credit Rules would not act as a bar to claiming of the CENVAT credit. One way of looking at the expression whole of the duty is that the word duty is also intended to apply only to a case, where there is a Notification granting exemption from the whole of the basic excise duty, which obviously is levied under Section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit is available with reference to all its component parts for payment of any duty of excise on the final product, subject to the restrictions or limitations under the provisos or any other provision, as for instance, Rule 6. It is clear that with reference to the facts of this case, for instance under the law as stood then, basic excise duty paid would be available for payment of NCCD and the cesses as they would fall under the category of any duties of excise , which is imposed on the final product, which is no doubt subject to the provisos, which are mentioned. However, after 2016, it is clear that NCCD components of CENVAT credit paid on input alone can be used for payment of NCCD on the final product. No other part of duties is available for the said purpose. There is no case before us that the said proviso, which was substituted on 1st March, 2016, has retrospective effect or it is declaratory in nature and we need no explore the said aspect. 44. It is equally true that under Rule 3(7)(b) of the CENVAT Credit Rules, despite what is provided in Rule 3(4)(a), it is also subject to the restrictions and conditions contained in Rule 3(7)(b) as it opens with a non obstante cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 5A of the Act, the conclusion would be that when there is exemption from the whole of the duty under Section 3 of the Act, the goods would be treated as exempted goods within the meaning of Section 2(d) of the Rules. As far as the case based on Rule 19 of the Central Excise Rules and the Circulars, which have been issued with reference to the same, whereunder NCCD, inter alia, has been treated as the duty of excise for the purpose of Rule 19, is concerned, we do not think that the principle on the basis of which, for the purpose of Rule 19, NCCD has been treated as the duty of excise, will assist the appellants when we are called upon the interpret the provisions of Rule 6 read with Rule 2(d) of the CENVAT Rules. We would think that the context and the purport of Rule 19 is different from setting of Rule 2(d) and Rule 6 of the CENVAT Rules, which we have already discussed. This would necessarily result in the appellant becoming disentitled from claiming of CENVAT credit consisting of basic excise duty paid on inputs for payment of NCCD and other cesses. 47. The remaining question is, whether the imposition of penalty under Section 11AC of the Act was justified. 48. Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Officer is of the opinion that the transactions in respect of which notice was issued have been recorded in specified records and the case falls under sub-section (5), penalty equal of 50 percent. of the duty shall be leviable. (2) Where the amount as modified by the appellate authority or tribunal or court is more than the amount determined under sub-section (10) of section 11A by the Central Excise Officer, the time within which the interest or penalty is payable under this Act shall be counted from the date of the order of the appellate authority or tribunal or court in respect of such increased amount.] 49. If the ingredients mentioned therein are fulfilled, the Legislature contemplated the levy of penalty at the rate of 100 per cent of the duty paid. A perusal of the order of the Original Authority would show that the definite case, which was set up by the appellant was that the NCCD and the cesses were exempted under Notification No. 50 of 2003. In fact, the assessee sought to buttress his claim on the basis of orders passed by the Tribunal in the cases of Tatra Trucks India Ltd. vs. CCE, Chennai reported in 2008 (227) ELT 269 (Tri-Chennai); Toyota Kirloskar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t NCCD is a duty of excise for the purposes of exemption notifications issued under Section 5A of the Act. In this case, the Tribunal proceeded to distinguish the decision of the Hon ble Apex Court in Modi Rubber. Following is the reasoning of the Tribunal in not following the order of the Hon ble Apex Court in Modi Rubber s case:- The Revenue, in their appeal, has also claimed support from the Supreme Court s judgment in Union of India Ors. v. Modi Rubber ors. [1986 (25) E.L.T. 849 (S.C.)], wherein it was held that exemption from duty of excise did not mean exemption also from Special Excise Duty, Additional Excise Duty or Auxiliary Duty. We find that this case law is not applicable to NCCD in view of sub-section(3) of Section 136 of the Finance act, 2001, which reads as under: - (3) The provisions of the Central Excise Act, 1944 and the Rules made there under, including those relating to refunds and exemptions from duties and imposition of penalty, shall, as far as may be, apply in relation to the levy and collection of the National Calamity duty leviable under this section in respect of the goods specified in the Seventh Schedule as they apply in relation to the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited vs. Commissioner reported in 2008 (227) ELT 269 (Tri.- Chennai): J.B.F Industries Ltd. vs. Commissioner of Central Excise, Vapi reported in 2009 (246) ELT 286 (Tri.- Ahmd.) and, thereafter, it also referred to the decisions in the case of Paras Petrofills Ltd. vs. Commissioner reported in 2009 (237) ELT 367 (Tri.-Ahmd.) and Superfine Syntex Pvt. Ltd. vs. Commissioner of Central Excise, Surat-I reported in 2009 (237) ELT 292 (Tri.-Ahmd.), all of which we have referred to, and held as follows: 2. We have considered the submissions made by both the sides. As rightly pointed out by the learned advocate for the appellants, the two decisions wherein this Tribunal had taken a view that NCCD is payable were rendered because the other decisions holding a contra view were not brought to the notice at the time of hearing. Therefore, he submits that they are to be treated as per incuriam. We find considerable force in this view. Further, we also find that there are three Tribunal decisions in favour of the appellants. In view of the above discussion, we consider this to be an appropriate case for unconditional waiver of pre-deposit and grant of stay during the pendency of appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Cesses were not on account of interpretation of relevant notification in any way. I also find that the colum No. 7 of the ER-1 returns submitted by the party revealed that they were well aware about all the duties of Excise including NCCD, Education Cess and Secondary Higher education, which are leviable in their case, as same has been mentioned in the said column of the monthly returns submitted by them. Even then, they failed to make proper assessment of duty and willfully deliberately chose not to pay appropriate duty leviable on them, thus contravening the provisions of Rule 6 read with Rule 8 of the Central Excise Rules 2002. This willful act made them liable to be penalized under Rule 25 of the Central Excise Rules 2002 read with Section 11AC of the Central Excise Act, 1944. As regards the quantum of penalty to be imposed in such cases, I find that the larger Bench of the Hon ble Supreme Court in the case of Union of India vs. Dharamendra Textile Processors [2008(231) E.L.T. 3(S.C.)] has held that penalty under Section 11AC of Central Excise Act, 1944 is mandatory and there is no discretion to the authorities on quantum of such penalty. Therefore, if penalty under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 737 (Tri-Del). In the present case, the arguments are confined to whether the penalty is imposable upon the assessee under Rule 25 of the Central Excise Rules, 2002, read with section 11AC of the Central Excise Act, 1944 for violation of provisions of Rule 4 8 of Central Excise Rules, 2002 and the provision of Notification No. 50/2003, with intent to payment of duty . 8. From the record, it appears that the appellant has deposited the entire amount of demand for the period April, 2013 to February, 2014 through PlA under protest. Impliedly, the appellant has not accepted the contention regarding the demand and payment of NCCD, Education Cess and Secondary and Higher Education Cess. 57. It is thereafter that the Tribunal has proceeded to refer to the judgment of the Bombay High Court in the case of CCE Mumbai vs. Hindustan Petroleum Corporation Ltd. reported in 2017 (347) ELT 229 (Bom), which has observed that in case of non-payment or short payment of duty, penalty gets automatically attracted and the authority had no discretion. It is stated that the Bombay High Court adverted to the judgment of the Hon ble Apex Court in the case of Union of India vs. Dharmendra Texti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that it would be necessary for the Assessing Authority or the Tribunal to consider before imposing or upholding penalty, whether the assessee s case regarding its / his duty liability was bona fide, even if it was not accepted on merits. It is also stated that the noticee already paid the amount from PLA under protest. This is sufficient to drop the proceedings. It is also stated that the learned Commissioner has failed to notice that there could not have been any intention on the part of the Noticee to evade its duty liability. There is reference to the other units of the Noticee consistently paying NCCD and the cesses on the same. It is also stated that the appellant has gone by an interpretation, which was adopted by the Department in its Circular dated 13th January, 2006 regarding export of goods. Reference is made to the decisions in TATRA Trucks India Ltd. vs. Commissioner of Central Excise and Toyota Kirloskar Motor Pvt. Ltd. vs. Commissioner of Central Excise (supra). Appellant has claimed the benefit of the Notification. That benefit would be available to the Noticee and it was not having any intention to evade duty at any point of time on any amounts paid through PLA u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the view they did. It cannot be said that they could never have concluded that they were entitled to the benefit of the Notification. We therefore feel that this is a case where penalty should not be imposed. We therefore delete the imposition of penalty on the Respondents. 62. It is in this context that the orders of the Tribunal in the cases of TATRA Trucks India Ltd. vs. Commissioner of Central Excise and Toyota Kirloskar Motor Pvt. Ltd. vs. Commissioner of Central Excise (supra) are apparently relied on. 63. We may now notice the judgment of the Hon ble Apex Court in the case of Union of India vs. Dharmendra Textile Processors and others reported in (2008) 13 SCC 369, wherein the learned Judges considered the question, whether Section 11-AC of the Central Excise Act, 1944 inserted by the Finance Act, 1996 with the intention of imposing mandatory penalty should be read to contain mens rea as an essential ingredient and whether there is a scope for levying penalty below the prescribed minimum. The Hon ble Apex Court took the view that, inter alia, mens rea may not be an essential element for imposing penalty and approved the principle that mens rea is not essential ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this stage, we need to examine the recent decision of this Court in Dharamendra Textile (supra). In almost every case relating to penalty, the decision is referred to on behalf of the Revenue as if it laid down that in every case of non-payment or short payment of duty the penalty clause would automatically get attracted and the authority had no discretion in the matter. One of us (Aftab Alam,J.) was a party to the decision in Dharamendra Textile and we see no reason to understand or read that decision in that manner. 67. In Paragraph 32, the Hon ble Apex Court, after referring to Paragraphs 19 20 of the judgment in Dharmendra Taxtile case, further proceeded to hold as follows: From the above, we fail to see how the decision in Dharamendra Textile can be said to hold that section 11AC would apply to every case of non-payment or short payment of duty regardless of the conditions expressly mentioned in the section for its application. There is another very strong reason for holding that Dharamendra Textile could not have interpreted section 11AC in the manner as suggested because in that case that was not even the stand of the revenue. 68. Finally, we may notice para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndigarh vs. Pepsi Foods Limited reported in (2011) 1 SCC 601, we notice that a Bench of three learned Judges was dealing with imposition of penalty under Section 11-AC. We notice that there is no reference as such to Dharmendra Textile (supra), but it has adverted to the case of Union of India vs. Rajasthan Spinning and Weaving Mills reported in (2009) 13 SCC 448 and held as follows: 25. The aforesaid dictum of Lord Reid has been followed by this Court also. A reference in this connection may be made to Union of India v. Rajasthan Spg. Wvg. Mills. This Court considering Section 11- AC of the Act held in ELT para 19 at p. 12 of the Report as follows: (SCC p. 459, para 29) 29. From the aforesaid discussion it is clear that penalty under Section 11-AC, as the word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section. 71. We may also notice paragraph 22, which reads as under: 22. It is well settled that when the statutes create an offence and an ingredient of the offence is deliberate attempt to evade duty either by fraud or misrepresentation, the statute req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sstatement and, accordingly, the finding regarding levy of equal amount of penalty was interfered with. 74. In the case of Commissioner of Central Excise, Mumbai vs. Sunil Silk Mills reported in (2011) 15 SCC 164, we also notice that a Bench of two learned Judges referred to both the decisions in the cases of Dharmendra Textile (supra) and Rajasthan Spinning and Weaving Mills (supra). It involved the case, where the Tribunal took the view that Rule 96-ZQ of the Excise Rules applied and exercised the discretion in the matter of penalty. The Court proceeded to refer to the decision in the case of Dharmendra Textile (supra) and agreed that under sub-rule (5), the assessee is liable to pay penalty equal to an amount of duty outstanding from him at the end of such month or ₹ 5000, whichever is greater. Thereafter, the Hon ble Apex Court proceeded to deal with Section 11-AC and held as follows: 7. In the present case also, we are directly concerned with the provisions of rule 96-ZQ. So far as Section 11- AC of the Act is concerned, the scope of the said section was considered by this Court in Union of India v. Rajasthan Spg. Wvg. Mills. That decision was rendered in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impact of the entries in Column 7 of the ER-1 return. In Form ER-1 under Clause 3, which provides the details of manufacture, clearance and duty payable, Column 7 comes under the heading duty and it provides for CENVAT and one other duty. He would submit that the Authority has not understood the scope of the contents. According to the appellants, it may be true that NCCD and the cesses were mentioned under the heading other duties , but that is not to say that the appellants were admitting their liability to pay the duty. They were under the impression that the duties of excise, namely, NCCD and the other cesses being duties of excise were exempt under the Notification No. 50 of 2003, and they were clearing the goods on the said basis. It is without appreciating this aspect that the contents of Column No. 7 were looked into. Furthermore, he would reiterate that the case involved interpretation of the Notification as the appellant was under the impression that the duties were exempt on the basis of the orders of the Tribunal. The matter was being contested also on the said line before the Authority. This is besides pressing the claim for CENVAT credit. 77. We may take the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law providing for penalty as Section 11AC provides. As far as the order in Toyota Kirloskar Motor Pvt. Ltd. (supra) is concerned, the Tribunal has proceeded on the basis that NCCD is indeed a duty of excise. Secondly, it proceeded to take note of Section 129 of the Finance Act. Thirdly, it referred to Circular, which is clearly traceable to Rule 19 of the Rules. We would think that the premise that it is a duty of excise and the matter is governed under Section 129 of the Act are both besides the point. 82. As far as the reference made to the Circular is concerned, it is related to the provisions of Rule 19 of the Central Excise Rules and it is in the said context that the Circular has to be understood and it cannot be given any meaning beyond the same. We may notice, at once, that in fact, the Hon ble Apex Court, in the year 1986 itself in the case of Union of India and others vs. M/s Modi Rubber Ltd. reported in AIR 1986 SC 1992, in paragraph 9, had actually adverted to Section 32 of the Finance Act, 1979 and noted that there being an identical provision in each Finance Act levying special duty of excise, which provided that the provisions of the Central Excise and Salt Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould think that it may not be a case, where the appellants could point out that they were entertaining a bonafide impression generated by the orders passed by the Tribunal in these cases. We say so as we would think that in the light of the pronouncement of the Hon ble Apex Court in Modi Rubber s case, it does not lie in the mouth of the appellant to contend that they still could draw support from the order of the Tribunal. We again reiterate that as far as the Circular extending the benefit of Rule 19 relating to export of goods without payment of duties of excise is concerned, it stood on a completely different footing and it cannot be mixed up with the issue relating to exemption from duties the question of exemption of duty being a matter exhaustively dealt with the judgment of the Hon ble Apex Court in Modi Rubber s case. 83. Therefore, we would think that the order passed by the Commissioner, which has been apparently approved by the Tribunal that this does not involve interpretation of the Notification, thus appears to be a view, which does not call for any interference. As far as placing reliance on the order of the larger Bench of the Tribunal is concerned, apparently i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indeed staked a claim in the matter as provided in law bearing in mind that it indeed was a pure legal issue and the bona fides also of the appellant cannot be doubted in this regard. 86. Accordingly, the resultant position is that we reject the case of the appellant that the appellant is entitled to claim the CENVAT Credit on the basic excise duty paid on the raw materials for payment of NCCD and the cesses. The question of law is answered against the appellant in all these Appeals in this regard. The fact of payment of the duties in question in all the Appeals, be it under protest or otherwise, cannot, in the light of the extant provisions, extricate the appellant from liability to pay the penalty, if it is otherwise found to be liable and the question of law raised in this regard is answered against the appellant. We also reject the case of the appellant that there was bona fide question relating to interpretation of Notification in the matter of whether NCCD and the cesses were duties of excise and were falling within the scope of exemption Notification, based on the orders of the Tribunal also and we reject the same. Finally, as far as the question relating to whether the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
