TMI Blog2019 (3) TMI 1427X X X X Extracts X X X X X X X X Extracts X X X X ..... Education Cess). The Department took a legal stand that the exemption notification had to be construed strictly and that there had been wilful suppression of facts. The demand raised was also specified. There was an initiative for development of industries in the North-Eastern States of Assam, Tripura, Meghalaya, Mizoram, Manipur, Nagaland, Arunachal Pradesh, etc. A Notification exempting goods from payment of excise duties was issued in respect of those States. Education Cess and Secondary Higher Education Cess, as imposed under the Finance Acts of 2004 and 2007, respectively were also sought to be levied on the appellant therein. The gravamen of the reasoning of this Court is that since these cesses are a surcharge levied and collected on the total value of the excise duty, and the excise duty itself is exempted, there cannot be any question of any recovery of these cesses, as the substratum does not exist. Not only that, this Court also took into account how the Department itself had viewed the situation regarding Education Cess and Secondary Higher Education Cess, which are payable as surcharge on the excise duty, once the excise duty is exempted. Levy of NCCD - Held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, certain special measures were considered appropriate to be taken by the Government of India. On the visit of the Prime Minister of India to Uttarakhand, in March, 2002, an announcement was made that tax and Central Excise concessions, to attract investments in the industrial sector will be worked out for the Special Category States including Uttaranchal (now Uttarakhand). The industries eligible for such incentives were to be environment friendly, with potential for local employment generation and use of local resources. Subsequently, an Office Memorandum was issued on 7.1.2003, announcing a package of incentives providing for New Industrial Policy and other concessions for the State of Uttaranchal and the State of Himachal Pradesh. Para 3.1 (I) stipulated the fiscal incentives. It is not necessary to reproduce the complete paragraph, but suffice to reproduce the relevant portion as under: 3.1: Fiscal Incentives to new Industrial Units and to existing units on their substantial expansion: (I). New industrial units and existing industrial units on their substantial expansion as defined, set up in Growth Centres, Industrial Infrastructure Development Centres (IIDCs), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der any of the said Acts. (emphasis supplied) 5. Once again, for the controversy in question, it is not necessary to refer to the notification further, which stipulates other conditions to be fulfilled, to avail of the benefit of the exemption notification, since there is no dispute that the appellant satisfies those conditions. 6. The appellant, a limited company, established a manufacturing unit of two wheeler vehicles in the year 2007. The appellant was exempted from, inter alia, CENVAT, by virtue of its manufactured products falling under the Second Schedule of the Central Excise Tariff Act, 1985. 7. The appellant was apparently paying an automobile cess, but the NCCD, Education Cess and Secondary Higher Education Cess were not being paid. The dispute arose on account of an audit conducted on 27/28.2.2009. The dispute pertains to the liability of the appellant to pay the unpaid three cesses referred to aforesaid. 8. Now turning to the three cesses in question, NCCD was imposed under Section 136 of the Finance Act, 2001, in the nature of a duty of excise, in addition to any other duties of excise chargeable under the 1944 Act. The relevant portion is extrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been wilful suppression of facts. The demand raised was also specified. 11. The appellant filed a writ petition under Article 226 of the Constitution of India, before the High Court of Uttarakhand on 13.10.2011, assailing the show cause notice. This endeavour, however, did not succeed and the writ petition was dismissed by the learned Single Judge, vide order dated 9.10.2014. The appeal preferred before the Division Bench also met the same fate, vide impugned order dated 16.3.2017. 12. The controversy before us is now in a narrow compass, on account of the subsequent judicial pronouncement in SRD Nutrients Pvt. Ltd. v. Commissioner of Central Excise, Guwahati (2018) 1 SCC 105. The issue of the Education Cess and the Secondary Higher Education Cess, in our view, is covered against the Department in view of this judgment and that is how, also, the Department appears to have understood now, in view of the written synopsis placed before us. 13. In the facts of that case, there was an initiative for development of industries in the North-Eastern States of Assam, Tripura, Meghalaya, Mizoram, Manipur, Nagaland, Arunachal Pradesh, etc. A Notification exempting goods from pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of goods specified in the First Schedule to the Central Excise 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 the 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. (emphasis supplied) 15. A reference was also made to the judgement of the Rajasthan H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hi, Advocate sought to contend otherwise by seeking to point out the difference in the nature of incidence, since NCCD was to be calculated on the value of the product and not on the value of the excise duty payable. 19. We may note that in terms of the impugned judgment, one principle which clearly emerges, and over which there is no dispute before us, also, is that exemption notifications, like the one in question must be read in a manner that give them a liberal interpretation, provided that no violence is done to the language employed. The rationale for the same is well enunciated in Novopan India Ltd., Hyderabad v. CCE and Customs, Hyderabad, 1994 Supp (3) SCC 606 apart from in other judicial pronouncements. In such cases, it is not as if the principle of strict interpretation of tax law has been given a complete go by, but that rule of interpretation would apply at a different stage, i.e., to determine whether the exemption is applicable to the assessee or not. Once such exemption is indeed found to be applicable to the assessee in question, a liberal approach is to be adopted by the Court in construing the language, such as to allow the benefit to be reaped by the benefic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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