TMI Blog2020 (1) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... dit scrips like the customs duty. Whether SWS is an independent levy or it also takes the colour of the parental levy viz., the customs duty? - HELD THAT:- Since this issue raised in respect of nature of levy of SWS is no more res integra in view of the latest decision of the Apex Court made in the case of M/s.Unicorn Industries [ 2019 (12) TMI 286 - SUPREME COURT ] as referred and discussed supra. By relying on SRD Nutrients Private Limited and Bajaj Auto Limited cases , the Revenue originally sought to contend that the Social Welfare Surcharge is not an independent levy and on the other hand, it forms part of the customs duty or takes the colour and nature of the parent levy viz., customs duty. It is true that in both the above decisions, the Apex Court has taken such view. The above two decisions are now considered by the Larger Bench of the Apex Court in M/s.Unicorn Industries case . The Hon'ble Supreme Court, after considering those two decisions and also the earlier decision of the Apex Court made in Union of India v. Modi Rubber Limited, 1986 (8) TMI 60 - SUPREME COURT , found that the duty on NCCD, Educational Cess and Secondary and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty levied and collected at all. On the other hand, when such duty is debited from the scrips which has a money value, such act of debiting, amounts to levy and collection of the duty from the importer. Since the duty is not paid in cash and on the other hand it is discharged by utilizing the scrips, it is true that such value of the duty in money has not gone to the Government Exchequer. But, that does not mean that the duty was not collected from the importer at all. An adjustment of duty from the duty credit scrips by way of debit is not to be termed as Nil duty. It is like an adjustment on balance sheet - Hence, it cannot be said that there was no payment or collection of duty at all. As I pointed out earlier, collection of duty in this case, in view of the exempted notifications, is by way of debiting the value of such duty from the scrips. If no duty is leviable and payable in view of the exemption granted under the above said notifications, as contended by the petitioner, it makes no sense for imposing conditions therein for making debits towards customs duty leviable from and out of the value of the scrips. Admittedly, in this case, the petitioner is not opposing or denyi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e benefits referred to therein in strict sense and not to be extended beyond its scope. If the notification is unambiguous, there is no need to interpret the same. Thus, under the guide of interpreting an exemption notification, a benefit conferred on a person cannot be extended as an undue benefit , which he is not entitled to otherwise under the notification. Going by the terms of the above exemption notifications and in view of the fact that levy and collection of Social Welfare Surcharge is an independent levy, that too, under a different enactment viz., the Finance Act, 2018, I am of the view that the respondents/Revenue are not empowered to make the debit of Social Welfare Surcharge, from and out of the value of the scrips apart from making debit of the duties leviable on the subject matter goods. Thus, it can be concluded that: (a) The petitioner is liable to pay the appropriate Social Welfare Surcharge on Basic Customs Duty in respect of the subject matter imported goods. (b) However, recovery of such Social Welfare Surcharge cannot be done by making debit from the value of the scrips produced by the petitioner, as Social Welfare Surcharge is not the subject matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner's activities ordinarily attracting the levy of Customs Duties. The petitioner offset such Customs Duties, by procuring scrips under the MEIS (Merchandise Exports from India Scheme) and SEIS (Service Exports from India Scheme) provided for under Chapter 3 of the FTP and utilizing such scrips. The concept of MEIS and SEIS Schemes are as follows: MEIS i) A claimant needs to export notified goods (coded under the ITC-HS) to notified places, as provided for under Appendix 3B to the Handbook of Procedures ( HOP ) of the FTP, in order to be entitled to MEIS benefit. The rate of reward for each type of export is also provided for under Appendix 3B. (Para 3.04 -FTP) ii) The value considered for calculating MEIS benefit is the realized FOB value of exports in free foreign exchange of the FOB value of exports as given in the shipping bills in free foreign exchange whichever is lesser. (Para 3.04 -FTP) iii) The claimant is then granted a 'Duty Credit Scrip' which can be used for defraying Customs Duties on imports, Excise Duties on manufactured goods and Service Tax on the procurement of services. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted certain goods at Karaikal Port in the normal course of its business during the period July 2017 to July 2018 and its Bills of Entry were assessed. The petitioner's MEIS licenses and SEIS licenses were debited by the amounts pertaining to SWS by the second respondent by including the same as part of customs duties. The petitioner through letter dated 26.06.2019 sought to ascertain the methodology adopted by the second respondent in deducting excess duties of customs from the scrips. The second respondent responded through the impugned letter stating that there was no excess duty being collected from the petitioner. The deduction of the amounts pertaining to SWS from the petitioner's MEIS and SEIS licenses is incorrect, unwarranted. Only Customs Duty leviable under the First Schedule to the Customs Tariff Act and Additional Duty under Section 3 of the Tariff Act can be debited from the MEIS and SEIS scrips other than what has been mentioned in the exempted notification. SWS is levied under Section 110 of the Finance Act 2018 as a duty of customs and not under the First Schedule to the Customs Tariff Act. Even if SWS is considered as equival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally treated as exemption from duty and that goods cleared through debit under DEPB Scheme were exempted goods. Subsequently para 4.3.5 of the FTP 2004-09 was amended so as to give the benefit of Cenvat credit or duty drawback to additional customs duty paid through debit under DEPB Scheme. Customs Notification 96/2004 dated 17.09.2004 read with Customs Circular No.59/2004 dated 21.10.2004 laid down that the additional customs duty paid through debit under DEPB Scheme shall be allowed to be availed as cenvat credit or duty drawback. Thus, it is submitted that the MEIS Scheme and SEIS Scheme under FTP 2015-20, which allows the debit of basic customs duties and other duties from duty credit scrips is the same as the DEPB Scheme available under the amended para 4.3.5 of Foreign Trade Policy 2004-2009. Thus, these schemes provide the objective to neutralize the incidence of customs duties on import component of the export product. This neutralization is provided by way of duty credit against export product which is at a specified percentage of FOB value of export. Thus, the MEIS Scheme and the SEIS Scheme like the earlier DEPB Scheme provides for payments for customs dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cks of the customs duty and CENVAT credit or drawback or additional customs duty against the amount debited in the scrips. Sub clause (5) lays down that the said scrips has to be produced before the proper officer of customs at the time of clearance for the debit of the duties leviable on the goods. Thus on a conjoint reading of the clauses in the Notifications, it is evident that there is no factual exemption on the customs duty but the Notifications only speak about the debit of the leviable duties from the duty credit scrips. Thus the SWS which was introduced as an additional customs duty under Section 110 of the Finance Act, 2018 has to be treated on the same plane as the basic customs duty and other customs duties as per sub section (5) of Section 110 of the Finance Act, 2018. Thus, in such an event the debit of SWS from the duty credit scrips is wholly justified and well in order and in accordance with the provisions of sub section (5) of Section 110 of the Finance Act, 2018 read with para 3.02 of the FTP 2015-2020. The Customs Circular issued by the CBIC Circular No.5/2005- Customs dated 31.01.2005 have clarified that in the case of DEPB Scheme, though the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessable value of bill of entry from the scrips of the petitioner have debited 49.5% by adding 10% of Social Welfare Surcharge, which is illegal, arbitrary and unsustainable in law. Notification Nos.24 25/2015 specifically exempt goods when imported using MEIS and SEIS scrips from the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act 1975 and the whole of additional duty leviable thereon under Section 3 of the Customs Tariff Act, 1975. The exemptions under the aforesaid Notifications are effectuated by way of debiting the duty amount from the value that the MEIS and SEIS scrips bear. Debiting of the scrip is only an administrative mechanism of tracking when the upper limit of exemption is reached. Therefore, it cannot be stated that the debit of scrip means payment of Customs Duties or that the duties are paid through the scrips. As per the above said two Notifications, the act of debit is permitted only for those duties which are leviable on the goods but for the specific exemption provided in the Notifications. In other words, only the Customs Duty leviable under the First Schedule to the Customs Tariff Act and Additional Duty und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsolidated fund of India. From a perusal of Union Budget of 2018-19 and more particularly, Annexure 7 of the Receipt Budget presented before the Parliament makes it abundantly clear that Revenue Impact on account of Export Promotion Concessions such as SEIS schemes and MEIS schemes etc. adds up to the Total Customs Duty Foregone by the Government of India. It is crystal clear that the incentives available under the DEPB scheme, SEIS Scheme, MEIS Scheme etc. tantamount to Revenue Foregone by the Central Government and thus do not form part of the Consolidated Fund of India. If debit of Duty through the scrips indeed amounted to payment of Tax, then for sure, such payment would have contributed to the Revenue Earned by the Government of India and not the Revenue Foregone . e) If debit of Duty amounts to payment of tax then occasion for imposition of interest in case of irregular utilization of the scrips could not have arisen. Even in a situation where Duty has been paid, as per the pleadings of the Respondent (through a scrip) where such scrip was irregularly used by exporter, there can be no occasion for the Revenue to recover further duties along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be anything other than a Notification granting exemption. Any other interpretation suggestive of the Notification requiring payment of tax, would run wholly contrary to the source of power, effectuated for issuing the subject notification and thus cannot be countenanced. h) Significance of the phrase But for this exemption . On a perusal of Clause 2(v) of the present Notification, it can be noticed that the power has been granted to the proper officer to debit the duties leviable on the goods but for this exemption. The choice of the words but for this exemption essentially denotes that where without the operation of the exemption notification, Customs Duty is payable, however, on application of the exemption notification, the duties are exempt. The present notification is only an exemption notification. The petitioner relies upon the Constitution Bench decision of the Supreme Court in the case of AV Fernandes vs. State of Kerala - AIR 1957 SC 657 . The petitioner also relies upon the Division Bench decision of the Supreme Court in the case of HICO Products vs. CCE 1994 (71) ELT 339 (SC). i) The substance of the Notification o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c decision was rendered by the Madras High Court in 2009, whereas in the year 2013, a Division Bench of the Madras High Court in case of Commissioner of Customs Tuticorin vs. DCW reported in 2014(306) ELT 398 (Mad.) in identical facts and issues involved as in the present petition, had come to the conclusion that the notification concerned therein i.e. Notification 96/2004 dated 17.09.2004 under which customs duties were being debited under the DEPB scheme, essentially granted a total exemption from the payment of Customs Duties, and consequently, it was held that Education Cess (similar to SWS) was also exempt. k) The Respondents' reliance on Circular No.5/2005 dated 21.05.2005 is wholly misplaced. It is submitted that such reliance is wholly misplaced because the said circular had been set aside as constitutionally invalid by the Hon'ble Gujarat High Court. Alternative remedy is not efficacious in the present case. In fact alternate remedy is an exercise in futility and the petitioner rightly approached this Hon'ble Court in writ proceedings under Article 226. 9. Mrs.Aparna Nandakumar, learned counsel for the second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which CENVAT Credit/Duty Drawback can be availed when there is no specific exemption. Thus, the petitioner endeavour to equate all the incentive schemes under one umbrella of exemption is wholly erroneous. The Duty Entitlement passbook Scheme or the Duty Credit Scrips Scheme cannot be treated as an exemption from payment of duty. In this regard, the second respondent herein places reliance on the decision of the Hon'ble Supreme Court in Commissioner of Customs, Calcutta v. Indian Rayon and Industries Ltd. [2008 (10) SCALE 498] . The decision of the Apex Court has been followed by the Division Bench of this Court in Tanfac Industries Ltd. v. The Assistant Commissioner of Customs, Customs Division, 2009 (165) ECR 186 (Madras) . SLP 24638-24640/2009 filed against this decision dismissed by the Hon'ble Supreme Court. Tanfac Industries decision has been followed by another Division Bench of this Court in CCE v. SPIC, Heavy Chemicals Division, [2014] 25 GSTR 538 (Mad). The second respondent herein also places reliance on the decisions of the Hon'ble Supreme Court in Yasha Overseas v. Commissioner of Sales Tax, (2008) 8 SCC 681. The second resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Contingent Duty are duties of excise and are not independent levies: A. CCE v. TELCO (1997) 5 SCC 275. B. Banswara Syntex v. UOI (Rajasthan High Court) RLW 2007(4) Raj.2995. The provisions of Section 110 of the Finance Act, 2018 are similar to Section 93 of the Finance Act, 2004 by which Education cess was introduced. While Section 93(1) of the Finance Act 2004 is comparable to Section 110(1) of the Finance Act, 2018, Section 93(2) and 93(3) of the Finance Act, 2004 are comparable to Section 110(4) and (5) of 2018. Thus, it is submitted that the decision in Banswara rendered in the context of education cess is applicable in all fours to the issue of SWS. The decision of the Hon'ble Rajasthan High Court in Banswara has been affirmed by the Hon'ble Supreme Court in SRD Nutrients v. CCE, (2018) 1 SCC 105 and in Bajaj Auto Ltd. Vs. UOI 2019 (366) ELT 577 (SC). f) Based on the ratio laid down by the Hon'ble Supreme Court, when the basic customs duty is not exempted and is debitable from the duty credit scrips, the SWS which takes the colour of parent levy viz., basic customs duty and is not an independ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reserved for orders on 18.12.2019. 11. In the revised written submission filed by the learned counsel for the revenue, apart from reiterating the earlier contentions, the learned counsel fairly submitted that the revenue can no longer rely upon the decisions of the Apex Court in SRD Nutrients Private Limited and Bajaj Auto Limited cases , in support of their contention that the Social Welfare Surcharge is not an independent levy but took the colour of the parent levy. However, the revenue sought to contend that the present issue is not a case of exemption of basic customs duty to test whether the exemption is at all applicable to social welfare surcharge and on the other hand, the issue revolves around the question whether the payment of SWS can be debited from the duty credit scrips like the customs duty. 12. In the additional written submissions filed on behalf of the petitioner, they relied on the recent decision of the Apex Court made in Unicorn Industries case, and contended that SWS could not have been debited from the scrips because notification Nos. 24 and 25 of 2015 exempted only Customs Duties levied under the Cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them shall be freely transferable. The Duty Credit Scrips can be used for: (i) Payment of Basic Customs Duty and Additional Customs Duty specified under Sections 3(1), 3(3) and 3(5) of the Customs Tariff Act, 1975 for import of inputs or goods, including capital goods, as per DoR Notification, except items listed in Appendix 3A. (ii) Payment of Central excise duties on domestic procurement of inputs or goods; (iii) Deleted (iv) Payment of Basic Customs Duty and Additional Customs Duty specified under Sections 3(1), 3(3) and 3(5) of the Customs Tariff Act, 1975 and fee as per paragraph 3.18 of this Policy. 16. The Central Board of Indirect Taxes and Customs issued two notifications in Nos.24/2015 and 25/2015, both dated 08.04.2015. The petitioner seeks to rely on the above said notifications in support of their contention that the Social Welfare Surcharge (SWS) cannot be debited from the above duty credit scrips. 17. Notification No.24/2015-Customs dated 08.04.2015 reads as follows: [TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II SECTION 3, SUB-SECTIO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms may within the jurisdiction, by special order, or by a Public Notice, and subject to such conditions as may be specified by him, permit import and export through any other seaport, airport, inland container depot or through any land customs station: Provided further that the exports of notified goods or products transacted through e-commerce platform as listed in Appendix 3C of Appendices and Aayat Niryat Forms of Foreign Trade Policy 2015-2020 are undertaken either through the courier mode from airports at Chennai, Mumbai or Delhi or through the Foreign Post Offices at Chennai, Mumbai or New Delhi ; (4)that the said scrip is registered with the Customs Authority at the port of registration specified on the said scrip; (5) that the said scrip is produced before the proper officer of customs at the time of clearance for debit of the duties leviable on the goods and the proper officer of customs taking into account the debits already made under this exemption and debits made under the notification Nos.20/ 2015 - Central Excise, dated the 8th April, 2015 and 10/ 2015 -Service Tax, dated the 8thApril, 2015,shall debit the duties leviabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nating in third country but transshipped through India; v Deemed Exports; vi SEZ/EOU/EHTP/BPT/FTWZ products exported through DTA units; vii Items, which are restricted or prohibited for export under Schedule-2 of Export Policy in ITC (HS), unless specifically notified in Appendix 3B of Appendices and Aayat Niryat Forms of Foreign Trade Policy 2015-2020; viii Service Export; ix Red sanders and beach sand; x Export product which are subject to Minimum export price or export duty; xi Diamond, Gold, Silver, Platinum, other precious metal in any form including plain and studded jewellery and other precious and semi-precious stones; xii Ores and concentrates of all types and in all formations; xiii Cereals of all types; xiv Sugar of all types and all forms; xv Crude/ petroleum oil and crude/primary and base products of all types and all formulations; xvi Export of milk and milk products; xvii Export of Meat and Meat products; xviii Products wherein precious metal/diamond are used o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough any land customs station; (3)that the said scrip is registered with the Customs Authority at the port of registration specified on the said scrip; (4)that the said scrip is produced before the proper officer of customs at the time of clearance for debit of the duties leviable on the goods and the proper officer of customs, taking into account the debits already made under this exemption and debits made under the notification Nos . 21 of 2015 - Central Excise, dated the 8th April, 2015 and 11 of 2015 -Service Tax, dated the 8thApril, 2015,shall debit the duties leviable on the goods, but for this exemption; (5) that the said scrip and goods imported against it shall be freely transferable ; (6)that where the importer does not claim exemption from the additional duty of customs leviable under section 3 of the said Customs Tariff Act, he shall be deemed not to have availed the exemption from the said duty for the purpose of calculation of the said additional duty of customs; (7)that the importer shall be entitled to avail drawback of the duty of customs leviable under the First Schedule to the said Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able on such goods and that the proper officer of the Customs, after taking into account the debits already made under these exemption notifications and the debit made under Notification No.20/2015-Central Excise dated 08.04.2015 and No.10/2015-Service Tax dated 08.04.2015, shall debit the duties leviable on the goods, but for this exemption. 20. A careful perusal of these two notifications, more particularly, Clause 2(5) of the same would thus, indicate that though the said notifications at the beginning gives an impression as if the duty leviable on the goods is exempted, in effect, it is only the payment of such duty in cash alone is exempted and on the other hand, such duty leviable and payable has to be debited from the value of the above scrips every time. In other words, the scrips in the hands of the importer, loaded with the FOB value of exports in free foreign exchange or the FOB value of exports as given in the shipping bills in free foreign exchange, realized by the importer are allowed to be utilized for paying the Duty. To put it simply, the incentives/benefits derived out of the exports in free foreign exchange are valued, calculated and loaded in a fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision Bench reads as follows: 1. This Civil Miscellaneous Appeal is filed at the instance of the Revenue as against the order of the Customs, Excise Service Tax Appellate Tribunal, South Zonal Bench at Chennai [2006 (206) E.L.T. 1024 (Tri. - Chennai)], by raising the following substantial questions of law :-- (1) Whether the Department is entitled to collect Customs Educational Cess on Basic Customs Duty which was debited in the DEPB Licence? (2) Whether the Tribunal is right in not considering that the Notification No. 96/2004- Customs dated 17-9-2004 passed in exercise of powers under Section 25(1) of the Customs Act, 1962 grants exemption of Basic Customs Duty (BCD) subject to debit of the BEPD Licence? (3) Whether the Tribunal erred in not considering the Board Circular No. 5/2005 dated 31- 1-2005? The Tribunal rejected the Revenue's appeal, thereby upholding the contention of the assessee that the levy of education cess under Section 84 of the Finance (No. 2) Act, 2004 was not to be levied on the exempted items. In so holding, the Tribunal followed the decision of the Mumbai Tribunal reported i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax Appeal filed by the Revenue against the order of the Tribunal in holding that the Education Cess is not leviable on goods which have been exempted from payment of customs duty and additional duty of customs under Notification No.32 of 2005. In Gujarat Ambuja Exports Ltd. case , the very same Court has observed as follows: 16. From the nature of DEPB scheme and the exemption granted to imports made under such scheme, it can be seen that the very purpose is to neutralise the import duty component on the imported goods used for production of export items. Such object is achieved through the DEPB scheme under which the exporter is given the facility of utilising the credits in the DEPB scrips for the purpose of adjustment against the customs duty liability on the goods imported for the ultimate purpose of export on value addition. 17. We may recall that Chapter 7 of the Export- Import Policy pertains to duty exemption/remission schemes. Para 7.1 thereof provides that the duty exemption scheme enables import of inputs required for export production. The duty remission scheme enables post export replenishment/remission of duty on inputs used in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision, the Tribunal taking note of the provisions contained in Sections 81 and 84 of the Finance Act, 2004 held that the impugned Circular No. 5/2005 is not legally sustainable. The Tribunal held that crediting and debiting of entries in the passbook is a matter of procedure and convenience and in essence, the Notification No. 45/2002 provides for full exemption from payment of customs duty. 20. We may also recall that the Larger Bench of the Tribunal in the case of Essar Steel Ltd. (supra) held that mere entry in the DEPB book is not sufficient for eligibility of Modvat credit availed on the strength of Bill of Entry where the importer had availed of benefit of the exemption from payment of customs duty. This would further go to show that while no customs duty is paid, there would be no question of availing Modvat credit on such duty. 21. We may notice that vide circular dated 8-7- 2004, the Ministry of Finance, in a question whether goods that are fully exempt from excise/customs duty or are cleared without payment of such duty would be subject to Education Cess, clarified that the Education Cess is leviable at the rate of 2% of the aggregate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty under various notifications issued by the Central Government under Section 25 of the Customs Act, 1962, no Education Cess is demanded by the respondents. In fact, the impugned notification itself is sufficiently clear and records that imports against Advanced Licences are exempt from all duties of customs and therefore, it follows that Education Cess at 2% is not leviable on such imports. In case of DEPB, however, a distinction is sought to be drawn on the premise that though the importers are governed by exemption notification, the fact remains that in case of such imports, the duty is debited from DEPB scrip. To our mind, such distinction is not valid. The clarificatory circular itself refers to the imports made under the DEPB scheme being covered under exemption notification. Such exemption is, of course, subject to fulfillment of certain conditions. One of the conditions includes that of adjustment of credit in the DEPB scrip. This, however, is merely procedural in nature and would not change the nature of benefit from one being of exemption. d) Perusal of the above decision made in Gujarat Ambuja Exports Ltd. case would show that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the following substantial questions of law. (a) Whether the CESTAT is vested with powers or has jurisdiction to hold and declare that notification/circulars issued by the Board are inconsistent to legislature? (b) Whether Education Cess is leviable on imports made under DEPB Scheme as per Finance (No. 2) of 2004 read with Board's Circular No. 5/2005, dated 31- 1-2005? 3. The Counsel appearing for both sides have addressed us on Question 2(b). In their submission, same would suffice for disposal of this appeal. 4. The respondent-assessee filed about 16 bills of entries for the purpose of assessment of various goods imported by them and claimed benefit of Notification No. 45/02-Customs, dated 22nd April, 2004. On finalization of the assessment, the benefit of this notification was extended to all the bills of entries inter alia, exempting duties leviable subject to the conditions that the duties leviable were debited from the relevant pass book under a scheme known as DEPB Scheme. The Education Cess at 2% on these duties was also debited from the duties of DEPB as per clause of the Finance Bill, 2004. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with similar conditions. That is, however, not the case. On the other hand, the cess has been specified at the rate of 2% of the Customs duty in relative terms. In which case, it becomes nil for exempted DEPB imports. Accordingly, we hold that no education cess is leviable on fully exempted DEPB imports and therefore, no debits from DEPB scrip are required. We are also of the view that the circular dated 31st January, 2005 is contrary to the provisions of the Finance (No. 2) Act, 2004 read with Notification No. 45/2002-Customs, dated 22nd April, 2002. The revenue appeal is, therefore, rejected. 8. It is the correctness of this view of the Tribunal which is challenged before us. Mr. A.S. Rao appearing on behalf of the revenue submits that merely because there is a scheme and an exemption is granted that does not wipe out the duties. The Customs duty is leviable and recoverable. In the light of the exemption it cannot be said that these duties are not legally recoverable. Therefore, the education cess also could have been levied and recovered. The Tribunal's view is therefore, erroneous in law. 9. On the other hand, Mr. Patel a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess on imported goods has also not been levied and collected. It is in that regard that the view taken by the High Court of Gujarat in the case of Gujarat Ambuja Exports Ltd. (supra) from paras 9 to 19 has been quoted and followed with approval of the same High Court. That view has also been applied by the High Court of Gujarat in the case of Pasupati (supra). Once the Tribunal's view taken in the present case has found favour with at least three High Courts and has not been interfered with, then, we are of the view that the Tribunal's decision cannot be termed as perverse. It is also not vitiated by any error of law apparent on the face of the record. Following the High Court Gujarat judgment as above, we answer the substantial question of law in Para 2(b) in favour of the assessee and against the revenue. Appeal of the revenue fails and is dismissed. There shall be no order as to costs. g) The High Court of Andhra Pradesh in the case of Commissioner of Central Excise, Visakhaptnam, Vs. Kedia Overseas Ltd., 2011-TIOl-1063-HC-AP-CUS has observed that the Education Cess was not leviable in respect of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble, the whole of the additional duty leviable under Section 3 of the Customs Tariff Act, 1975 and the whole of the special additional duty of Customs leviable under Section 3A of the Customs Tariff Act are exempted from duty. The availment of exemption is subject to inter alia the following conditions: (i) the importer has been issued DEPB in terms of paragraph 4.3 of the Export and Import Policy; (ii) the importer has been permitted credit entries in the said DEPB by the Licensing Authority at the rates notified by, the Government of India; and (iii) the DEPB is produced before the proper officer of Customs for debit of the duties leviable on the goods but for exemption contained therein. The only disability is when there is no sufficient credit in the DEPB for debiting the duty leviable on the goods. 6. A reading of the Notification No. 45/2002 would show that the intention of the Government is to exempt the whole of the duty, additional duty and special additional duty. It is, therefore, not possible to read-any further restriction as to levy of education cess in respect of duty free imports under DEPB. scheme. Further there is no dispute that the rulin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest payable on clearance of warehoused goods when duty paid through DEPB debit. Subject : Waiver of interest on goods cleared from a warehouse when duty is paid by way of debit in DEPB licenses-Regarding. I am directed to refer to instructions contained in Board's Circular No. 10/2006-Customs, dated 14.2.2006 (F. No. 473/07/2005-LC) (2006 (194) E.L.T. T23) regarding waiver of interest on Customs duty on warehoused goods and to say that a reference was received in the Board seeking clarification whether interest on warehoused goods is chargeable, if the Customs duty is paid by way of debit in DEPB. 2. The issue was examined and necessary clarification in the matter has been issued vide F. No. 605/85/2006-DBK, dated 21.7.2006 to the Commissioner concerned. Having regard to the general implications of the matter, a copy of the same is enclosed for information and necessary action. 3. In brief, the issue involved is, whether the duty paid through debits under DEPB is to be treated as payment of duty of exemption from duty. Hitherto, the stand taken by the Department was that goods cleared through debit under DEPB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PB scrips which allows them specific amounts to be utilised for payment of Customs duty. Therefore, the importers, who use DEPB scrips, pay duty not by cash but only by way of credit. This is clear from the judgment of the Supreme Court extracted above. Therefore, the goods cleared under DEPB Scheme cannot be treated an exempted goods, but they can only be treated to be duty-paid goods and therefore, the interest is payable as per Section 61(2) of the Act. The debit of any amount under the DEPB Scheme is a mode of payment of duty on the imported goods and cannot be treated as exempted goods, unlike the goods under DEEC Scheme. We are unable to answer the questions raised by the appellant in its favour. Therefore, the civil miscellaneous appeals are dismissed. The above said decision was put to challenge before the Hon'ble Supreme Court in Special Leave Petition Nos.24638-24640/2009 and the same was dismissed on 09.10.2009. b) Tanfac Industries Ltd. case was subsequently followed by another Division Bench decision of this Court, in the case of Commissioner of Central Excise Vs. SPIC Heavy Chemicals Division, (2014) 25 GSTR 538 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. Countering the stand of the assessee, the learned standing counsel appearing for the Revenue, however, supported the order of the Tribunal, particularly in the face of the larger Bench decision in the case of Essar Steel Ltd. v. CCE [2004] 173 ELT 239 (Trib.-Delhi) [LB] on the strength of Notification No. 34/1997, dated April 7, 1997. The learned standing counsel appearing for the Revenue submitted that in the face of clause 7.41 of the Export and Import Policy on DEPB, unless and until the assessee had complied with the requirement of the Rules, viz., payment in cash, the question of granting relief under rule 57Q of the Central Excise Rules did not arise. On the admitted facts of the case, no exception could be taken to the order passed against the assessee. Consequently, there is no necessity to interfere with the order of the Tribunal which went against the assessee, in the light of the decision of the larger Bench reported in [2004] 173 ELT 239 (Trib.- Delhi) [LB] Essar Steel Ltd. v. CCE. He further submitted that the decision of the larger Bench has not been taken on appeal so far. In the circumstances, the view thus having attained finality, the same may be accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph 7.29 of the Export and Import Policy and that the exemption would be available only when there is sufficient credit in the duty entitlement passbook for debiting the duty leviable on the goods, but for the exemption. The notification issued, however, has no relevance to the case where the assessee pays the duty by way of credit entry, in which event, the question of exemption of the notification, does not operate. 22. Thus, in view of the limited scope of exemption, the notification cannot be construed as a non-liability for the purpose of claiming Modvat credit. Read in the context of the decision of the Supreme Court reported in [1999] 106 ELT 3 (SC) Eicher Motors Ltd. v. Union of India and the policy relevant to the period in this case, in the absence of any prohibition in clause 7.41 of the Export and Import Policy with the Handbook of Procedures as well as under rule 57Q of the Central Excise Rules, the assessee will be entitled to relief under rule 57Q of the Central Excise Rules, irrespective of whether the duty is paid in cash or through credit entry in the passbook. c) Apart from the above decisions, the learned counsel for the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the various Finance Bills and Acts, additional duty of excise levied under the Act of 1957 and other kind of duty of excise levied under the Central enactments. ..... 38. This Court in Modi Rubber Limited (supra) also considered the provisions of Section 32 of the Finance Act, 1979, levying special duty making applicable to the provisions of the Act of 1944 and the Rules made thereunder, relating to refunds and exemptions from duties. They shall, as far as may be, apply in relation to the levy and collection of the special duty of excise as they apply to the levy and collection of the duty of excise under the Act of 1944. It was held that reference to the provisions under section 32 of the Finance Act as to the source of power under which notifications dated 1.8.1974 and 1.3.1981 were issued, it could not be held that exemption granted under these two notifications was extendable to Finance Act, 1979. It was limited only to the duty of excise payable under the Act of 1944. The expression 'duty of excise' in these two notifications could not legitimately be construed as comprehending special duty of excise. Merely reference to the source of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly to the duty of excise payable under the Central Excises and Salt Act, 1944 and the expression duty of excise in these two notifications could legitimately be construed as comprehending special duty of excise. This argument is, in our opinion, not wellfounded and cannot be sustained. It is obvious that when a notification granting exemption from duty of excise is issued by the Central Government in exercise of the power under Rule 8(1) simpliciter, without anything more, it must, by reason of the definition of duty contained in Rule 2 clause (v) which according to the well recognised canons of construction would be projected in Rule 8(1), be read as granting exemption only in respect of duty of excise payable under the Central Excises and Salt Act, 1944. Undoubtedly, by reason of subsection (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 subsection (4) of Section 32 or other sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose relating to exemption from duty are made applicable. Moreover, the exemption granted under all these notifications specifically refers to special duty of excise or additional duty of excise, as the case may be. It is, therefore, clear that where a notification granting exemption is issued only under subrule (1) of Rule 8 of the Central Excise Rules, 1944 without reference to any other statute making the provisions of the Central Excises and Salt Act, 1944 and the Rules made thereunder applicable to the levy and collection of special, auxiliary or any other kind of excise duty levied under such statute, the exemption must be read as limited to the duty of excise payable under the Central Excises and Salt Act, 1944 and cannot cover such special, auxiliary or other kind of duty of excise. The notifications in the present case were issued under subrule (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 Excises and Salt Act, 1944. This Court in Modi Rubber Limited (supra) has also considered w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... force of law and cannot be said to be binding concerning the interpretation of the provisions by the courts. The reason employed in SRD Nutrients Private Limited (supra) that there was nil excise duty, as such, additional duty cannot be charged, is also equally unacceptable as additional duty can always be determined and merely exemption granted in respect of a particular excise duty, cannot come in the way of determination of yet another duty based thereupon. The proposition urged that simply because one kind of duty is exempted, other kinds of duties automatically fall, cannot be accepted as there is no difficulty in making the computation of additional duties, which are payable under NCCD, education cess, secondary and higher education cess. Moreover, statutory notification must cover specifically the duty exempted. When a particular kind of duty is exempted, other types of duty or cess imposed by different legislation for a different purpose cannot be said to have been exempted. 42. The decision of larger bench is binding on the smaller bench has been held by this Court in several decisions such as Mahanagar Railway Vendors Union v. Union of India Ors. (1994) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduct which would be at a specified percentage of FOB value of export. The holder of DEPB would have an option to pay additional customs duty in cash also. DEPB is freely transferable. The Foreign Trade Policy of 2009-2014 contained an additional clause which hitherto was not a part of the policy and reads as under: Applicability of Drawback. Additional customs duty/Excise Duty and Special Additional Duty paid in cash or through debit under DEPB may also be adjusted as CENVAT Credit or Duty Drawback as per DOR rules. 16. It can thus be seen that the DEPB scheme aims at neutralising the incidence of customs duty on import component of export product, where upon export, credit would be given at specified rate on the FOB value of the exports. Such credit could be utilised for payment of duty in future or may even be traded. It was in this background that Supreme Court in case of Liberty India v. Commissioner of Income-tax reported in MANU/SC/1585/2009 : 317 ITR 218, had held that DEPB being an incentive which flows from the scheme framed by the Central Government, hence, incentives profits are not profit derived fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corn Industries case . The Hon'ble Supreme Court, after considering those two decisions and also the earlier decision of the Apex Court made in Union of India v. Modi Rubber Limited, (1986) 4 SCC 66, found that the duty on NCCD, Educational Cess and Secondary and Higher Education Cess are in the nature of additional duties imposed by different legislation for a different purpose. The learned counsel for the Revenue fairly submitted that in view of the above recent decision of the Apex Court made in M/s.Unicorn Industries , the Revenue can no longer rely upon SRD Nutrients Private Limited and Bajaj Auto Limited cases in support of their contention that Social Welfare Surcharge is not an independent levy. Therefore, in view of the above recent decision of the Apex Court made in M/s.Unicorn Industries , I hold that Social Welfare Surcharge levied under Section 110(3) of the Finance Act, 2018, is an independent levy imposed and collected under different enactment viz., Finance Act 2018. Consequently, I hold that SWS intended totally for a different purpose is not taking the colour of parent levy viz., customs duty. 26. Now, let me take the other three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t reading of Clause 3.02 of the Foreign Trade Policy and the subject matter notifications will not give any room for doubt as to whether the duty is collected from the petitioner or not. Clause 3.02 is clear and categorical that the duty credit scrips can be used for payment of basic customs duty, additional customs duty and payment of central excise duties and therefore, the purpose for which the duty credit scrips are given is evident and apparent viz., for payment of customs and excise duties. The duty credit scrips thus, are having money value and therefore, the same can be used in lieu of cash for payment of the above duties. The exemption notifications, as already discussed supra, specifically stipulate that those duty credit scrips should be produced before the concerned officer of customs by the importer, who imports goods against those scrips, for the purpose of debiting the duty leviable on such goods, but for exemption. It is to be noted at this juncture that the term but for exemption is to denote that the duty liable to be paid in cash, in view of exemption, is to be accepted by way of debiting such quantum of duty from the value of scrips. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment or collection of duty at all. As I pointed out earlier, collection of duty in this case, in view of the exempted notifications, is by way of debiting the value of such duty from the scrips. If no duty is leviable and payable in view of the exemption granted under the above said notifications, as contended by the petitioner, it makes no sense for imposing conditions therein for making debits towards customs duty leviable from and out of the value of the scrips. Admittedly, in this case, the petitioner is not opposing or denying or disputing the debit of customs duty from the value of the scrips. Their only grievance is against the levy and collection of SWS. 31. Their contention against such levy and collection is that when the levy of customs duty itself is exempted, the Revenue cannot levy and collect the Social Welfare Surcharge. I have already pointed out that the exemption granted under the above said notifications is not an exemption from payment of customs duty in toto and on the other hand, subject to the conditions stipulated therein, which I have already discussed supra. Needless to state that exemption notifications have to be read in full to know the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h decided DCW Ltd. case . Under the above circumstances and in the absence of any direct decision of the Apex Court on the issue as to whether exemption granted under the exemption notifications based on the incentive scrips is an exemption from payment of duty in toto (duty paid is Nil), I bound to follow the Tanfac Industries Ltd. Case, confirmed by the Apex Court. It is true that the Gujarat High Court has taken a different view in Gujarat Ambuja Exports Ltd. case , which was followed in Pasupati Acrylon Ltd., case. It is also true that in Gujarat Ambuja Exports Ltd. case , the Gujarat High Court has taken note of the view expressed in Tanfac Industries Ltd. case and however, had chosen to differ from such view. But perusal of the decision made in Gujarat Ambuja Exports Ltd., reported in 2013 (289) E.L.T 273 (Gujarat), would show that the decision of the Apex Court in dismissing SLP filed against Tanfac Industries Ltd. case seems to have not been placed before the Gujarat High Court. As already pointed out Tanfac Industries Ltd. decision of this Court was not interfered with by the Apex Court by dismissing SLP as early as on 09.10.2009. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment in cash and that under no circumstances, the benefit of Modvat credit could be denied to the assessee. Thus by following Tanfac case, subsequent Division Bench in the above SPIC case found that the exemption notification cannot be construed as a non-liability for the purpose of claiming Modvat credit and that the assessee therein was entitled to the relief under Section 57Q of the Central Excise Rules, irrespective of whether the duty is paid in cash or through credit entry in the pass-book. Therefore, the above view expressed by the other Division Bench following TANFAC Industries Ltd., made after DCW Ltd. case, undoubtedly, drive me to follow the view taken by TANFAC Industries Ltd. Case. Accordingly, I hold that the petitioner is not justified in contending that total exemption is granted to them from payment of customs duty and that there is nil rate of duty. 34. Reliance placed on the decision of the Apex Court reported in AIR 1957 SC 657, AV Fernandes vs State of Kerala, by the petitioner to contend that the subject matter notifications granted total exemption from payment of duty, is neither helpful nor applicable to the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Tariff Act, 1975 and additional duties leviable thereon under Section 3 of the Customs Tariff Act, 1975. Except these two duties, the above exemption notifications do not empower the Revenue to make debit of any other levy or duty or surcharge or cess either under the Customs Act, or under other enactment. It is well settled that the exemption notifications are to be construed strictly. Scope and ambit of exemption notifications cannot be enlarged or extended beyond its intend as specifically spoken to therein. A benefit given in an exemption notification must be confined only with such of those benefits referred to therein in strict sense and not to be extended beyond its scope. If the notification is unambiguous, there is no need to interpret the same. Thus, under the guide of interpreting an exemption notification, a benefit conferred on a person cannot be extended as an undue benefit , which he is not entitled to otherwise under the notification. Going by the terms of the above exemption notifications and in view of the fact that levy and collection of Social Welfare Surcharge is an independent levy, that too, under a different enactment viz., the Finance Act, 2018, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The above contention of the petitioner is liable to be rejected in view of the findings and observation made by the Hon'ble Supreme Court in the latest decision made in M/s.Unicorn Industries case, wherein at Paragraph No.41, it has been observed as follows: 41. The Circular of 2004 issued based on the interpretation of the provisions made by one of the Customs Officers, is of no avail as such Circular has no force of law and cannot be said to be binding on the Court. Similarly, the Circular issued by Central Board of Excise and Customs in 2011, is of no avail as it relates to service tax and has no force of law and cannot be said to be binding concerning the interpretation of the provisions by the courts. The reason employed in SRD Nutrients Private Limited (supra) that there was nil excise duty, as such, additional duty cannot be charged, is also equally unacceptable as additional duty can always be determined and merely exemption granted in respect of a particular excise duty, cannot come in the way of determination of yet another duty based thereupon. The proposition urged that simply because one kind of duty is exempted, other kinds of duties automatic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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