TMI Blog2020 (4) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... omputing brand rate eligibility. Applicability of the Drawback Rules to NCCD - N/N. 4/2019-Cus. (Instruction) dated 11.10.2019 - HELD THAT:- There are similar provisions relating to NCCD as in the case of Secondary and Higher Education Cess. Vide Circular No.4/2019 Cus. (Instruction) dated 11th October, 2019, the CBEC has issued certain clarifications, whereby it has been clarified that section 136 of the Finance Act, 2007 which levies Secondary and Higher Education Cess (SHE), and section 110 of the Finance Act, 2018 which levies Social Welfare Surcharge (SWS), as a duty of Customs provide that the rules and regulations made thereunder including those relating to refunds, exemptions etc. shall apply to these levies. Further, these cesses are factored in the calculation of all industry rates of duty drawback by the Drawback Committee. Reference can be made to a Circular No. 106/95-Cus. dated 11.10.1995, wherein, the CBEC has clarified that anti-dumping duty which is leviable under section 9A of the Customs Tariff Act, read with section 12 of the Customs Act, is rebatable as drawback in terms of section 75 of the Customs Act. Since, anti-dumping duty is not taken into consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was required to file a separate appeal in respect of each appeal in which the common order has been passed. However, considering the fact that the appeal has been admitted in the year 2012 without any such objection having been raised, at this stage the court does not deem it fit to enter into such technicalities when the matter has come up for final hearing. 2. While admitting the appeal, this court, by an order dated 24.07.2012, had formulated the following four substantial questions of law: i) Whether National Calamity Contingent Duty (NCCD), levied under Section 134 of the Finance Act, 2003, is a duty of Customs? ii) Whether in the fact and circumstances of the case, was the tribunal s right in law, in holding that any appeal on the issue of inclusion of NCCD for computation of Brand rate of Drawback is not maintainable in terms of first proviso to section 129A(1)(b) of the Customs Act, 1962? iii) Whether inclusion of NCCD for computation of Brand rate of Drawback has anything to do with payment of drawback appearing at exception clause (C) of the first proviso to section 129A(1)(b) of the Customs Act, 1962? iv) Whether any appeal arising out of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce Act, 2003, is not a duty of customs and, hence, duty incidence of NCCD cannot be considered for computing the brand rate eligibility as NCCD is not specified for fixation of brand rate. It was submitted that section 75 of the Customs Act stipulates that a drawback should be allowed of duties of customs chargeable under that Act on any imported materials subject to the rules made under subsection (2). It was contended that the Drawback Rules have been framed under section 75 of the Customs Act and thus, the scope of the Drawback Rules has been restricted to the provisions contained in section 75 of the Customs Act and drawback can be allowed only of duties levied under that Act. According to the learned senior standing counsel, since NCCD is levied under the Finance Act, 2003, the provisions of section 75 of the Customs Act would not apply and that NCCD not being a customs duty for the purpose of granting drawback under section 75 of the Customs Act, the Additional Commissioner, Central Excise, Rajkot, has rightly held that no duty incidence on account of NCCD can be considered for computing the brand rate eligibility as NCCD is not specified for fixation of brand rate; and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, and concurred with the view expressed by the Rajasthan High Court in Banswara Syntex Ltd. v. Union of India, 2007 (216) ELT 16 , and held thus: 20. We may notice that the primary reasoning contained in the impugned order is common for the three cesses, i.e., NCCD; Education Cess and Secondary Higher Education Cess. These were in the nature of surcharges levied in other Acts, which have not been specifically excluded under the Notification in question. That reasoning does not prevail, more so because of the judgment in SRD Nutrients Pvt. Ltd.(supra) The question, thus, is whether, even though the NCCD is in the nature of an excise duty, its incidence being on the product, rather than on the value of the excise duty, that itself would make any difference to the applicability of the NCCD to excise exempt units. 21. On a proper appreciation of the judicial pronouncement in SRD Nutrients Pvt. Ltd.,(supra) we are not inclined to take a different view from the one taken for Education Cess and Secondary Higher Education Cess, even while considering the issue of NCCD. 22. We may notice that this Court, in SRD Nutrients Pvt. Ltd.(supra) gave its imprimatur to the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervation and Development) Act, 1974 as a duty of excise and an equivalent duty of customs is levied on imported coal under section 7 of the said Act. However, the Act does not make applicable any of the provisions like refund, drawback etc. of Central Excise Act or Customs Act to the aforesaid levies. Therefore, these levies cannot be considered for inclusion in the calculation of duty drawback on any export goods. It was submitted that insofar as NCCD is concerned, sub-section (4) of section 134 of the Finance Act, 2003 provides that the provisions of the Customs Act and the rules and regulations 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 National Calamity Duty of Customs leviable under that section in respect of the goods specified in the Seventh Schedule to the Finance Act, 2001 (14 of 2001) as amended by the Thirteenth Schedule, as they apply in relation to the levy and collection of the duties of customs on such goods under that Act, or those rules and regulations, as the case may be. The learned counsel for the respondent submitted that, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expression employed in the said rule is rebate of duty or tax . Referring to section 134 of the Finance Act, 2003, it was pointed out that the same provides for levy, by surcharge, a duty of customs, called the National Calamity Contingent Duty of Customs. Inviting attention to Circular No.4/2019 dated 11th October, 2019, it was pointed out that the provisions of the Finance Acts under which levies of Secondary and Higher Education cess (SHE) and Social Welfare Surcharge (SWS) have been levied are similar to NCCD and there is no difference, and hence, the decision of the Supreme Court in M/s Unicorn Industries v. Union of India (supra) would have no bearing on the facts of the present case. It was accordingly urged that the impugned order passed by the Commissioner (Appeals) being just legal and proper, does not warrant interference. 6. The facts, as emerging from the record are that by separate communications dated 16th March, 2010 and, 29th March, 2010 in respect of various applications made by the respondent, the Additional Commissioner, Central Excise, Rajkot, informed the respondent that no duty incidence on account of NCCD can be considered for computing brand rate elig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been issued under section 75 of the Customs Act, 1962. He, accordingly, found that Board s Circular No.11/2005-Cus dated 03.03.2005, wherein it has been clarified that education cess which is being levied @ 2% of aggregate duties of customs needs to be factored in the brand rate would be squarely applicable to NCCD. 6.3 The Tribunal has dismissed the appeals on the ground of maintainability. 7. Insofar as proposed questions No.2 to 4 as regards maintainability of the appeal under section 129A of the Customs Act are concerned, no submissions have been made in connection with the said questions; hence, the court does not find appropriate to deal with the same and leaves those questions open to be agitated in some other matter. 8. The short question that arises for consideration in the present case is whether National Calamity Contingent Duty of Customs (NCCD) levied under section 134 of the Finance Act, 2003, is a customs duty and whether NCCD can be considered for computing brand rate eligibility? 9. Section 134 of the Finance Act, 2003, reads thus: 134. National Calamity Contingent Duty of Customs.-(1) In the case of goods specified in the Seventh Schedule t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Section 75 of the Customs Act provides for drawback on imported material used in the manufacture of goods which are exported, and as it stood at the relevant time, reads thus: 75. Drawback on imported materials used in the manufacture of goods which are exported .- (1) Where it appears to the Central Government that in respect of goods of any class or description manufactured , processed or on which any operation has been carried out in India, being goods which have been entered for export and in respect of which an order permitting the clearance and loading thereof for exportation has been made under section 51 by the proper officer, or being goods entered for export by post under section 82 and in respect of which an order permitting clearance for exportation has been made by the proper officer, a drawback should be allowed of duties of customs chargeable under this Act on any imported materials of a class or description used in the manufacture or processing of such goods or carrying out any operation on such goods, the Central Government may, by notification in the Official Gazette, direct that drawback shall be allowed in respect of such goods in accordance with, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t class or description either by manufacturers generally or by persons processing or carrying on any operation generally or by any particular manufacturer or particular person carrying on any process or other operation, and interest, if any, payable thereon. (aa) for specifying the goods in respect of which no drawback shall be allowed; (ab) for specifying the procedure for recovery or adjustment of the amount of any drawback which had been allowed under sub-section (1) or interest chargeable thereon; (b) for the production of such certificates, documents and other evidence in support of each claim of drawback as may be necessary; (c) for requiring the manufacturer or the person carrying on any process or other operation to give access to every part of his manufactory to any officer of customs specially authorised in this behalf by the Assistant Commissioner of Customs to enable such authorised officer to inspect the processes of manufacture , process or any other operations carried out] and to verify by actual check or otherwise the statements made in support of the claim for drawback. (d) for the manner and the time within which the claim for payment of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cess. Government vide notification No. 2/20 0-Clean Energy Cess dated 22-62010 made, among others, the provisions related to refund under Section 11B of Central Excise Act, 1944 applicable to the cess. Vide instruction F. No. 354/72/2010-TRU dated 24-6-2010 [2010 (255) E.L.T. (T4)], the Board clarified that Clean Energy cess would also be levied on import in the form of additional duty of Customs. Since the cess is collected as additional duty under Section 3 of the Customs Tarriff Act, the provisions of Customs Act, 1962 related to drawback, refund etc. are applicable to it in terms of Section 3(12) of the Customs Tariff Act, 1975. Therefore, the incidence of Clean Environment cess (erstwhile Clean Energy cess) is required to be included in the calculation of Brand Rate. It may be mentioned that Clean Energy cess was renamed as Clean Environment cess in Finance Bill 2016 and the latter has been subsumed under GST w.e.f. 1-72017. 2.4 Stowage Excise duty: Stowage Excise duty is levied under Section 6 of The Coal Mines (Conservation and Development) Act, 1974 as a duty of Excise and an equivalent duty of Customs is levied on imported coal under Section 7 of the Said Act. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Act, 1944 (1 of 1944) or under any other law for the time being in force. (2) The Education Cess on excisable goods shall be in addition to any other duties of excise chargeable on such goods, under the Central Excise Act, 1944 (1 of 1944) or any other law for the time being in force. (3) The provisions of the Central Excise Act, 1944 (1 of 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 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, as the case may be. 17. Section 94 of Finance (No.2) Act, 2004 makes provision for levy of education cess on imported goods and reads thus: 94. Education Cess on imported goods.-(1) The Education Cess levied under Section 91, in the case of goods specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), being goods imported into India, shall be a duty of customs (in this section referred to as the Education Cess on imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess levied under sub-section (12) of Section 2 and this chapter for the purposes specified in sub-section (1) as it may consider necessary. 19. Section 138 of Finance Act, 2007 makes provision for levy of Secondary and Higher Secondary Education Cess on excisable goods and section 139 of the said Act makes provision for levy of Secondary and Higher Secondary Education Cess on imported goods. Section 138 and section 139 of the Finance Act, 2007 read thus: 138. Secondary and Higher Education Cess on excisable goods.-(1) The Secondary and Higher Education Cess levied under Section 136, 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 Secondary and Higher Education Cess on excisable goods), at the rate of one per cent calculated on the aggregate of all duties of excise (including special duty of excise or any other duty of excise but excluding Education Cess chargeable under Section 93 of the Finance (No. 2) Act, 2004 (23 of 2004) and Secondary and Higher Education Cess on excisable goods) which are levied and collected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation Cess on imported goods. (2) The Secondary and Higher Education Cess on imported goods shall be in addition to any other duties of customs chargeable on such goods, under the Customs Act, 1962 (52 of 1962) or any other law for the time being in force and the Education Cess chargeable under Section 94 of the Finance (No. 2) Act, 2004 (23 of 2004). (3) The provisions of the Customs Act, 1962 (52 of 1962) and the rules and regulations 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 imported goods as they apply in relation to the levy and collection of the duties of customs on such goods under the Customs Act, 1962 or the rules or the regulations made thereunder, as the case may be. 20. A perusal of the provisions of sub-sections (3) of section 138 of the Finance Act, 2007 relating to the Secondary and Higher Secondary Education Cess indicates that the provisions of the Central Excise Act, 1944, and the rules made there under, including those relating to refunds and exemptions from duties and imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rawback. The very circular further provides that in case of Stowage Excise Duty which is levied under section 6 of the Coal Mines (Conservation and Development) Act, 1974 as a duty of Excise and equivalent duty of Customs on imported coal under section 7 of the Act, the Act does not make applicable any of the provisions like refund, drawback, etc. of the Central Excise Act or Customs Act to the said levies, therefore, those levies cannot be considered for inclusion in the calculation of duty drawback on any export goods. 23. At this stage, reference can be made to a Circular No. 106/95-Cus. dated 11.10.1995, wherein, the CBEC has clarified that anti-dumping duty which is leviable under section 9A of the Customs Tariff Act, read with section 12 of the Customs Act, is rebatable as drawback in terms of section 75 of the Customs Act. Since, anti-dumping duty is not taken into consideration while fixing all-industry rate of drawback, the drawback of such anti-dumping duty can only be claimed under an application for brand rate under rule 6 or rule 7 of the Customs and Central Excise Duties Drawback Rules, 1995. 24. Thus, in the case of anti-dumping duty, the Board has clarified th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments of NCCD are required to be factored in brand rate of drawback duty. 26. However, since the NCCD has not been taken into consideration while fixing all-industry rate of drawback, like in the case of anti-dumping duty as provided in Circular No.106/95-Cus dated 11th October, 1995, the drawback of such NCCD can only be claimed under an application for brand rate under rule 6 or rule 7 of the Drawback Rules. In this case the respondent has made an application for fixing the brand rate of duty drawback under rule 6 of the Drawback Rules. Therefore, in the light of the stand taken by the CBEC in the clarificatory circulars referred to hereinabove, the application made by the respondent under rule 6 of the Drawback Rules, ought to have been taken into consideration. The Additional Commissioner of Central Excise was, therefore, not justified in holding that no duty incidence on account of NCCD can be considered for computing brand rate liability as NCCD is not specified for fixation of brand rate. For the reasons recorded hereinabove, this court is in agreement with the view adopted by the Commissioner (Appeals) in holding that since NCCD is a duty of customs, drawback thereof is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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