TMI Blog2021 (10) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... her than the duty or additional duty of customs cannot be paid through MEIS scrips. Here in the case in hand, it is no doubt that, the exemption N/N. 24/2015 is dated 08.04.2015 ie., well after the Finance Act, 2004 and 2007. In the 2004 Finance Act, Section 91 deals with education cess and Section 93 made it clear that, the education cess levied under Section 91 in the case of goods specified in the First Schedule to the Central Excise Tariff Act, 1994, being goods manufactured or produced, shall be a duty of excise. Therefore, insofar as the Central Excise is concerned, the education cess imposed under Section 91 of the Finance Act, 2004 was to be treated as a duty of excise, in view of Section 93. What is the duty to be imposed on the imported goods first be calculated and accordingly, 2% of education cess and 1% of secondary and higher education cess shall be levied and imposed. Hence, when the importer pay the duty, he shall also pay the cess which become part and parcel of the duty of customs. That is the reason why the total amount of ₹ 22,88,86,212/- were paid by the petitioner as duty of customs as well as education cess through the scrips of MEIS. Having accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms duty of ₹ 22,88,86,212/-. Out of the said duty paid, an amount of ₹ 66,66,582/- was debited in respect of education cess and secondary and higher secondary education cess that were payable as a percentage of basic customs duty leviable on the goods. 3. It is the further case of the petitioner that, after the assessment was over and the clearance of the goods were given, however, the respondent has issued a show cause notice dated 19.11.2019, on the ground that, the education cess that was wrongly debited from MEIS scrips of the petitioner was not permissible in terms of Notification No.24/2015-Cus dated 08.04.2015. In this context, it seems to be the contention of the respondent that, only basic customs duty can be debited from the scrips and education cess and secondary and higher education cess are to be paid only by way of cash. Therefore, on that basis, the show cause notice proposed to demand an amount of ₹ 66,66,582/- that was paid by the petitioner by way of debit in MEIS scrips along with interest and there was also a proposal to impose a penalty under Section 117 of the Customs Act, 1962. 4. In response to the show cause notice, the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eover, 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. 14.07. CBIC vide para 4 of Circular No. 02/2020-Customs dated 10.01.2020 has stated that the duty credit scrips issued under schemes such as MEIS, SEIS, etc. are granted as rewards / incentives for exporters under the respective FTP, as per para 3.02 of the Foreign Trade Policy 2015-2020, these scrips can be used for payment of Basic Customs Duty and Additional Customs Duty specified under Section 3(1), 3(3) and 3(5) of the Customs Tariff Act, 1975 for import of inputs or goods and for payment of Central Excise duties on domestic procurement of inputs of goods. The relevant Customs exemption notifications also allow debit of Basic Customs Duty and Additional Duties of Customs in the duty scrips. It is to mention that the debit of SWS through duty credit scrip is not envisaged in the FTP and the exemption notifications. Further it is clarified that in para 11 of the said circular that in respect of past cases of debits of SWS already mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered to be part and parcel of duty of excise and customs duty, that position since was not prevailing till the regime of Notification No.71/2003, such exemption sought for in the Unicorn Industries case was negated by the Hon'ble Supreme Court. In support of his case, he relied on the following: 19. The education cess came to be imposed vide notification dated 10.9.2004 issued under the Finance Act, 2004. Sections 91 and 93 are extracted hereunder: 91. Education Cess- (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 subsection (11) of Section 2 and this Chapter for the purposes specified in subsection (1), as it may consider necessary. 93. Education Cess on Excisable Goods. - (1) The Education Cess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence to the notification issued under the Finance Act, 2001. There was no question of granting exemption related to cess was not in vogue at the relevant time imposed later on vide Section 91 of the Act of 2004 and Section 126 of the Act of 2007. The provisions of Act of 1944 and the Rules made thereunder shall be applicable to refund, and the exemption is only a reference to the source of power to exempt the NCCD, education cess, secondary and higher education cess. A notification has to be issued for providing exemption under the said source of power. In the absence of a notification containing an exemption to such additional duties in the nature of education cess and secondary and higher education cess, they cannot be said to have been exempted. The High Court was right in relying upon the decision of threeJudge Bench of this Court in Modi Rubber Limited (supra), which has been followed by another threeJudge Bench of this Court in Rita Textiles Private Limited (supra). 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the public interest so to do, hereby exempts goods when imported into India against a duty credit scrip issued by the Regional Authority under the Merchandise Exports from India Scheme in accordance with paragraph 3.04 read with paragraph 3.05 of the Foreign Trade Policy (hereinafter referred to as the said scrip) from,- (a) the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as said Customs Tariff Act); and (b) the whole of the additional duty leviable thereon under section 3 of the said Customs Tariff Act. 10. Only in that context, eventhough the petitioner had paid the entire duty to the extent of ₹ 22,88,86,212/-, which includes the education cess of ₹ 66,66,582/- by using MEIS scrips, the impugned order now has been passed stating that, the education cess therein does not form part of the mode of payment of MEIS scrip. Therefore, the same should have been paid only by way of cash by the importer ie., the petitioner and that is the reason why, the show cause notice was issued. 11. Learned Counsel would further submit that, however, subsequently, the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he import of the judgment in Unicorn Industries case has been misinterpreted and wrongly fit in in the present case. Therefore, the learned Counsel for the petitioner seeks indulgence of this Court against the impugned order. 14. Per contra, Mr.B.Vijay Karthikeyan, learned Standing Counsel appearing for the respondent has relied upon two judgments ie., 2006 (194) E.L.T. 11 (S.C.) in the case of Tata Teleservices Ltd., Vs. Commissioner of Customs and 2019 (370) E.L.T. 3 (S.C.) in the case of Unicorn Industries Vs. Union of India. By relying upon these judgments, learned Standing Counsel has made submissions that, if at all any notification has been issued, that could have been issued only by the Central Government, under its powers. Therefore, the Notification No.24/2015 dated 08.04.2015, cannot be overridden by any subsequent circular issued by the department of customs. Therefore, Circular No.2/2020 dated 10.01.2020, cannot have any overriding effect and this proposition is in consonance with the decision taken in the Hon'le Supreme Court in the two cases cited supra. 15. Learned Standing Counsel would also submit that, insofar as the plea raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is concerned, there could be no much controversy, as the petitioner had imported RBD Palmolein under 10 warehouse bills of entry and 52 bills of entry, for which, whatever the duty imposed against him had been paid, of course, by using the scrips issued under MEIS. This is an acceptable method for debiting the duty by using the credit scrips under MEIS. While paying such duty, using the scrips, the petitioner had paid the entire duty, which includes the education, secondary education or higher education cess to the total amount of ₹ 22,88,86,212/-, that was accepted and the clearance of the goods had also been given by the Customs. Subsequently, the Customs department has come forward to issue a show cause notice on the ground that, while paying the duty by using the scrips, the petitioner also paid the education cess to the tune of ₹ 66,66,582/-. That kind of payment for other heads other than the duty or additional duty of customs cannot be paid through MEIS scrips. Therefore, insofar as the said amount is concerned, that was demanded with interest and also it was proposed to impose the penalty under Section 117 of the Customs Act. This is how the show cause notice wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Excise Tariff Act, 1994, being goods manufactured or produced, shall be a duty of excise. Therefore, insofar as the Central Excise is concerned, the education cess imposed under Section 91 of the Finance Act, 2004 was to be treated as a duty of excise, in view of Section 93. Similarly, a provision is available under Section 94 of the very same Finance Act, 2004, which 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, being goods imported into India, shall be a duty of customs (in this section referred to as the Education Cess on imported goods), at the rate of two per cent., calculated on the aggregated of duties of customs which are levied and collected by the Central Government in the Ministry of Finance (Department of Revenue), under section 12 of the Customs Act, 1962 and ay sum chargeable on such goods under any other law for the time being in force, as an addition to, and in the same manner as, a duty of customs, but not including- (a) the safeguard duty referred to in section 8B and 8C of the Customs Tariff Act, 1975; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other law for the time being in force, as an addition to, and in the same manner as, a duty of customs, but not including- (a) the additional duty referred to in subsection (5) of section 3 of the Customs Tariff Act, 1975; (b) the safeguard duty referred to in sections 8B and 8C of the Customs Tariff Act, 1975; (c) the countervailing duty referred to in section 9 of the Customs Tariff Act, 1975; (d) the anti-dumping duty referred to in section 9A of the Customs Tariff Act, 1975; and (e) the Education Cess chargeable under section 94 of the Finance (No.2) Act, 2004 and Secondary and Higher Education 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 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. (3) The provisions of the Customs Act, 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere it has already been paid and where the goods have been cleared. This was exactly been made in execution by Circular No.2/2020 dated 10.01.2020. 26. When such a circular was issued by the Customs Department and the same having been implemented in respect of various people like the petitioner, the benefit of the said circular cannot be denied to the petitioner on the alleged reason that, the education cess or the higher and secondary education cess being a different component cannot be treated as customs duty or additional customs duty and therefore, the benefit conferred under Clause 11 of the said circular cannot be made available to the petitioner. The said view taken by the respondent / Customs Department, in the considered opinion of this Court, in view of the aforestated legal position, is untenable and unacceptable. 27. The quoting of the Hon'ble Supreme Court judgment in Unicorn Industries case is a wrong fitment of the citation, as the issue decided in the said case, in fact the principle enunciated in that case if it is culled out, certainly would support the case of the petitioner and not the respondent. Therefore, this Court has no hesitation to state ..... X X X X Extracts X X X X X X X X Extracts X X X X
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