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TMI Blog2024 (2) TMI 1419X X X X Extracts X X X X X X X X Extracts X X X X ..... er and above the duties of Customs already discharged at the time of removal to the DTA in terms of Section 30 of the SEZ Act, which as a part of Additional duty under Section 3(1) of the Customs Tariff Act, includes SAED, RIC as also AIDC, being Additional duties equal to the duty of excise leviable on like articles for the time being produced or manufactured in India. 1.2 The adjudicating authority has vide Order in Original No.RAJ-EXCUS000-COM-002-2023-24 dated 14-6-2023, being impugned in the present proceedings, confirmed the demand for levy and recovery of Excise duty under Section 11A read with Section 147 of Finance Act, 2002, Section 112 of Finance Act, 2018 and Section 125 of Finance Act, 2021 in the form of SAED, RIC and AIDC respectively alongwith interest thereon under Section 11AA and penalty under Rule 28 of the Central Excise Rules, 2017. This demand for Central Excise Duty has been confirmed over and above what has already been assessed and paid in terms of Section 30 of the SEZ Act, 2005 on removal of HSD from the SEZ to the DTA by rejecting the appellant's contention to the effect that the additional duty recovered under Section 3(1) of the Customs Tariff Act, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d collection of Central Excise duty would not apply to goods produced or manufactured in Special Economic Zones. The said exclusion provided for in Section 3 of the Central Excise Act, 1944 equally apply to the levy under the Finance Acts in question. (d) SAED in terms of Section 147 of the Finance Act, 2002 was levied as a surcharge while RIC levied under Finance Act, 2018 and AIDC under the Finance Act, 2021 were levied as additional duty of excise. Since the basic excise duty, to which these duties were a surcharge or an additional duty, itself was not leviable as the Central Excise Act itself does not apply to goods manufactured in SEZ, the said surcharge or additional duty could also not have been levied, as the same were to be levied in addition to any other duties of excise chargeable under the Central Excise Act or any other law for the time being in force. (e) SEZ is a sui generis enclave, which is outside India for the purposes of taxation as is evident from Section 30 of the SEZ Act, 2005 read with Rule 47/48 of the Special Economic Zone Rules, 2006 which envisages that clearance from the SEZ to the DTA is accorded the same treatment as in respect of goods physically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Z Act, subjected to duties of customs, including anti dumping duty, countervailing duty, and safeguard duty under the Customs Tariff Act, 1975. It is undisputed that the HSD in question has been subjected the levy of additional duty under Section 3 (1) of the Customs Tariff Act, which is equal to the Excise duty for the time being leviable on like article, produced or manufactured in India. As a part of the said additional duty under Section 3(1) of the Customs Tariff Act, the amount leviable in respect of SAED, RIC and AIDC under respective Finance Acts, has already been levied and collected. 4.2 Faced with the challenge of justifying how a clearance which is regarded as an import into India and applicable customs duties recovered on the same could be subjected to a levy of Central Excise duty in addition to additional duty under Section 3(1) of Customs Tariff Act, the Adjudicating Authority has in para 3.4.5.1 and 3.4.5.2 concluded that "............. consequently, it is safe to conclude that the clearance from the SEZ unit to the DTA is normal clearance of manufactured goods within India i.e. domestic tariff area and all the levy duty, SEZ created under Central Law enactments i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious counts, one of which being that the duty payable on goods cleared from an EOU to the DTA as to be on Par with the duties payable on goods imported from abroad into the country. It was held that the interpretation suggested by the Revenue would have the effect of goods cleared from the EOU to the DTA suffering a higher duty vis-a-vis that leviable on import of goods into the country. Such an interpretation was held to be clearly at odds with the principle that duty is payable on goods cleared into DTA from 100% EOU should be on par with duty leviable on goods imported into the country from abroad. 4.6 The ratio laid down by the Larger Bench of this Tribunal applies in all force to the present factual situation also, in as much as an SEZ is deemed to be a territory outside the customs territory of India for undertaking authorized operations. It is for this reason that on clearances from the SEZ to the DTA, duties of customs as leviable on such goods when imported into India is a required to be discharged, this being the case there cannot be any logic or rational in requiring the SEZ to pay duties and taxes higher than those payable on imports of goods into the country. If the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the duties leviable under the Finance Acts and there was no justification in once again seeking to recover the very same amount separately as a duty of excise. 4.8. Notwithstanding the above, we also find that applying the ratio laid down by the Apex Court in the case of Govind Saran Ganga Saran Vs. Commissioner of Sales Tax 1985 SUPP (SCC) 205 the levy of SAED, RIC and AIDC under the relevant Finance Acts, cannot be given effect to without the support and reference to the provisions of the Central Excise Act, 1944 and the Rules made thereunder relating to levy and collection, as made applicable in terms of Section 147(3)/112(3)/125(4) of Finance Acts 2002/2018/2021 respectively. We will first deal with this aspect as it goes to the very fulcrum of the proceedings initiated against the Appellant. For doing so we are extracting herein below the relevant provisions of the Finance Act, 2002, 2018 and 2021. Relevant extracts of Finance Act, 2002: 147. Special additional excise duty . - (1) In the case of goods specified in the Eighth Schedule, being goods manufactured, there shall be levied and collected, for purposes of the Union, by surcharge, a duty of excise, to be called th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be called Agriculture Infrastructure and Development Cess, on the goods specified in the Seventh Schedule (hereinafter referred to as scheduled goods), being the goods manufactured or produced, at the rates specified in column (3) of the said Schedule, for the purposes of financing the agriculture infrastructure and other development expenditure. (2) The Central Government may, after due appropriation made by Parliament by law in this behalf, utilise such sums of money of the Agriculture Infrastructure and Development Cess levied under this section for the purposes specified in sub-section (1), as it may consider necessary. (3) The cess leviable under sub-section (1), chargeable on the scheduled 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. (4) The provisions of the Central Excise Act, 1944 (1 of 1944), and the rules and the regulations made thereunder, including those relating to assessment, non-levy, shortlevy, refund, exemptions, interest, appeals, offences, and penalties shall, as far as may be, apply in relation to the levy and collecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or manufacture takes place at a particular location, territory, etc., failing which the nature of levy is vague and uncertain and falls foul of the criteria laid down by the Apex Court in the case of Govind Saran Ganga Saran (supra). 4.11. It will be relevant to compare the charging provision of the aforesaid Finance Acts vis-à-vis the charging provision under the Central Excise Act, 1944, the Customs Act, 1962, Service Tax law as provided for in Chapter V of the Finance Act, 1994, as also the provisions of the levy of Goods and Services Tax under the Central Goods and Services Tax Act, 2017 and as also the Integrated Goods and Services Tax Act, 2017 and see if they define the taxable event with reference to the location/territory. For ease of comparison we are extracting the charging provision under the Central Excise Act, 1944, the Customs Act, 1962, Service Tax law as provided for in Chapter V of the Finance Act, 1994, as also Central Goods and Services Tax Act, 2017 and the Integrated Goods and Services Tax Act, 2017: Central Excise Act, 1944 [SECTION 3. Duty specified in the Fourth Schedule to be levied. - (1) There shall be levied and collected in such manner as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of goods not belonging to Government.] Service Tax-Chapter V of Finance Act, 1994 SECTION [66B. Charge of service tax on and after Finance Act, 2012. -There shall be levied a tax (hereinafter referred to as the service tax) at the rate of [fourteen per cent.] on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed.] (52) "taxable territory" means the territory to which the provisions of this Chapter apply; SECTION 64. Extent, commencement and application. - (1) This Chapter extends to the whole of India except the State of Jammu and Kashmir. (2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. (3) It shall apply to taxable services provided on or after the commencement of this Chapter. Central Goods & Services Tax Act, 2017 SECTION 9. Levy and collection. - (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Goods and Services Tax Act and at such rates, not exceeding forty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person : Provided that the integrated tax on goods [other than the goods as may be notified by the Government on the recommendations of the Council] imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 (51 of 1975) on the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962 (52 of 1962). SECTION 7. Inter-State supply. - (1) Subject to the provisions of section 10, supply of goods, where the location of the supplier and the place of supply are in - (a) two different States; (b) two different Union territories; or (c) a State and a Union territory, shall be treated as a supply of goods in the course of inter-State trade or commerce. (2) Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ul of the requirement of prescribing the taxable event as they do not prescribe that the production or manufacture has to happen in any particular location. In the absence of such a prescription the levy cannot be given effect to, as the taxable event itself is uncertain and vague. 4.13. It appears to us that to obviate any challenge to the levy being vague and uncertain the legislature has consciously in sub-section 3 of Section 147 of the Finance Act, 2002, Sub-section 3 of Section 112 of Finance Act 2018 and Sub-section 4 of Section 125 of the Finance Act, 2021 stipulated that the provision of the Central Excise Act 1944 and the Rules made thereunder shall, as far as may be apply in relation to levy and collection of the duties under the Finance Acts, as they apply in relation to levy and collection of duties under the Central Excise Act, 1944 or the Rules made thereunder. In our view this statutory prescription has to be given a meaning and effect. If the provision for levy in sub-section (1) of Section 147/Section 112/Section 125 of the Finance Act 2002, 2018 and 2021 were enough to sustain the levy, then there would have been no need to provide that the provisions of the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be vague and unascertainable and would not fall foul of the test laid down in the case of Govind Saran Ganga Saran (supra). 4.17. In our view the levy under Section 147(1)/112(1)/125(1) of the Finance Act, 2002, 2018 and 2021 respectively, applies to goods manufactured or produced in India, excluding goods produced or manufactured in the Special Economic Zones. This is the only way that the said charging sections can be made operational and effective, by reading in the provisions relating to levy and collection provided for under the Central Excise Act, 1944 and the Rules made thereunder. 4.18. We find that the adjudicating authority has not assigned any reason in the impugned order for rejecting the appellant's contention regarding levy under the Finance Acts being inapplicable to goods manufactured or produced in the Special Economic Zone. According to the Respondent since the levy under the Finance Acts was over and above the levy under the Central Excise Act, the provisions of the later Act could not have been invoked. This finding in our view is at odds with the specific provision under the Finance Acts providing for the provisions of the Central Excise Act and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment has been able to by virtue of Section 3B of the Central Excise Act, 1944 amend the 8th Schedule to the Finance Act, 2002 and increase the rate of SAED on ATF. There is absolutely no answer that the Revenue has to this submission. 4.21. We find that the Respondent has in the impugned order proceeded on a tangent by referring to Central Excise Laws (Amendment and Validation) Act, 1982 to contend that if under any Central Law, the levy and collection of the duty of excise is in terms of the provision of the Central Excise Act, 1944, then the exemption provided for in the Central Excise Act, 1944 would not ipso facto apply to the levy of duty of excise under the other Central Acts. In support of this proposition, reliance is also being placed on the judgement of the Apex Court in the case of Unicorn Industries vs UOI reported in 2019 (370) ELT 3. We find that in the case of Unicorn Industries the issue in dispute was whether the exemption from levy of Central Excise duty provided for under the Central Excise Act, 1944 would ipso facto result in exemption being extended from the levy of Education cess under the Finance Act, 2004 as also NCCD under the Finance Act, 2001 and Additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) being completely different and poles apart, the principle laid down therein does not further the case of the Respondent in the present case. 4.24. We are therefore of the view that the appellant was completely justified in contending that the provisions of the Central Excise Act, 1944 with regard to levy and collection of Central Excise duty, to the extent they are not inconsistent, apply equally to the provisions of the Finance Act and accordingly the levy under the Finance Act will apply to goods manufactured or produced in India, other than the goods produced or manufactured in SEZ. 4.25. We also find substance in the appellant's contention to the effect that the duties under the concerned Finance Acts, being in addition to any other duty of excise, chargeable on such goods under the Central Excise Act, is a clear indication that the levy under the relevant Finance Acts is in itself in the nature of a duty of excise chargeable on goods under Section 3 of the Central Excise Act, 1944. Further the use of the expression 'in addition to any other duties of excise' makes it clear that when no other duty of excise can be levied on goods manufactured in an SEZ by virtue of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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