2011 (6) TMI 576 - AT - Central Excise

Demand of NCCD along with interest and equal amount of penalty Notification No. 50/2003-C.E., dated 10-6-2003 - Held that - Once it is true that the appellants had claimed benefit of exemption in relation to NCCD even though they were not entitled to the same, and the said fact was revealed only consequent to the investigation by the department, it apparently disclosed the intention of the assessee to evade the duty. There was no scope for interpretation of the notification, as notification clearly stated that the exemption was restricted to the duties leviable under the statutes under which the notification was issued and admittedly NCCD was not leviable under any of those statues. Being so, the authority below was justified in imposing penalty. - appeal fails and is hereby dismissed.

Issues Involved:
1. Applicability of Notification No. 50/2003-C.E. to National Calamity Contingent Duty (NCCD).
2. Liability to pay education cess and secondary and higher education cess on NCCD.
3. Liability to pay education cess and secondary and higher education cess on automobile cess.
4. Interpretation of exemption notifications.
5. Revenue neutrality and eligibility to avail CENVAT credit.
6. Imposition of interest and penalty for non-payment of duty.

Issue-wise Detailed Analysis:

1. Applicability of Notification No. 50/2003-C.E. to NCCD:
The appellants argued that NCCD is a duty of excise and thus falls under the exemption provided by Notification No. 50/2003-C.E. The Commissioner, however, ruled that the notification specifically exempts duties under the Central Excise Act, 1944, Additional Duties of Excise (Goods of Special Importance) Act, 1957, and Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, but not duties under the Finance Act, 2001, which includes NCCD. The Tribunal upheld this interpretation, stating that the exemption notification must be strictly interpreted and cannot be extended to duties not explicitly mentioned.

2. Liability to Pay Education Cess and Secondary and Higher Education Cess on NCCD:
The appellants contended that since NCCD is exempt, education cess and secondary and higher education cess should not be levied on it. The Tribunal rejected this argument, clarifying that education cess is levied on the aggregate of duties collected, and since NCCD is payable, education cess must also be collected on it as per Section 93 of the Finance Act, 2004.

3. Liability to Pay Education Cess and Secondary and Higher Education Cess on Automobile Cess:
The Commissioner had dropped the demand for education cess and secondary and higher education cess on automobile cess. This part of the decision was not contested further, and the Tribunal did not address it in detail.

4. Interpretation of Exemption Notifications:
The Tribunal emphasized that exemption notifications must be strictly interpreted. The power to exempt products from duty lies with the government, and the scope of such exemptions cannot be expanded through interpretation. The Tribunal referenced multiple cases, including Indo Farm Tractors & Motors Ltd. v. Union of India, to support this principle.

5. Revenue Neutrality and Eligibility to Avail CENVAT Credit:
The appellants argued that even if they were liable to pay NCCD and education cess, they would be eligible to avail CENVAT credit, making the situation revenue neutral. The Tribunal dismissed this argument, stating that revenue neutrality does not apply in cases where duty is not paid on time. The procedure for claiming CENVAT credit must be followed as per the law, and delayed payment attracts interest liability.

6. Imposition of Interest and Penalty for Non-Payment of Duty:
The Tribunal upheld the imposition of interest and penalty, noting that the appellants had claimed exemption for NCCD without entitlement, which was discovered only after an investigation. This indicated an intention to evade duty. The Tribunal found no scope for interpretation of the notification that would justify the appellants' claim, thus validating the penalty and interest imposed by the Commissioner.

Conclusion:
The appeal was dismissed, with the Tribunal affirming the Commissioner's order that denied the exemption of NCCD under Notification No. 50/2003-C.E., upheld the liability for education cess on NCCD, and confirmed the imposition of interest and penalty for non-payment of duty. The Tribunal reiterated the necessity of strict interpretation of exemption notifications and clarified that revenue neutrality does not negate interest liability for delayed duty payment.

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