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2013 (4) TMI 482 - AT - Central ExciseEducation/S H cess - Goods cleared by 100% EOU into DTA - double taxation - whether education cess and S H Cess is to be levied again in respect of DTA clearances of a 100% EOU on the aggregate of the duties of customs which already includes the education cess and S H cess? Held that Sections 93 94 of Finance Act, 2004 and Sections 138 and 139 of Finance Act, 2007 while defining the measure of education cess and S H cess in respect of excisable goods and imported goods respectively, specifically provide that the aggregate of duties of excise or aggregate of duties of customs levied by the Central Government , on which this cess is to be levied as surcharge, would not include the education cess and S H cess. Thus, the intention of the legislature was never to charge education cess on education cess. In fact this is not permissible from very mode of this levy as prescribed in Section 91 of the Finance Act, 2004 and Section 136 of the Finance Act, 2007, as when a new tax is introduced as surcharge on the existing levies, the base on which the new levy as surcharge is to be calculated will include only the existing levies, not the new levy. As decided by the Apex court in the Jain Brothers v. U.O.I., reported in 1969 (11) TMI 1 has held that there can be no objection for double taxation if the legislature has distinctly enacted it, but while interpreting general words of taxation, the same cannot be so interpreted as to tax the subject twice over to the same tax. Thus, this principle which has to be kept in mind while calculating education cess and S H cess on DTA clearances of a 100% EOU. Since the DTA clearance of a 100% EOU attract central excise duty and in terms of proviso to Section 3(1) of Central Excise Act, 1944, the measure of the excise duty leviable is aggregate of duties of customs charged on import of like goods into India under Customs Act, 1962 read with Indian Customs Tariff Act, 1975 or any other law for the time being in force, this aggregate of duties of customs on which education cess under Section 93 of Finance Act, 2004 and S H cess under Section 138 of Finance Act, 2007 is to be charged, would not include education cess and S H cess under Section 94 of Finance Act, 2004 and Section 139 of Finance Act, 2007. In other words, the education cess and S H cess would be chargeable only once under Section 93 of Finance Act, 2004 and Section 138 of Finance Act, 2007 on the sum of basic customs duty and Additional customs duty.
Issues Involved:
1. Calculation of education cess and secondary & higher education cess (S&H cess) on excise duty for goods cleared by a 100% Export-Oriented Unit (EOU) into the Domestic Tariff Area (DTA). Issue-wise Detailed Analysis: 1. Calculation of Education Cess and S&H Cess on DTA Clearances by 100% EOU: The core dispute revolves around the method of calculating education cess and S&H cess on excise duty for goods cleared by a 100% EOU into the DTA. The appellant contends that since the education cess and S&H cess are already included in the aggregate customs duties while calculating the excise duty, they should not be charged again. The Department, however, asserts that these cesses should be applied again on the excise duty calculated based on the aggregate customs duties. Legal Provisions and Arguments: - Proviso to Section 3(1) of the Central Excise Act, 1944: This section mandates that goods cleared by a 100% EOU into DTA should attract central excise duty equivalent to the aggregate of customs duties that would be levied on like goods if imported into India. - Section 91, 93, and 94 of the Finance Act, 2004, and Section 136, 138, and 139 of the Finance Act, 2007: These sections impose education cess and S&H cess as surcharges on excise and customs duties. The appellant's argument is based on the premise that once the aggregate of customs duties (which includes education cess and S&H cess) is determined, there is no need to charge these cesses again on the excise duty calculated from this aggregate. They cite the Tribunal's judgment in the case of Sarla Performance Fibers Ltd. v. CCE, Vapi, which supports this view. The Department, on the other hand, argues that education cess and S&H cess are distinct levies and should be charged again on the excise duty calculated from the aggregate customs duties. They rely on the Apex Court's judgment in Union of India v. Modi Rubber Ltd., which held that special excise duty or additional excise duty are distinct from the basic excise duty. Tribunal's Analysis and Conclusion: - Distinct Nature of Cess: The Tribunal acknowledges that education cess and S&H cess are distinct levies from excise and customs duties. However, it emphasizes that the intention of the legislature was not to impose cess on cess. Sections 93 and 94 of the Finance Act, 2004, and Sections 138 and 139 of the Finance Act, 2007, specifically exclude cess from the aggregate of duties on which the cess is calculated. - Proviso to Section 3(1) of the Central Excise Act: The Tribunal clarifies that this proviso provides a measure for calculating excise duty on DTA clearances by a 100% EOU, which should be equivalent to the aggregate of customs duties on like imported goods. This aggregate should not include the education cess and S&H cess. - Principle of Double Taxation: The Tribunal refers to the principle that general words of taxation should not be interpreted to tax the subject twice over to the same tax. Therefore, charging education cess and S&H cess again on the aggregate customs duties (which already include these cesses) would amount to double taxation, which is not permissible. Final Judgment: The Tribunal concludes that the education cess and S&H cess should be charged only once on the sum of basic customs duty and additional customs duty. The point referred by the referring bench is answered accordingly. Separate Judgment by Member (T): While agreeing with the final finding, Member (T) provides additional reasoning. He emphasizes that the interpretation of "duties of customs" and "duties of excise" in the proviso to Section 3(1) should be consistent. If "duties of customs" include education cess and S&H cess, then "duties of excise" should also include these cesses, leaving no scope for charging them a third time. Conclusion: The Tribunal's judgment clarifies that education cess and S&H cess should not be charged again on the excise duty calculated from the aggregate customs duties for DTA clearances by a 100% EOU. This interpretation aligns with the legislative intent and avoids double taxation.
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