2012 (7) TMI 846 - AT - Central Excise

Refund of Education Cess - Notification No. 56/2002-C.E. dated. 14-11-2002 - Held that - From plain reading of the Notification No. 56/2002-C.E. it is clear that this notification issued under Section 5A(1) of Central Excise Act 1944 Section 3(3) of Additional Duties of Excise (Goods of Special Importance) Act 1957 and Section 3(3) of Additional Duties of Excise (Textiles and Textile Articles) Act 1978 exempts the duties levied by these three acts only to the extent as mentioned in this notification. This notification does not mention the Education Cess levied under Finance Act 2004 and Finance Act 2007 as being covered by this exemption. When Notification No. 123/74-C.E dated 1-8-74 and No. 27/81-C.E. dated 1-3-81 issued under Rule 8(1) of Central Excise Rules 1944 (corresponding to Section 5A of Central Excise Act 1944) exempted the goods from the duty leviable thereon according to well recognised canons of construction of statutes these exemptions should be read as granting exemption only in respect of duty of excise payable under the Central Excise Act 1944 and the exemption cannot be extended to any other duty leviable on the goods under some other Act. Accordingly the Apex Court in this case held that these exemption notifications would not cover the Special Duties of Excise leviable under Finance Act and Additional Duty of Excise leviable on the goods under Additional Duties of Excise (Goods of Special Importance) Act 1957 - Following decision of CCE Jammu v. Jindal Drugs Ltd. 2009 (8) TMI 812 - CESTAT NEW DELHI - Decided in favour of Revenue.

Summary

Issues:
Whether the units manufacturing EMUSOL and KAISPERSE in Jammu and Kashmir are eligible for exemption under Notification No. 56/2002-C.E. for Education Cess and Secondary and Higher Education Cess.

Analysis:
The judgment revolves around the eligibility of units in Jammu and Kashmir manufacturing EMUSOL and KAISPERSE for exemption under Notification No. 56/2002-C.E. for Education Cess and Secondary and Higher Education Cess. The dispute arises from the denial of this exemption by the original Adjudicating Authority, leading to appeals filed by the units against the decision. The Commissioner (Appeals) allowed the appeals, citing a Tribunal judgment in a similar case. The Revenue challenged this decision, arguing that the Tribunal's previous single Bench judgment was overruled by a Division Bench in a different case, emphasizing that the exemption does not cover Education Cess and Secondary and Higher Education Cess levied under the Finance Acts. The units' counsels relied on a different Tribunal judgment, asserting that the exemption should apply to Education Cess and Secondary and Higher Education Cess. The Tribunal analyzed the provisions of Notification No. 56/2002-C.E. and relevant legal precedents, including a Supreme Court ruling, to determine the scope of the exemption.

The Tribunal noted that Notification No. 56/2002-C.E. specifically exempts duties levied under certain acts but does not mention Education Cess levied under the Finance Acts. It referenced a Supreme Court decision to establish that exemptions should be construed narrowly, applying only to duties under the Central Excise Act and not extending to other levies. The Tribunal highlighted that Education Cess and Secondary and Higher Education Cess are distinct from basic excise duties and additional excise duties covered by the notification. The units argued that since the duty paid through PLA is refunded, Education Cess should not apply, but the Tribunal rejected this argument. It clarified that the issue of Education Cess calculation is separate from the core issue of exemption eligibility for these cesses under Notification No. 56/2002-C.E. The Tribunal emphasized that even if the units' plea were accepted, refunding Education Cess on the exempted duty portion would fall under different provisions subject to unjust enrichment considerations.

Based on the analysis and legal interpretations, the Tribunal concluded that the units were not entitled to the exemption for Education Cess and Secondary and Higher Education Cess under Notification No. 56/2002-C.E. The decision aligned with a Division Bench ruling, overturning the Commissioner (Appeals) decision and reinstating the original Adjudicating Authority's orders. The Revenue's appeals were allowed, and the impugned order was set aside, emphasizing the limited scope of the exemption notification in relation to specific excise duties and not Education Cess or other levies.

This detailed analysis of the judgment highlights the intricacies of interpreting exemption notifications, legal precedents, and the specific application of tax laws in the context of duty liabilities and refund mechanisms.