2015 (12) TMI 806 - HC - Central Excise

Exemption under Notification No. 50/2003-C.E. Dated 10.06.2003 - manufacture of various toiletry products containing alcohol - Assessee already paid excise duty under the Medicinal and Toilet Preparations (Excise Duty) Act 1955 - Double taxation - Held that - As per entry No. 84 of List-I (Union List) of 7th Schedule of the Constitution of India medicinal and toiletry preparations containing alcohol are made subject matter thereunder. Under Article 268 of the Constitution of India the excise duty on such products is leviable by Government of India but the same has to be collected through the State. From the impugned order it is evident that the petitioner manufactures various toiletry products containing alcohol. The stand of the petitioner is that it has already paid excise duty under the Act of 1955. Hence prima facie it seems that demand of excise duty from the petitioner under the Act would amount to taxing it twice. More so vide notification dated 10.06.2003 the goods manufactured in the States of Himachal Pradesh and Uttrakhand are being exempted from excise duty for 10 years from the date of commencement of production under the Act. This issue has also not been considered by respondent No. 2. Hence in our opinion it would be expedient to remand the case back to respondent No. 2 for taking a decision afresh after affording an opportunity of hearing to the petitioner and considering its stand including that raising the demand of any excise duty under the Act would tantamount to taxing it twice more particularly when the petitioner has already paid the excise duty under the Act of 1955. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
1. Quashing of order confirming Central Excise Duty demand.
2. Interpretation of excise duty laws on toiletry products containing alcohol.
3. Exemption notification for goods manufactured in specific states.
4. Double taxation concern raised by the petitioner.
5. Request for remand and fresh decision by respondent No. 2.

Issue 1: Quashing of order confirming Central Excise Duty demand
The petitioner sought to quash the order confirming the demand of Central Excise Duty, including Education Cess, for a specific period. The petitioner argued that the demand was unjustified and exceeded the jurisdiction of respondent No. 2. The petitioner contended that being taxed twice, once under the Act of 1955, would amount to double taxation, which is impermissible. The petitioner relied on legal provisions and a relevant judgment to support their argument for quashing the impugned order.

Issue 2: Interpretation of excise duty laws on toiletry products containing alcohol
The controversy arose from the interpretation of excise duty laws concerning toiletry products containing alcohol. The petitioner's stance was that they were not liable to pay excise duty under the Act, as they had already paid duty under the Act of 1955. The Court noted the constitutional provisions and the exemption notification for goods manufactured in specific states. It was observed that demanding excise duty from the petitioner under the Act could lead to double taxation, especially considering the exemption notification not being considered by respondent No. 2.

Issue 3: Exemption notification for goods manufactured in specific states
The Court highlighted the exemption notification dated 10.06.2003 for goods manufactured in certain states, exempting them from excise duty for a specified period. This notification was crucial in determining the petitioner's entitlement to exemption from Central Excise Duty. The Court noted that respondent No. 2 had not adequately considered this aspect while passing the impugned order, indicating a lapse in the decision-making process.

Issue 4: Double taxation concern raised by the petitioner
The petitioner raised a valid concern regarding the possibility of double taxation if excise duty was demanded under the Act despite already paying duty under the Act of 1955. The Court acknowledged this concern and emphasized that taxing the petitioner twice for the same products would be inequitable. This concern further strengthened the argument for quashing the impugned order and avoiding unjust taxation practices.

Issue 5: Request for remand and fresh decision by respondent No. 2
In light of the complex legal and factual issues involved, the Court decided to set aside the impugned order and remand the case back to respondent No. 2 for a fresh decision. The Court directed respondent No. 2 to reconsider the matter after providing the petitioner with an opportunity to present their case and taking into account all relevant legal provisions, including the potential for double taxation. The Court clarified that this decision did not express any opinion on the merits of the underlying controversy, emphasizing the procedural aspect of affording a fair hearing and due consideration.

This detailed analysis of the judgment highlights the key legal issues, arguments presented by the parties, and the Court's reasoning leading to the decision to remand the case for a fresh determination.