2018 (10) TMI 1718 - HC - Central Excise

Liability of National Calamity Contingency Duty - POY produced and captively consumed within the factory of production by the Petitioner - period from October 2007 to February 2008 - petitioner has drawn our attention to the order of the Supreme Court in the case of Bajaj Auto Limited v. Union of India 2019 (3) TMI 1427 - SUPREME COURT - it is submitted that levying of the basic excise duty is exempted qua the goods in question and surcharge is levied. HELD THAT - Prima facie question about National Calamity Contingent Duty is to be exempted on the ground of exemption of excise duty on POY or to be treated as surcharge etc. we deem it just and proper to issue notice returnable on 06.12.2018. Direct Service is permitted.

Summary

Issues:
1. Interpretation of National Calamity Contingency Duty on POY production.
2. Applicability of area-based exemption on duty payments.
3. Refund entitlement of Education Cess and Higher Education Cess.
4. Legal validity of levying surcharge in the case.

Analysis:
1. The petitioners sought a writ to declare that POY produced and consumed within their factory was not subject to National Calamity Contingency Duty. Reference was made to a decision by the Uttarakhand High Court regarding Area Based exemption denial, raising a constitutional argument under Article 271 and citing a Supreme Court case involving Education Cess refund. The court found it appropriate to issue a notice for further examination on the matter, staying a previous order by CESTAT.

2. The issue of area-based exemption and the recovery of duty payments was highlighted, drawing parallels with previous legal precedents. The court noted divergent views between CESTAT and High Courts on refund entitlements related to Education Cess and Higher Education Cess, emphasizing the exemption of EC and HEC when the exercise duty or Service Tax was fully exempted. The distinction between basic excise duty exemption and surcharge imposition was deliberated upon.

3. The legal validity of levying surcharge in the case was questioned, with the court considering the nature of National Calamity Contingent Duty in relation to excise duty exemptions. The petitioners' argument regarding the surcharge aspect was acknowledged, prompting the court to delve deeper into the matter by scheduling a returnable notice date for further proceedings.

4. The court's decision to issue a notice and stay a previous order indicated a willingness to examine the complexities surrounding the National Calamity Contingency Duty, area-based exemptions, and the applicability of surcharges in the context of excise duty. The involvement of constitutional provisions and past judicial interpretations added layers of legal intricacy to the case, necessitating a thorough analysis before reaching a final judgment.