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2018 (11) TMI 1374 - AT - Central ExciseLevy of Tea Cess - export of tea under bond under Rule 19 of the Central Excise Rules without payment of any duty - Department took the view that even for export under bond, cess as applicable was payable by the appellants - whether the appellants on export of tea are required to discharge Tea Cess which is otherwise leviable under Section 25 of the Tea Act, 1953? Held that - The exemption extended to tea produced and exported by EOUs from levy and collection of Cess, the exemption was brought about by Notification dt. 1.9.2004 which was published in the Gazette of India Part-Ii Section 3 of 1st September 2004. In this regard, the exports by EOUs are on different footing from export goods under bond by manufacturer / assessees in the DTA. For the latter, during the period of dispute, erstwhile provisions of Rule 19 of Central Excise Rules, 2002 would be applicable. Hence for these reasons we are of the firm conclusion that the exemption granted to EOUs vide the above notification cannot be used in support of proposition that by implication export made by DTA units will be exigible to Cess. The Section 37B Order dt. 13.1.2006 clearly states that Past instructions, Circulars and Orders on the issue may be considered as suitably modified - there has been no instruction or order etc. issued earlier to 13.01.2006 to the effect that Tea Cess being duty of excise is required to be collected in respect of exports made by DTA units, such as the appellants. In any case, even if there had been any such instruction, that would obviously have got nullified by the said 37B order dated 13.01.2006. Tea Cess being collected as duty of excise as per Section 25 of the Tea Act, 1953, in view of Section 37B Order dt. 13.1.2006, cannot be collected in respect of exports under bond made by the appellants. The manner of preparation of tea and the process of manufacture of instant tea powder cannot take away instant tea out of the definition of tea under the Act, the Hon ble Apex Court has held that the latter is also leviable for levy of cess under Section 25 of the said Act - post-Section 37B order, there should not be any doubt or confusion that cess under Section 25 of the Tea Act 1953 is not required to be paid in respect of exports under bond by DTA units, like the appellants. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether Tea Cess is payable on tea exported under bond. 2. Applicability of Section 37B Order dated 13.01.2006. 3. Relevance of Board’s Circular No.48/88-CX.8 dated 12.09.1988. 4. Distinction between exports by EOUs and DTA units. 5. Interpretation of Supreme Court judgment in CCE Cochin Vs TATA Tea Ltd. Detailed Analysis: Issue 1: Whether Tea Cess is payable on tea exported under bond. The appellants argued that under Rule 19 of the Central Excise Rules, any excisable goods may be exported without payment of duty, which includes Tea Cess. They contended that Tea Cess, being a duty of excise, should be exempted for exports under bond as per Notification No.42/2001-CE (NT) and its amendments. The department, however, maintained that Tea Cess is payable on exports, except for 100% EOUs, and issued show cause notices demanding Tea Cess with interest. Issue 2: Applicability of Section 37B Order dated 13.01.2006. The Section 37B Order aimed to ensure uniformity in the levy of duties of excise on goods exported under bond. It clarified that none of the duties leviable under any Act of Parliament is required to be paid on export of goods under bond. The appellants argued that this Order should apply to Tea Cess as well, as it is collected as a duty of excise under Section 25 of the Tea Act, 1953. The lower authorities, however, concluded that the Order did not explicitly mention Tea Cess and therefore did not exempt it. Issue 3: Relevance of Board’s Circular No.48/88-CX.8 dated 12.09.1988. The lower authorities relied on this Circular, which clarified that export under bond without payment of Cess under Rule 13 was not permissible. They interpreted that the Section 37B Order did not override this earlier Circular. However, the Tribunal found that the Section 37B Order clearly stated that past instructions, circulars, and orders should be considered as suitably modified, nullifying any previous instructions requiring the collection of Tea Cess on exports. Issue 4: Distinction between exports by EOUs and DTA units. The exemption for EOUs from Tea Cess was brought about by a Notification dated 01.09.2004. The lower authorities held that this exemption could not be extended to DTA units exporting under bond. The Tribunal agreed but clarified that the Section 37B Order provided a broader exemption for all duties of excise on exports under bond, which should include Tea Cess. Issue 5: Interpretation of Supreme Court judgment in CCE Cochin Vs TATA Tea Ltd. The department cited this judgment to support the levy of Tea Cess on exports. However, the Tribunal noted that this judgment primarily dealt with whether instant tea is a variety of tea liable to cess. The Tribunal emphasized that the Section 37B Order, issued after this judgment, provided clear instructions on the non-levy of duties on exports under bond, including Tea Cess. Conclusion: The Tribunal held that Tea Cess, being collected as a duty of excise under Section 25 of the Tea Act, 1953, is not required to be paid on exports under bond by DTA units, in view of the Section 37B Order dated 13.01.2006. The impugned orders were set aside, and all appeals were allowed with consequential benefits as per law.
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