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2021 (10) TMI 119 - HC - CustomsSeeking refund of amount debited from the MEIS scrips issued to the petitioner in cash - Refund of education cess or the higher and secondary education cess - HELD THAT - The petitioner had imported RBD Palmolein under 10 warehouse bills of entry and 52 bills of entry, for which, whatever the duty imposed against him had been paid, of course, by using the scrips issued under MEIS. This is an acceptable method for debiting the duty by using the credit scrips under MEIS. While paying such duty, using the scrips, the petitioner had paid the entire duty, which includes the education, secondary education or higher education cess to the total amount of ₹ 22,88,86,212/-, that was accepted and the clearance of the goods had also been given by the Customs. Subsequently, the Customs department has come forward to issue a show cause notice on the ground that, while paying the duty by using the scrips, the petitioner also paid the education cess to the tune of ₹ 66,66,582/-. That kind of payment for other heads other than the duty or additional duty of customs cannot be paid through MEIS scrips. Here in the case in hand, it is no doubt that, the exemption N/N. 24/2015 is dated 08.04.2015 ie., well after the Finance Act, 2004 and 2007. In the 2004 Finance Act, Section 91 deals with education cess and Section 93 made it clear that, the education cess levied under Section 91 in the case of goods specified in the First Schedule to the Central Excise Tariff Act, 1994, being goods manufactured or produced, shall be a duty of excise. Therefore, insofar as the Central Excise is concerned, the education cess imposed under Section 91 of the Finance Act, 2004 was to be treated as a duty of excise, in view of Section 93. What is the duty to be imposed on the imported goods first be calculated and accordingly, 2% of education cess and 1% of secondary and higher education cess shall be levied and imposed. Hence, when the importer pay the duty, he shall also pay the cess which become part and parcel of the duty of customs. That is the reason why the total amount of ₹ 22,88,86,212/- were paid by the petitioner as duty of customs as well as education cess through the scrips of MEIS. Having accepted the same, though subsequently, in view of the notifications, if the Customs Department come forward to take a stand that the mode of payment of the education cess even though being part of the customs duty, shall not be on the same line by using the scrip, such kind of payment can be insisted upon, provided only in future cases and not in the cases where it has already been paid and where the goods have been cleared. This was exactly been made in execution by Circular No.2/2020 dated 10.01.2020. The impugned order is hereby quashed. As a sequel, there shall be a direction to the respondent to give the benefit of Clause 11 of Circular No. 02/2020 dated 10.01.2020 to the petitioner - Petition allowed.
Issues Involved:
1. Legality of using MEIS scrips for payment of education cess and secondary and higher education cess. 2. Applicability of Circular No. 02/2020-Customs dated 10.01.2020 to past cases. 3. Interpretation of the Supreme Court judgment in Unicorn Industries Vs. Union of India. Detailed Analysis: 1. Legality of Using MEIS Scrips for Payment of Education Cess and Secondary and Higher Education Cess: The petitioner, an importer/manufacturer, used MEIS scrips to pay customs duties, including education cess and secondary and higher education cess, totaling ?22,88,86,212/-. The respondent issued a show cause notice, arguing that education cess and secondary and higher education cess could not be debited from MEIS scrips as per Notification No.24/2015-Cus dated 08.04.2015. The respondent contended that only basic customs duty could be debited from MEIS scrips, and education cess and secondary and higher education cess must be paid in cash. The petitioner argued that education cess and secondary and higher education cess are part of customs duty and should be payable through MEIS scrips. 2. Applicability of Circular No. 02/2020-Customs dated 10.01.2020 to Past Cases: The petitioner cited Circular No. 02/2020-Customs, which stated that for past cases, debits of Social Welfare Surcharge (SWS) made through duty credit scrips should be accepted as revenue duly collected, and recoveries in cash should not be insisted upon. The petitioner argued that this circular should apply to their case, as the payments were made before the circular was issued. The respondent, however, rejected this argument, stating that the circular only applied to SWS and not to education cess and secondary and higher education cess. 3. Interpretation of the Supreme Court Judgment in Unicorn Industries Vs. Union of India: The respondent relied on the Supreme Court judgment in Unicorn Industries, which held that exemptions must be specifically stated in notifications, and additional duties like education cess and secondary and higher education cess cannot be assumed to be exempted unless explicitly mentioned. The petitioner argued that this judgment was misinterpreted and misapplied, as the education cess and secondary and higher education cess should be considered part of the customs duty, and thus payable through MEIS scrips. Judgment: The court found that the education cess and secondary and higher education cess, as per the Finance Acts of 2004 and 2007, are to be treated as part of customs duty. Therefore, payments made using MEIS scrips for these cesses should be accepted. The court held that the respondent's reliance on the Unicorn Industries judgment was misplaced, as the judgment supported the petitioner's case. The court quashed the impugned order and directed the respondent to extend the benefit of Clause 11 of Circular No. 02/2020-Customs to the petitioner. The writ petition was allowed with no order as to costs.
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