2019 (9) TMI 1737 - AT - Central Excise

Denial of exemption notification No. 50/2003 CE dated 10.06.2003 - whether the appellant are liable to pay NCCD auto Cess Education Cess and Senior Higher Education Cess while claiming the exemption Notification No. 50/2003-CE dated 10.6.2003 or not? - HELD THAT - Basically in the case of BAJAJ AUTO LIMITED VERSUS UNION OF INDIA OTHERS 2019 (3) TMI 1427 - SUPREME COURT wherein the Hon ble Apex Court observed when NCCD at the time of collection takes the character of a duty on the product whatever may be the rationale behind it it is also subject to the provisions relating to excise duty applicable to it in the manner of collection as well as the obligation of the taxpayer to discharge the duty. Once the excise duty is exempted NCCD levied as an excise duty cannot partake a different character and thus would be entitled to the benefit of the exemption notification. The exemption notification also states that the exemption is from the whole of the duty of excise or additional duty of excise. We may also note that the exemption itself is for a period of ten years from the date of commercial production of the unit. Thus the appellants are not liable to pay the Central Excise duty while claiming the exemption under Notification No. 50/2003-CE dated 10.6.2003 - while claiming the Notification No. 50/2003-CE dated 10.6.2003 the appellant are not liable to pay Education Cess and Senior Higher Education Cess. Conclusion - NCCD Education Cess and Senior Higher Education Cess are considered surcharges on excise duty and should be exempted when the primary excise duty is exempted under the relevant notification. The appellants are not liable to pay NCCD auto Cess Education Cess and Senior Higher Education Cess and therefore demand confirmed against the appellant vide impugned order are set aside. Appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the appellant is liable to pay National Calamity Contingent Duty (NCCD), Automobile Cess, Education Cess, and Senior Higher Education Cess while claiming the exemption under Notification No. 50/2003-CE dated 10.06.2003.
• Whether the extended period of limitation is applicable for the recovery of these duties and cesses.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Liability to Pay NCCD, Automobile Cess, Education Cess, and Senior Higher Education Cess

• Relevant Legal Framework and Precedents:
• Notification No. 50/2003-CE grants exemption from payment of Central Excise duty upon satisfying certain conditions.
• NCCD is governed by Section 136 of the Finance Act, 2001, and is considered a surcharge on excise duty.
• Relevant case law includes Bajaj Auto Limited vs. Union of India, SRD Nutrients Pvt Ltd. vs. Commissioner of Central Excise, and TVS Motor Co. Ltd. vs. Union of India.
• Court's Interpretation and Reasoning:
• The court relied heavily on the precedent set by the Hon'ble Apex Court in Bajaj Auto Limited vs. Union of India, which clarified that NCCD, being in the nature of excise duty, should be exempted when the primary excise duty is exempted under the notification.
• The court observed that the reasoning applied to Education Cess and Senior Higher Education Cess in SRD Nutrients Pvt Ltd. is applicable to NCCD as well, as these are surcharges on excise duty.
• Key Evidence and Findings:
• The appellant had been availing the exemption under Notification No. 50/2003-CE and had informed the department accordingly.
• The court noted the judicial pronouncements that support the appellant's claim for exemption from these duties and cesses.
• Application of Law to Facts:
• The court applied the legal principles established in the cited cases to conclude that since the primary excise duty is exempted, the surcharges, which are in the nature of excise duty, should also be exempted.
• Treatment of Competing Arguments:
• The respondent argued that the duties and cesses were not covered by the exemption notification. However, the court found this argument inconsistent with the legal precedents.
• Conclusions:
• The appellant is not liable to pay NCCD, Automobile Cess, Education Cess, and Senior Higher Education Cess under the exemption notification.

Issue 2: Applicability of Extended Period of Limitation

• Relevant Legal Framework and Precedents:
• The appellant argued that the extended period of limitation is not invokable, citing that most of the demand is barred by limitation.
• Court's Interpretation and Reasoning:
• The court did not explicitly address this issue in detail, as the primary determination of non-liability rendered the question of limitation moot.
• Conclusions:
• Given the primary finding of non-liability, the issue of limitation does not alter the outcome.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning:
• "Once the excise duty is exempted, NCCD, levied as an excise duty cannot partake a different character and, thus, would be entitled to the benefit of the exemption notification."
• "There cannot be any surcharge when basic duty itself is Nil."
• Core Principles Established:
• NCCD, Education Cess, and Senior Higher Education Cess are considered surcharges on excise duty and should be exempted when the primary excise duty is exempted under the relevant notification.
• The exemption notification applies to the "whole of the duty of excise or additional duty of excise."
• Final Determinations on Each Issue:
• The appellant is not liable to pay NCCD, Automobile Cess, Education Cess, and Senior Higher Education Cess under Notification No. 50/2003-CE dated 10.06.2003.
• The appeal is allowed, and the demand confirmed against the appellant is set aside.