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2013 (11) TMI 487 - HC - Central ExciseNational Calamity Contingency Duty - Exemption under Notification No. 32/99 - Whether National Calamity Contingency duty is exempted under Notification No. 32/99 Held that - National Calamity Contingency duty is nothing but a duty of excise - Notification No. 32/99 relates to exemption to North East States from excise duty and additional excise duty on goods cleared from certain units - By virtue of this notification the Central Government has exempted goods specified in the First and Second Schedules to the Central Excise Tariff Act - The general exemption is only in respect of the duty of excise or additional duty of excise - The general exemption has absolutely no reference to NCC duty which is levied as a surcharge under the provisions of the Finance Act, 2001 - National Calamity Contingency duty, even though it is a duty of excise, is not exempted under Notification No. 32/99 - The operation of thie notification is limited. - Decided in favor of revenue. Utilization of cenvat credit - Duty not Exempted under the Notification - Whether CENVAT credit can be utilized towards payment of National Calamity Contingency duty under the CENVAT Credit Rules Held that - In terms of Rule 3(1) a manufacturer or producer of a final product is allowed to take CENVAT credit of National Calamity Contingency duty National Calamity Contingency duty is a duty of excise, Rule 3(4) provides that CENVAT credit may be utilized for payment of any duty of excise on any final product - CENVAT credit of NCC duty may also be utilized for payment of any duty of excise on any final product in terms of Rule 3(4) subject to Rule 3(7) - while CENVAT credit of National Calamity Contingency duty can be utilized under the CENVAT Credit Rules only towards payment of such National Calamity Contingency duty, CENVAT credit obtained from other sources can be utilized for payment of National Calamity Contingency duty on the final product.
Issues:
1. Whether NCC Duty is exempted under Notification No. 32/99-C.E. 2. Whether CENVAT Credit under the CENVAT Credit Rules can be utilized towards payment of NCC duty. Analysis: 1. The High Court addressed the first issue by examining the nature of NCC duty, which is levied under Section 136 of the Finance Act, 2001, as a surcharge and a duty of excise. The Court clarified that NCC duty is not exempted under Notification No. 32/99-C.E., which specifically pertains to exemptions from excise duty and additional excise duty, but not NCC duty. The Court emphasized that NCC duty, although a duty of excise, is not covered by the mentioned notification, indicating a limited scope of exemption. 2. Moving on to the second issue, the Court delved into the provisions of the CENVAT Credit Rules, particularly Rule 3(4) and Rule 3(7). Rule 3(4) allows the utilization of CENVAT credit for payment of excise duty on final products. The Court highlighted the significance of the second proviso to Rule 3(4), which specifies that CENVAT credit on inputs cleared after availing exemption under Notification No. 32/99-C.E. should only be used for paying duty on the exempted final product. Additionally, Rule 3(7) specifically mandates that CENVAT credit in respect of NCC duty must be utilized solely for paying NCC duty on final products manufactured by the assessee. 3. The Court addressed the contention raised by the assessee regarding the utilization of CENVAT credit on basic excise duty for paying NCC duty. The Commissioner of Central Excise had previously ruled that such credit could not be used for NCC duty payment. However, the Court, concurring with the Customs, Excise and Service Tax Appellate Tribunal's view, held that CENVAT credit on basic excise duty can indeed be utilized for paying NCC duty, as long as it complies with Rule 3(4) and Rule 3(7) of the CENVAT Credit Rules. 4. Consequently, the High Court concluded that while CENVAT credit of NCC duty is restricted to payment of NCC duty only, credits obtained from other sources can be utilized for paying NCC duty on final products. The Court provided a detailed analysis of the relevant rules and provisions to support its decision, ensuring clarity on the permissible use of CENVAT credit in the context of NCC duty payment. 5. The Court also noted a preliminary objection raised regarding the appeal's maintainability, but given the resolution of the substantive issues, the Court did not find it necessary to delve into that matter, thereby focusing on the core legal aspects of NCC duty exemption and CENVAT credit utilization.
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