2017 (3) TMI 373 - AT - Central Excise

Scope for collecting duty - Additional Duties of Excise - whether the said duty being a surcharge leviable on duty, which itself being nil , would exclude the intermediate goods from levy under the Additional Duties of Excise? - Held that - From a cumulative reading of section 3 of Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 it would not be possible to alienate chargeability under this Act from assessment under Central Excise Act, 1944 and when the effective rate of duty is nil there is no assessment at all. With the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 making specific reference to the chargeability and assessment of duty under Central Excise Act, 1944 the necessity to base the tax on the effective rate of duty, whether it be nil or otherwise, is inevitable. Appeal rejected - decided against Revenue.

Issues Involved:
1. Scope of collecting duty under the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 on excisable goods exempted under the Central Excise Tariff Act, 1985 or by an exemption notification.
2. Interpretation of the exemption provided by notification no. 67/95-CE dated 16th March 1995.
3. Applicability of judicial precedents in determining the levy of additional duties of excise.
4. Interpretation of the charging provision of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978.

Detailed Analysis:

1. Scope of Collecting Duty under the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978:
The primary issue revolves around whether additional duties of excise can be levied on goods that are exempted from basic excise duty either through the First Schedule to the Central Excise Tariff Act, 1985 or by an exemption notification under section 5(1) of the Central Excise Act, 1944. The appellant, a composite mill, claimed exemption under notification 67/95-CE for captively consumed goods. The Commissioner of Central Excise, Mumbai - III, in the order-in-original, held that since the basic excise duty is 'nil', additional duties of excise are not leviable. The Revenue appealed against this decision.

2. Interpretation of Exemption Notification No. 67/95-CE:
The Revenue argued that the exemption provided by notification no. 67/95-CE is limited to the basic excise duty and does not extend to additional duties of excise. The reviewing authority cited the Supreme Court decision in Modi Rubber Ltd and other Tribunal decisions, asserting that exemptions under section 5A of the Central Excise Act, 1944, do not cover special excise duty and additional duty unless explicitly mentioned. The Tribunal, however, noted that in similar cases, such as Rivaa Exports Ltd, it was held that exemptions under Central Excise Rules should apply equally to additional duties of excise.

3. Applicability of Judicial Precedents:
The Tribunal considered multiple judicial precedents. The decision in Commissioner of Central Excise, Ahmedabad v. Mahendra Petrochemicals Ltd, which followed the Himachal Pradesh High Court's decision in Indo Farm Tractors and Motors Ltd, supported the notion that additional duties could be levied even if the basic excise duty is 'nil'. However, the Tribunal also referenced the decision in Rivaa Exports Ltd, which concluded that additional duties are not leviable when goods are exempt from basic excise duty, aligning with the current case.

4. Interpretation of the Charging Provision:
The Tribunal revisited the charging provision of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978. The provision states that additional duties are levied on goods 'chargeable with a duty of excise' under the Central Excise Act, 1944. The Tribunal found merit in the argument that if goods are not 'assessed to duty' under the Central Excise Act, 1944, additional duties cannot be levied. This interpretation aligns with the decision in Rivaa Exports Ltd, indicating that when the effective rate of duty is 'nil', there is no assessment, and thus no additional duty is leviable.

Conclusion:
The Tribunal concluded that the appeal of Revenue is without merit and dismissed it. The interpretation that additional duties of excise cannot be levied when the effective rate of basic excise duty is 'nil' was upheld. The Tribunal also emphasized avoiding anomalies and absurdities in tax law interpretation, ensuring that goods with a 'nil' rate of duty are not unfairly burdened with additional duties.

The decision was pronounced in court on 07/02/2017, with both members of the Tribunal concurring with the findings and conclusions.

Separate Judgment by M V Ravindran:
M V Ravindran agreed with the findings and conclusions of the other member and added that subsequent Tribunal decisions, which analyzed the entire provisions and considered the Himachal Pradesh High Court's decision, carry more weight than earlier decisions. The appeal of Revenue was thus rejected.

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