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2020 (8) TMI 608 - HC - Central ExciseExemption from education cess secondary and higher education cess - area based exemption availed - whether in view of the exemption granted to the excise duty the petitioner would also be entitled to an exemption to the payment of education cess secondary and higher education cess? - HELD THAT - The said question was decided by the Supreme Court in its pronouncement in SRD Nutrients Pvt. Ltd. Vs. Commissioner of Central Excise, Guwahati 2017 (11) TMI 655 - SUPREME COURT wherein it was held that the appellants therein were entitled to refund of education cess and higher education cess which was paid along with the excise duty once the excise duty itself was exempted from levy. The demand cum show-cause notice dated 09.06.2020 is assailed in this writ petition on the ground that the condition precedent to invoke the power under section 11(A-1) is that the refund made must be erroneous - It being so, condition precedent of section 11(A-1) of the Excise Central Act, 1944 is not satisfied. A question for determination would be as to whether the proposition of law laid down in Unicorn Industries 2019 (12) TMI 286 - SUPREME COURT would render the refund made to the petitioner to be erroneous - As agreed upon list the matter on 06.10.2020 for further consideration. Till the next date fixed, the recovery of the higher education cess already refunded by the department to the petitioner shall not be recovered.
Issues:
1. Entitlement to exemption of education cess & higher education cess along with excise duty under Northeast Industrial Policy, 2007. 2. Interpretation of Supreme Court judgments regarding refund of education cess & higher education cess. 3. Validity of demand cum show-cause notice for recovery of refunds under section 11(A-1) of the Central Excise Act, 1944. 4. Determination of whether refunds made prior to the judgment in Unicorn Industries case were erroneous. 5. Stay on the operation of the demand cum show-cause notice dated 09.06.2020. Analysis: 1. The petitioner, engaged in economic activities under the Northeast Industrial Policy, 2007, sought exemption from excise duty. The issue arose whether the exemption from excise duty extended to education cess & higher education cess. The Supreme Court in SRD Nutrients Pvt. Ltd. case held that once excise duty was exempted, the appellants were entitled to a refund of education cess & higher education cess paid alongside excise duty. 2. Subsequently, the Supreme Court in Unicorn Industries case clarified that the exemption of one duty does not automatically exempt other duties like education cess. The court emphasized the need for specific statutory notifications to cover exemptions and highlighted the binding nature of previous decisions on the matter. 3. Following the Unicorn Industries judgment, the respondent authorities issued a demand cum show-cause notice to the petitioner, claiming the refunds of education cess & higher education cess were erroneous and sought recovery under section 11(A-1) of the Central Excise Act, 1944. The petitioner contested this, arguing that the refunds were not erroneous as they were made in accordance with the law prevailing before the Unicorn Industries judgment. 4. The court deliberated on whether the refunds made to the petitioner became erroneous post the Unicorn Industries judgment. It considered the condition precedent under section 11(A-1) of the Excise Central Act, 1944, and stayed the operation of the demand cum show-cause notice dated 09.06.2020 until further orders. 5. The court allowed time for the filing of affidavits by the concerned parties and scheduled further consideration of the matter. It also directed that the recovery of the higher education cess refunded to the petitioner should not proceed until the next hearing date. Additional affidavits were permitted to be filed within specified timelines, with corresponding opportunities for replies by the petitioners.
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