Home Case Index All Cases Central Excise Central Excise + HC Central Excise - 2021 (10) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (10) TMI 1030 - HC - Central ExciseRejection of application for settlement of disputes under the Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019 - excisable goods - supplies made as against international competitive bidding to power projects, under exemption - Department adopted the view that the commodity supplied, being lubricant, was only used as a coolant/lubricating agent and hence did not entitle the petitioner to the exemption sought - HELD THAT - The incidence of duty must not be looked at a mechanical event but a constructive one, that contains all incidents of a taxable event. Thus, to attract levy of duty, a practical point of view must also be called into play to determine whether the goods are marketable or capable of being marketed. Though in that case the Court was concerned with whether the commodity in question was capable of being marketed as a distinct and marketable product, the observations made would apply to the present scenario as well, since in the present case, there is no rate of duty that is set out alongside lubricants that may be applied to a transaction of manufacture and sale of the said lubricant. Thus, even though the product in this case is marketable, it does not answer to the question of excisable goods as, practically there can be no levy of duty thereupon in the absence of a stipulated rate and applicable rate of duty. Thus, notwithstanding that the language of Section 125(h) of the SVLDRS Scheme uses the phrase with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944 , the use of the word excisable cannot be seen to be cosmetic, but must contain some purpose - Mere mention of the commodity without the rate of tax would serve no purpose as far as excisability is concerned. Neither the judgment of the Hon ble Supreme Court in the case of MOTI LAMINATES PVT. LTD. VERSUS COLLECTOR OF CENTRAL EX., AHMEDABAD 1995 (2) TMI 67 - SUPREME COURT , the General Rules of interpretation to Schedule 4 of the Act nor the Clarification of the OSD have been brought to the notice of the Division Bench of the Allahabad High Court while considering the case of M/S INDIAN OIL CORPORATION LIMITED VERSUS UNION OF INDIA AND 2 OTHERS 2020 (12) TMI 316 - ALLAHABAD HIGH COURT and for these reasons, this decision is distinguishable. Petition allowed.
Issues Involved:
1. Eligibility under the Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS Scheme) 2. Classification of lubricants under the Central Excise Act, 1944 3. Interpretation of Section 125 of the SVLDRS Scheme 4. Marketability and excisability of goods 5. Legal precedents and their applicability Issue-wise Detailed Analysis: 1. Eligibility under the Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS Scheme): The petitioner, a Public Sector Undertaking, challenged the rejection of their application for dispute settlement under the SVLDRS Scheme by the Commissioner of Central Excise and GST. The petitioner argued that their dispute, originating from a show cause notice regarding lubricants, should be considered under the Scheme. The Scheme excludes certain disputes, including those involving excisable goods listed in the Fourth Schedule to the Central Excise Act, 1944. 2. Classification of lubricants under the Central Excise Act, 1944: The petitioner had erroneously filed returns under Serial No.336 instead of 338 of Notification No.12/2012 – Central Excise dated 17.03.2012. The Department contended that lubricants, used as coolants/lubricating agents, did not qualify for exemption. The petitioner argued that lubricants were subject to GST and not central excise duty, thereby falling outside the Scheme's exclusions. 3. Interpretation of Section 125 of the SVLDRS Scheme: Section 125(1)(h) excludes declarations related to excisable goods listed in the Fourth Schedule. The petitioner sought clarification, which was provided by the Officer on Special Duty (OSD), stating only specific petroleum products and tobacco remained under central excise. The petitioner argued that lubricants, with a '.......' rate of duty, should not be considered excisable goods under the Scheme. 4. Marketability and excisability of goods: The Supreme Court in Moti Laminates Pvt. Ltd. v. Collector of Central Ex., Ahmedabad emphasized that goods must be marketable to be considered excisable. The petitioner argued that lubricants, with no specified duty rate, could not be deemed excisable. The Court agreed, stating that the absence of a duty rate rendered the excisability of lubricants illusory. 5. Legal precedents and their applicability: The revenue relied on judgments such as Wallace Flour Mills Company Ltd. v. Collector of Central Excise and Tamil Nadu Handloom Weavers Co-operative Society Ltd. v. Assistant Collector of Central Excise, arguing for a literal interpretation of the Scheme. However, the Court distinguished these cases, noting that the interpretation must align with the Scheme's objective to reduce litigation. The Court also referenced Circular No.1071/4/2019 – CX 8, supporting the petitioner's view that only goods with a specified duty rate are excluded under the Scheme. Conclusion: The Court concluded that lubricants, with a '.......' duty rate, are not excisable goods for the purposes of the SVLDRS Scheme. The interpretation of Section 125 must consider the Scheme's objective, and any ambiguity should favor the assessee. The Writ Petition was allowed, and the rejection of the petitioner's application under the SVLDRS Scheme was set aside.
|