2022 (1) TMI 615 - SC - Central Excise

Refund of education cess and higher education cess - whether the education cess and higher education cess which were paid along with the excise duty was also liable to be refunded along with the central excise duty in terms of exemption notifications? - HELD THAT - Whereas it is the case of the applicant that issue is covered in view of the earlier judgment of this Court in the case of Modi Rubber Ltd. 1986 (8) TMI 60 - SUPREME COURT which is rendered by three-Judge Bench of this Court, which is followed in the case of M/s. Unicorn Industries 2019 (12) TMI 286 - SUPREME COURT by this Court, on the very same issue in this batch of appeals this Court has held that when the duty is exempted the cess which is notified by subsequent Finance Act which is leviable on excise duty also stands exempted. In view of the fact that the earlier judgment in the case of M/s. Unicorn Industries (supra) is rendered by three-Judge Bench of this Court, relying on earlier judgment of this Court in the case of Modi Rubber Ltd. which is also rendered by three-Judge Bench of this Court we are of the view that the present application is required to be considered by a three-Judge Bench. It is also to be noted that notice in the application is also issued by three-Judge Bench of this Court. This application is required to be heard by a Bench of three Judges. Registry to place the papers before the Hon ble Chief Justice and to list this application before three-Judge Bench, after obtaining appropriate directions from the Hon ble Chief Justice.

Summary

Issues:
1. Refund of education cess and higher education cess along with excise duty under exemption notifications.

Analysis:
The case involves an application seeking modification of a previous judgment regarding the refund of education cess and higher education cess paid along with excise duty under exemption notifications. The notifications allowed refund of excise duty paid by manufacturers in specified backward areas, but did not mention refunding the education cess amounts collected. The applicants challenged the denial of refund for education cess and higher education cess, citing previous judgments. The Court considered various precedents, including the case of M/s. Unicorn Industries, where it was held that additional excise duties like education cess were not covered by the exemption notifications. The Court noted that the present application required consideration by a three-Judge Bench due to the conflicting interpretations of the law.

The applicant argued that the judgment in the civil appeals needed modification as the earlier binding judgment in the case of Modi Rubber Ltd. was not considered, despite being referred to in written submissions. On the other hand, the respondent contended that the judgment in the appeals correctly interpreted the notifications and circulars, and there was no need for modification. The Court acknowledged the core question of whether the exemption from excise duty extended to education cess and higher education cess imposed by the Finance Acts. It noted the importance of previous judgments in deciding similar issues and directed the application to be heard by a three-Judge Bench for further consideration.

In conclusion, the Court decided that the application required a hearing by a Bench of three Judges and directed the Registry to list the application before a three-Judge Bench. The decision was based on the need to address the conflicting interpretations of the law regarding the refund of education cess and higher education cess under the exemption notifications. The case highlighted the significance of previous judgments in shaping the interpretation of legal provisions and the necessity for a thorough review by a higher Bench to resolve the legal complexities involved.