2023 (7) TMI 540 - HC - Central Excise

Denial of the benefit of the Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 - rejection on the ground of ineligibility observing that in terms of Section 125(1)(h) of the Finance Act, 2019, the product falling under the Fourth Schedule to the CE Act is not eligible for this Scheme - Section 125(1)(h) of the Finance Act (No.2) Act of 2019. HELD THAT - The interpretation placed by the Department on Section 125(1)(h) of the Finance Act, 2019 appears not to be correct. No doubt that the Petitioner s product (Process Oil) falls under the Fourth Schedule to the CE Act but as far as the rate of duty is concerned, what is indicated is, excise duty is not leviable at all - Therefore, there is no question of the Petitioner s product being outside the purview of the SVLDR Scheme read with the Fourth Schedule to the CE Act. The Court, therefore, rejects the plea of the Department that the Petitioner would be ineligible for the benefit of the SVLDR Scheme. The Court quashes the order dated 26th December, 2019 and other similar orders issued by the Department (all of which have been assailed by the Petitioner in the writ petitions) rejecting the SVLDR applications of the Petitioner since they are based on an erroneous interpretation of not only the SVLDR Scheme but also Section 125(1)(h) of the Finance Act - Petition disposed off.

Summary

Issues:
Petitioner denied benefit under SVLDR Scheme invoking Section 125(1)(h) of Finance Act; Interpretation of 'excisable goods' under Fourth Schedule of CE Act for SVLDR Scheme eligibility.

Analysis:
The petitioner, a company manufacturing various goods, sought benefits under the Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 (SVLDR Scheme) but was denied due to Section 125(1)(h) of the Finance Act. The petitioner's product, Process Oil, fell under the Fourth Schedule of the Central Excise Act, but the rate of duty was indicated as not leviable. The Court held that 'excisable goods' under SVLDR Scheme refer to goods subject to central excise duty, emphasizing that the petitioner's product was not outside the Scheme's purview due to the absence of excise duty. The Department's interpretation was deemed erroneous, leading to the quashing of rejection orders on SVLDR applications.

The Court highlighted that the SVLDR Scheme aimed to resolve legacy tax issues and provide amnesty, benefiting taxpayers and focusing on small taxpayers with lower duty amounts. The Scheme excluded goods subject to central excise levy, such as those listed in the Fourth Schedule. The Court rejected the Department's contention of the petitioner's ineligibility, emphasizing that the absence of excise duty on Process Oil made it eligible for the SVLDR Scheme, contrary to the Department's interpretation.

A direction was issued for the Department to process the petitioner's SVLDR applications, hear the petitioner, and provide a reasoned order within four weeks. The Court disposed of the writ petitions, emphasizing the importance of correct interpretation of the SVLDR Scheme and Finance Act provisions for fair application and benefit of the Scheme to eligible taxpayers.