9911796707
TMI Blog2013 (9) TMI 614X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-C.E. 1.2 The Notification No. 56/2002-C.E. exempts the goods covered by this notification and manufactured and cleared by the units located in the areas specified in Annexure-II to the notification from the following duties leviable thereon "as is equivalent to the amount of duty paid by the manufacturer, other than the amount of duty paid by utilizing Cenvat credit under the Cenvat Credit Rules"- (i) Duties of excise leviable under Section 3(1) of the Central Excise Act, 1944 i.e. the basic excise duty and special excise duty under Section 3(1) of the Act. (ii) Additional excise duty leviable under Additional Duties of Excise (Goods of Special Importance Act), 1957 [(hereinafter referred to as AED (GSI)]. (iii) Additional excise duty leviable under Additional Duties of Excise (Textiles & Textile Articles) Act, 1978 [(hereinafter referred to as the AED (T & TA)]. In terms of Explanation to this notification below para 2A, for the purpose of this notification, duty paid, by utilization of the amount credited in the account current, shall be taken as payment of duty by the way other than utilization of Cenvat credit under the Cenvat Credit Rules, 2004. 1.3 Clause 1A of the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication No. 56/2002-C.E. cannot utilize BED credit for payment of education cess and S & H cess, as it results in higher payment of BED through PLA and thus higher quantum of refund, to the extent the BED credit was used for payment of education cess and S & H cess. On this basis, the jurisdictional Assistant/Deputy Commissioner disallowed the refund claim of extra BED paid through PLA on account of diversion of BED credit for payment of education cess and S & H cess. 1.8 However, on appeals being filed against the orders of Assistant/Deputy Commissioner, the CCE (Appeals) by the impugned orders-in-appeal, set aside the orders of Assistant/Deputy Commissioner and allowed the appeals on the grounds that - (a) In terms of the provisions of Rule 3(4) of the Cenvat Credit Rules, 2004, the Cenvat credit of various duties can be utilized for payment of any duty of excise; (b) The only restriction on utilization of Cenvat credit of various duties is specified in Rule 3(7)(b) according to which the credit of AED (GSI), AED (T & TA), NCCD, education cess and S & H cess be utilized only for payment of AED (GSI), AED (T & TA), NCCD, education cess and S & H cess respectively, and there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and M/s. Sun Pharmaceuticals Industries; Shri S.K. Malhotra, Chartered Accountant representing M/s. Tawi Chemical Industries (Unit-II), M/s. Ultra Home Care Coils (P) Ltd., M/s. Modern Whitners Pvt. Ltd., Masters India, M/s. Shree Sita Ram Industries Pvt. Ltd., M/s. J & K Metals, Jammu Castings Pvt. Ltd., M/s. Aar Bee Industries, M/s. Nav Bharat Metals, M/s. Bharat Box Factory Unit II and III, M/s. Krishi Rasayan Exports Pvt. Ltd., M/s. Sud Pines Pvt. Ltd., M/s. K.C. Minerals and Allied Industries, M/s. Balajee Rosin Industries, M/s. K.S. Profiles, M/s. Cardinal Chemicals Pvt. Ltd., M/s. J & K Pulp & Papers Pvt. Ltd. and Shri S.J. Vyas, Advocate representing M/s. Hitachi Home & Life Solutions (I) Ltd., (Appeal No. E/1928 to 1930/2009) defending the impugned orders pleaded that the Notification No. 56/2002-C.E. exempts the education cess and S & H education cess also, that in this regard they rely upon judgments of the Tribunal in the cases of Bharat Box Factory Ltd. v. CCE, Jammu reported in 2007 (214) E.L.T. 534 (Tri.-Del.) and Cyrus Surfactant Pvt. Ltd. reported in 2007 (215) E.L.T. 55 (Tri.-Del.); that when the education cess is a duty exempted under Notification No. 56/2002-C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , so that he pays only the balance amount of duty, if any payable, through PLA, can utilize BED credit for payment of education cess and S & H cess, before fully utilizing the BED credit available at the end of the month for payment of BED. Before going into the above question, it would be worthwhile having a look at - (a) The relevant provisions of Notification No. 56/2002-C.E.; (b) Provisions regarding levy of education cess and S & H cess; and (c) Relevant provisions of Cenvat Credit Rules; 5.1 Paras 1, 1A, 2, 2A, 3 & 4 of the exemption Notification No. 56/2002-C.E., as it existed during the period of dispute, read as under :- Notification No. 56/2002-C.E. Exemption to all goods (except cigarettes, cigars, tobacco and its product and soft drinks and their concentrates) produced in Jammu & Kashmir by units located in Industrial Growth Centre, Industrial Infrastructure Development Centre or Export Promotion Industrial Park; or Industrial Estate or Industrial Area or Commercial Estate or Scheme Area. - In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a manufacturer, such refund shall not exceed the amount of duty paid less the amount of the CENVAT Credit availed of, in respect of the duty paid on the inputs used in or in relation to the manufacture of goods cleared under this notification.; (c) If there is likely to be any delay in the verification, the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall refund the amount on provisional basis by the 15th day of the next month to the month under consideration, and thereafter may adjust the amount of refund by such amount as may be necessary in the subsequent refunds admissible to the manufacturer. 2A. Notwithstanding anything contained in paragraph 2, - (a) the manufacturer at his own option, may take credit of the amount of duty paid during the month under consideration, other than by way of utilisation of CENVAT credit under the CENVAT Credit Rules, 2002, in his account current, maintained in terms of Part V of the Excise Manual of Supplementary Instruction issued by the Central Board of Excise and Customs. Such amount credited in the account current may be utilised by the manufacturer for payment of duty, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 (5 of 1986), being goods manufactured or produced, shall be a duty of excise (in this section referred to as the Education Cess on excisable goods), at the rate of two percent, calculated on the aggregate of all duties of excise (including special duty of excise or any other duty of excise but excluding Education Cess on excisable goods) which are levied and collected by the Central Government in the Ministry of Finance (Department of Revenue), under the provisions of the Central Excise Act, 1944 (1 of 1944) or under any other law for the time being in force. (2) The Education Cess on excisable goods shall be in addition to any other duties of excise chargeable on such goods, under the Central Excise Act, 1944 (1 of 1944) or any other law for the time being in force. (3) The provisions of the Central Excise Act, 1944 (1 of 1944) and the rules made thereunder, including those relating to refunds and exemptions from duties and imposition of penalty shall, as far as may be, apply in relation to the levy and collection of the Education Cess on excisable goods as they apply in relation to the levy and collection of the duties of excise on such goods under the Central Excise Act, 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007); and] (vii) the additional duty of excise leviable under [section 85 of Finance Act, 2005 (18 of 2005)], shall be utilised towards payment of duty of excise or as the case may be, of service tax leviable under the said Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 or the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001), or the education cess on excisable goods leviable under section 91 read with section 93 of the said Finance (No. 2) Act, 2004 (23 of 2004), or the Secondary and Higher Education Cess on excisable goods leviable under section 136 read with section 138 of the Finance Act, 2007 (22 of 2007) or the additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of 2003), or the education cess on taxable services leviable under section 91 read with section 95 of the said Finance (No. 2) Act, 2004 (23 of 2004), or the Secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a unit are covered by the exemption, which is the case in all these appeals, the assessee for availing this exemption, is required to first utilize the whole of the cenvat credit available to him on last day of the month under consideration for payment of duty on the goods cleared during such month and pays only the balance amount, if any payable, in cash (PLA); (3) It is the amount so paid through PLA which is refunded or can be taken as self credit by following the procedure as prescribed in para 2 & 2A of the notification; and (4) Thus this notification grants exemption in form of refund/self credit in PLA of the duties levied under Central Excise Act, 1944, AED (GSI) Act, 1957 and AED (T & TA) Act, 1978 to the extent the same have been paid through PLA when the liability for excise duty and/or AED has been discharged in the manner prescribed in para 1A of the notification. 6.1 In our view, the expression - "first utilize the whole of cenvat credit available on the last day of the month for the payment of duty on goods cleared during the month" in para 1A of the notification, implies that for availing this exemption, a manufacturer must first discharge the duty liability on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44 (now Section 5A of Central Excise Act, 1944) cover only the duty of excise leviable under Section 3(1) of the Central Excise Act, 1944 and do not cover special excise duty leviable under Finance Act, 1978 and AED (GSI) leviable under AED (GSI) Act, 1957. Relying upon this judgment of the Apex Court this Tribunal in case of CCE, Jammu v. Jindal Drugs Ltd. reported in 2011 (267) E.L.T. 653 (Tri.-Del.) has held that Notification No. 56/2002-C.E. does not cover education cess leviable under Section 91 read with Section 93 of Finance Act, 2004 and S & H cess leviable under Section 136 read with Section 138 of the Finance Act, 1978. Same view has been taken by Hon'ble Gauhati High Court in case of CCE, Shillong v. Dharmpal Satyapal Ltd. reported in 2012 (275) E.L.T. 71 (Gau.) wherein with regard to Notification No. 32/99-C.E., a notification similar to Notification No. 56/2002-C.E., it was held that the notification does not exempt education cess. Therefore, education cess leviable under Section 91 read with Section 93 of the Finance Act, 2004 and S & H cess leviable under Section 136 read with Section 138 of the Finance Act, 2007 is not covered by exemption Notification No. 56/2002-C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication No. 32/99-C.E. and if the answer to the first part is negative then whether the Cenvat credit under Cenvat Credit Rules can be utilized for the payment of NCC duty. The High Court has answered the first question in negative. As regards the second question, the High Court has held that cenvat credit of basic excise duty can be utilized by the assessee for payment of NCC duty. On perusal of the aforesaid judgment it is seen that Hon'ble High Court has not considered the scheme of refund admissible to the assessee under Notification No. 32/99-C.E. which is identical to the Notification No. 56/2002-C.E. which is subject matter of these appeals. 7.1 A perusal of Rule 3(4) and Rule 3(7)(b) of the Cenvat Credit Rules, 2004, would show that while AED (T & TA) credit, NCCD credit, credit of education cess leviable under Section 91 read with Section 93 of Finance Act, 2004, credit of S & H cess leviable under Section 136 read with Section 138 of the Finance Act, 2007, and credit of AED leviable under Section 85 of the Finance Act, 2005 can be used only for payment of AED (T & TA), NCCD, education cess, S & H cess and AED leviable under Section 85 of Finance Act, 2005 respectively, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
