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TMI Blog2019 (3) TMI 1427X X X X Extracts X X X X X X X X Extracts X X X X ..... ecial Category States including Uttaranchal (now Uttarakhand). The industries eligible for such incentives were to be environment friendly, with potential for local employment generation and use of local resources. Subsequently, an Office Memorandum was issued on 7.1.2003, announcing a package of incentives providing for "New Industrial Policy and other concessions for the State of Uttaranchal and the State of Himachal Pradesh." Para 3.1 (I) stipulated the fiscal incentives. It is not necessary to reproduce the complete paragraph, but suffice to reproduce the relevant portion as under: "3.1: Fiscal Incentives to new Industrial Units and to existing units on their substantial expansion: (I). New industrial units and existing industrial units on their substantial expansion as defined, set up in Growth Centres, Industrial Infrastructure Development Centres (IIDCs), Industrial Estates, Export Processing Zones, Theme Parks (Food Processing Parks, Software Technology Parks, etc.) as stated in Annexure-I and other areas as notified from time to time by the Central Government, are entitled to : (a) 100% (hundred percent) outright excise duty exemption for a period of 10 years from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. The appellant, a limited company, established a manufacturing unit of two wheeler vehicles in the year 2007. The appellant was exempted from, inter alia, CENVAT, by virtue of its manufactured products falling under the Second Schedule of the Central Excise Tariff Act, 1985. 7. The appellant was apparently paying an automobile cess, but the NCCD, Education Cess and Secondary & Higher Education Cess were not being paid. The dispute arose on account of an audit conducted on 27/28.2.2009. The dispute pertains to the liability of the appellant to pay the unpaid three cesses referred to aforesaid. 8. Now turning to the three cesses in question, NCCD was imposed under Section 136 of the Finance Act, 2001, in the nature of a duty of excise, in addition to any other duties of excise chargeable under the 1944 Act. The relevant portion is extracted as under: "S. 136- National Calamity Contingent Duty (1) In the case of goods specified in the Seventh Schedule, being goods manufactured or produced, there shall be levied and collected for the purposes of the Union, by surcharge, a duty of excise, to be called the National Calamity Contingent duty (hereinafter referred to as the Nationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 9.10.2014. The appeal preferred before the Division Bench also met the same fate, vide impugned order dated 16.3.2017. 12. The controversy before us is now in a narrow compass, on account of the subsequent judicial pronouncement in SRD Nutrients Pvt. Ltd. v. Commissioner of Central Excise, Guwahati (2018) 1 SCC 105. The issue of the Education Cess and the Secondary & Higher Education Cess, in our view, is covered against the Department in view of this judgment and that is how, also, the Department appears to have understood now, in view of the written synopsis placed before us. 13. In the facts of that case, there was an initiative for development of industries in the North-Eastern States of Assam, Tripura, Meghalaya, Mizoram, Manipur, Nagaland, Arunachal Pradesh, etc. A Notification exempting goods from payment of excise duties was issued in respect of those States. Education Cess and Secondary & Higher Education Cess, as imposed under the Finance Acts of 2004 and 2007, respectively were also sought to be levied on the appellant therein. The gravamen of the reasoning of this Court is that since these cesses are a surcharge levied and collected on the total value of the exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovides that the provisions of the Central Excise Act, 1944 and the Rules made thereunder, including those related to refunds and duties, etc. shall as far as may be applied in relation to levy and collection of education cess on excisable goods. A conjoint reading of these provisions would amply demonstrate that education cess as a surcharge, is levied @ 2% on the duties of excise which are payable under the Act. It can, therefore, be clearly inferred that when there is no excise duty payable, as it is exempted, there would not be any education cess as well, inasmuch as education cess @ 2% is to be calculated on the aggregate of duties of excise. There cannot be any surcharge when basic duty itself is nil." (emphasis supplied) 15. A reference was also made to the judgement of the Rajasthan High Court, in Banswara Syntex Ltd. v. Union of India 2007 SCC OnLine Raj 365 :: (2007) 216 ELT 16, where it has been observed as under: "15. The very fact that the surcharge is collected as part of levy under three different enactments goes to show that scheme of levy of education cess was by way of collecting special funds for the purpose of Government project towards providing and finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question must be read in a manner that give them a liberal interpretation, provided that no violence is done to the language employed. The rationale for the same is well enunciated in Novopan India Ltd., Hyderabad v. CCE and Customs, Hyderabad, 1994 Supp (3) SCC 606 apart from in other judicial pronouncements. In such cases, it is not as if the principle of strict interpretation of tax law has been given a complete go by, but that rule of interpretation would apply at a different stage, i.e., to determine whether the exemption is applicable to the assessee or not. Once such exemption is indeed found to be applicable to the assessee in question, a liberal approach is to be adopted by the Court in construing the language, such as to allow the benefit to be reaped by the beneficiary in question (Union of India v. Wood Papers Ltd. (1990) 4 SCC 256). 20. We may notice that the primary reasoning contained in the impugned order is common for the three cesses, i.e., NCCD; Education Cess and Secondary & Higher Education Cess. These were in the nature of surcharges levied in other Acts, which have not been specifically excluded under the Notification in question. That reasoning does not pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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