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TMI Blog2019 (9) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Duty, restricts its utilization in accordance with fifth proviso in rule 3(4) of CENVAT Credit Rules, 2004. In view of this clear segregation of National Calamity Contingent Duty from the general pool of CENVAT credit, the discharge of duty liability under National Calamity Contingent Duty would not qualify the goods to be other than exempted goods - To permit the availment of credit of duties/tax paid on inputs/input services utilized in the manufacture of GSM mobile sets would be tantamount to grant of refund of tax that were collected, under authority of law and in accordance with the provisions of law, at the immediately preceding stage. Thus, the respondent herein is within the ambit of rule 6 of CENVAT Credit Rules, 2004. Ineligibility to CENVAT credit of tax paid on services used in common - legality of recovery in the face of reversal claimed by respondent - HELD THAT:- It is seen that the impugned order has not examined the submissions that the obligation under rule 6 of CENVAT Credit Rules, 2004 has been duly discharged by reversal of proportionate credit and that the bar of limitation impedes recovery. The adjudicating authority should have ascertained the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Second Schedule to Central Excise Tariff Act, 1985 and, the expression duty of excise in rule 2(d) of CENVAT Credit Rules, 2004 being in the singular, is not to be construed as a levy collected under any of the statute. Pointing out the inconsistency of approach on the part of the original authority by dropping of the demand for the period when National Contingent Calamity Duty was also not leviable, Learned Authorised Representative sought reversal thereof. Reliance was placed on the decision of the Tribunal in Mahindra Mahindra Ltd v. Commissioner of Central Excise, Mumbai [2007 (211) ELT 481 (Tri.-Mumbai)] and in Oil Natural Gas Corporation Ltd v. Commissioner of Central Excise, Raigad [2013 (31) STR 214 (Tri.-Mumbai)] which have held that the discharge of any liability other than that of basic excise duty would not exclude it from the ambit of exempted goods. Attention was also drawn to the decision of the Hon ble High Court of Gujarat in Hero MotoCorp Ltd v. Commissioner of Central Excise, Dehradun [2018 (14) GSTL 200 (Uttarakhand)] which held that 41. The other way to look at it is that since the words duty of excise are capable of comprehending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise duty, there are surcharges, as NCCD and cesses in this case, then when the assessee opts for the benefit of the exemption from the duty under Section 3, then it would not also, at the same time, claim further benefit by way of Cenvat credit. It is to be noticed that there is no case for the appellant that the appellant did not exercise his option in the matter of claiming benefit of Notification No. 50 of 2003. We would think that though, no doubt, Modi Rubber was rendered in the context of Excise Rules and it was not rendered in the scenario of the Cenvat credit, having regard to the language used in Rule 6 read with Rule 2(d) in conjunction with the language used in Section 5A of the Act, the conclusion would be that when there is exemption from the whole of the duty under Section 3 of the Act, the goods would be treated as exempted goods within the meaning of Section 2(d) of the Rules. As far as the case based on Rule 19 of the Central Excise Rules and the Circulars, which have been issued with reference to the same, whereunder NCCD, inter alia, has been treated as the duty of excise for the purpose of Rule 19, is concerned, we do not think that the principle on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , more so because of the judgment in SRD Nutrients Pvt. Ltd.7 The question, thus, is whether, even though the NCCD is in the nature of an excise duty, its incidence being on the product, rather than on the value of the excise duty, that itself would make any difference to the applicability of the NCCD to excise exempt units. 21. On a proper appreciation of the judicial pronouncement in SRD Nutrients Pvt. Ltd.,8 we are not inclined to take a different view from the one taken for Education Cess and Secondary Higher Education Cess, even while considering the issue of NCCD. 22. We may notice that this Court, in SRD Nutrients Pvt. Ltd.9 gave its imprimatur to the view expressed by the Rajasthan High Court in Banswara Syntex Ltd.10 The rationale is that while there may be surcharges under different financial enactments to provide the Government with revenue for specified purposes, the same have been notified as leviable in the nature of a particular kind of duty. In the case of NCCD, it is in the nature of an excise duty. It has to bear the same character as those respective taxes to which the surcharge is appended. NCCD will not cease to be an excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not for input services during the relevant period of time. It is, therefore, contended that for the period prior to March 2008, respondent had been compliant with rule 6 of the CENVAT Credit Rules, 2004. For the period thereafter, reference was invited to section 136 of Finance Act, 2001 to evince clear linkage with duty of central excise and, therefore, not open for contention by Revenue that goods continue to be exempted. It is submitted that circular no. 641/32/2002-CX dated 26th June 2002 of Central Board of Excise Customs accords parity to the duty discharged by them with duties of excise in dealing with exports. Reliance was also placed on the decision of the Hon ble High Court of Supreme Court in Barnagore Jute Factory Co v. Inspector of Central Excise [1992 (57) ELT 3 (SC)] and of the Larger Bench of the Tribunal in TTK-LIG Ltd v. Commissioner of Customs, Chennai/New Delhi [2006 (193) ELT 169 (T-LB)] to support the contention that levy of any cess or other duties is not different from levy of duties of central excise. 5. Having heard both sides and perused the records, the first issue to be decided is whether the discharge of National Calamity Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngent Duty would not qualify the goods to be other than exempted goods . This would also be consistent with the scheme of CENVAT credit which is intended to ensure that the burden of any indirect tax is borne by the ultimate consumer; the ultimate consumer is the one who is not enjoined to pay tax or duty directly into the exchequer. On any manufactured goods, it is the addition to value is subject to tax and effect is given to his charge through the mechanism CENVAT credit. To permit the availment of credit of duties/tax paid on inputs/input services utilized in the manufacture of GSM mobile sets would be tantamount to grant of refund of tax that were collected, under authority of law and in accordance with the provisions of law, at the immediately preceding stage. Hence the decision of the Tribunal in re Mahindra Mahindra Ltd that 31. The next question arises is whether tractors on which automobile cess and education cess is payable can be considered as exempted from the whole of duty of excise thereon or chargeable to nil rate of duty as required under Rule 2(d) of Cenvat Credit Rules. Here we find that the terms exempted goods has been defined under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified both in First Schedule of the Tariff Act and Second Schedule to the Tariff Act, it has to be considered as exempted and not dutiable as is being contended by the appellants. In view of the same the appellants are required to follow the provision of Rule 6(2) and (3) of the Cenvat Credit Rules. 7. We are, therefore, led to conclude that the respondent herein is within the ambit of rule 6 of CENVAT Credit Rules, 2004. In the light of this finding, their liability cannot but be enforceable. 8. The next question; in the context of ineligibility to CENVAT credit of tax paid on services used in common, is the legality of recovery in the face of reversal claimed by respondent. 9. It is seen that the impugned order has not examined the submissions that the obligation under rule 6 of CENVAT Credit Rules, 2004 has been duly discharged by reversal of proportionate credit and that the bar of limitation impedes recovery. The adjudicating authority should have ascertained the correctness of the claim of the respondent that the proportionate of amount of CENVAT credit had been reversed and that interest thereon had been paid before issue of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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