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TMI Blog2023 (10) TMI 1223X X X X Extracts X X X X X X X X Extracts X X X X ..... circular dt. 01.02.2022. Hon ble Supreme Court in M/S. UNICORN INDUSTRIES VERSUS UNION OF INDIA OTHERS [ 2019 (12) TMI 286 - SUPREME COURT] was concerned with the interpretation of an exemption notification no. 71/2003-CE dt. 9.9.2003 granting area based exemption to units located in the north east. Under Notification No. 71/2003-CE, units in the north east were entitled to refund of specified duties paid on value addition and the question before the Hon ble Court was whether EC, SHEC, NCCD imposed by the Finance Act 2001, 2004 and 2007 which were not specifically exempted under Notification No. 71/2003 shall also come within the scope of the said exemption for the purposes of refund - The Hon ble Supreme Court denied refund of the un-specified duties under Notification No. 71/2003-CE as would be evident from para 40 of the said order as the exemption was categorical in its scope. Further, since refund of specified duties under Notification No. 71/2003-CE was only possible post collection, the question of non leviability of Education Cess under Section 94 of the Finance (No. 2) Act 2004 for want of collection of the underlying duty was not germane to the issue before the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lenged the assessment of SWS in each of these BOEs by filing as many appeals before the Ld. Appellate Commissioner. All these appeals were rejected by the Ld. Appellate Commissioner vide the impugned orders, which are the subject matter of challenge in these proceedings. 3. The learned Consultant appearing for the Appellant has assailed the impugned Orders on the following grounds: (a) In terms of Section 110(3) of the Finance Act, 2018, SWS is required to be computed at the rate of 10% on the aggregate of duties levied and collected under Section 12 of the Customs Act, 1962. Further, in terms of the judgement of the Hon ble Supreme Court in the case of Somaiya Organics Limited Vs. State of Uttar Pradesh [2001 (130) E.L.T. 3] collection in the context of tax laws means physical realization of tax . Since, no BCD is collected in view of the exemption conferred under Notification Nos. 24/2015 Cus. and 25/2025 - Cus. both dated 08.04.2015, the SWS computed at the rate of 10% on zero should also be zero . The CBIC in its later Circular No. 03/2022 - dated 01.02.2022 has also clarified the said position at Para 4 set out hereunder: 4. Thus, it is clarified that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Vishakhapatnam Vs. Kedia Overseas Limited [2014 (305) E.L.T. 268 (AP)] Maintained SC [2015 (326) E.L.T. A134] 3. Commissioner of Central Excise, Tuticorin Vs. DCW Limited [2014 (306) E.L.T. 398 (Mad.)] 4. Commissioner of Customs (Export) Vs. Reliance Industries Limited [2015 (322) E.L.T. 121 (Bom.)] 5. Commissioner of Customs, Kandla Vs. Bhushan Steel Strips Limited [2010 (259) E.L.T. 155]. (d) The decision of the Hon ble Supreme Court in the case of Unicorn Industries, reported in 2019 (370) ELT 3 (S.C.) has no application to the facts of the present case. In the said case the Hon ble Supreme Court was dealing with an exemption notification no. 71/2003 CE dated 09.09.2003, granting certain duty concessions to the units located in the Northeastern states. Under the said notification, the assessee was entitled to refund of specified duties paid on value addition and the question before the Hon ble Court was whether EC and SHEC shall also come within the scope of exemption although not specified therein. Since refund of the specified duties was only possible post collection, the question of leviability of EC and SHEC was not gone into by the Hon bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in the case of CC Hyderabad Vs. Pennar Industries Limited [2015 (322) E.L.T. 402]. b) The Hon ble Supreme Court in the case of Somaiya Organics Limited Vs. State of Uttar Pradesh reported 2001 (130) E.L.T. 3 has held in no uncertain terms that the expression collection in the context of tax laws would mean physical realization of tax . On the other hand, the Ld. Appellate Commissioner in the impugned order has himself accepted at Para 28 that in effect no money representing the duty goes to the government exchequer under Notification 24 and 25 which essentially would imply that no BCD is physically collected and the debit to the scrips is only a matter of procedure not vitiating the factum of exemption from BCD as held in the case Gujarat Ambuja Exports Limited (supra). c) There was no change in the legal position as regards non leviability of EC in case of goods imported against DEPB scrips despite the introduction of Notification No. 96/2004 Cus. dated 17.09.2004 as also the Circular dated 31.01.2005 as is evident from the judgement of the Hon ble Madras High Court in the case of DCW Limited (supra). Further, the conditions as regards entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst MEIS/SEIS scrips and being specific should prevail over Circular No. 03/2022-Cus dated 01.02.2022 (b) BCD is not generally exempted under Notification No. 24/2015-Cus(Tariff) dt. 8.04.2015 but paid by debit to the MEIS/SEIS Scrips (c) The decision of the Hon ble Madras High Court in Writ Petition No. 24490 and 27459 of 2019 filed by Gemini Edibles and Fats India Pvt. Ltd fully supports the contention of the revenue (d) The decision of the Hon ble Bombay High Court in LA TIM Metals cannot prevail over the judgement of the Supreme Court in the Unicorn Industries case (supra) 5. Heard both sides and perused the appeal records. 6. We find that a pure question of law arises for our consideration in these appeals not involving any factual controversy. The issue involved in these appeals relates to the levy and collection of SWS under Section 110(3) of the Finance Act, 2018 set out hereunder to the extent relevant for the instant appeals: (3) The Social Welfare Surcharge levied under sub-section (1), shall be calculated at the rate of ten percent on the aggregate of duties, taxes and cesses which are levied and collected by the Central Government in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debit to the duty credit scrips as prevalent in the notifications operationalizing the DEPB scheme and the Target Plus Scheme had fallen for consideration of various High Courts and Tribunal in the following cases in the context of levy and collection of EC imposed by the Finance (No. 2) Act, 2004: (i) Gujarat Ambuja Exports Vs. Government of India [2013 (289) E.L.T. 273 (Guj.)] (ii) Commissioner of Central Excise, Vishakhapatnam Vs. Kedia Overseas Limited [2014 (305) E.L.T. 268 (AP)] Maintained SC [2015 (326) E.L.T. A134] (iii) Commissioner of Central Excise, Tuticorin Vs. DCW Limited [2014 (306) E.L.T. 398 (Mad.)] (iv) Commissioner of Customs (Export) Vs. Reliance Industries Limited [2015 (322) E.L.T. 121 (Bom.)] (v) Commissioner of Customs, Kandla Vs. Bhushan Steel Strips Limited [2010 (259) E.L.T. 155]. The Hon ble Gujarat High Court in the Gujarat Ambuja Case (supra) held that the condition of debit of the exempted duties to the Scrips is merely procedural as the Scrip has value and would not change the nature of benefit from one being of exemption having been issued in exercise of powers conferred under Section 25 of the Customs Act. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the High Court in the Gujarat Ambuja Exports Case (supra). At this stage, it would also be pertinent to refer to the provisions of Section 94 of the Finance (No. 2) Act, 2004, which reads as under: (1) The Education Cess levied under Section 91, in the case of goods specified in the First Schedule to the Customs Tariff Act, 1975 being goods imported into India, shall be a duty of customs (in this section referred to as the Education Cess on imported goods) at the rate of two percent calculated on the aggregate of duties of customs which are levied and collected by the Central Government in the Ministry of Finance (Department of Revenue) under Section 12 of the Customs Act, 1962 and any sum chargeable on such goods under any other law for the time being in force, as an addition to and in the same manner as a duty of customs but not including, (a) (b) .. 7. Since both EC and SWS are in the nature of surcharge and the provisions pertaining to their quantification as contained in Section 94(1) of the Finance (No. 2) Act, 2004 and Section 110(3) of the Finance Act, 2018 as extracted above are pari materia, the jurisprudence as regards non applicability/non levy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2020 which takes the same view for SWS as was canvassed in Circular dt. 31.01.2005 for Education Cess cannot be given primacy over the later circular dt. 01.02.2022. 9. We also find that the Hon ble Supreme Court in the Unicorn Case (supra) was concerned with the interpretation of an exemption notification no. 71/2003-CE dt. 9.9.2003 granting area based exemption to units located in the north east. Under Notification No. 71/2003-CE, units in the north east were entitled to refund of specified duties paid on value addition and the question before the Hon ble Court was whether EC, SHEC, NCCD imposed by the Finance Act 2001, 2004 and 2007 which were not specifically exempted under Notification No. 71/2003 shall also come within the scope of the said exemption for the purposes of refund. Para 2 and 22 of the said decision are set out hereunder for ease of reference: 2 The question involved in the appeals is with respect to the levy of education cess, higher education cess and National Calamity Contingency Duty on it. The appeals arise out of common judgement. The High Court has held that duties in question are not part of the exemption notification. The writ petitions have b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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