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TMI Blog2024 (5) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Guwahati High Court considered the issue in detail as to whether National Calamity Contingent Duty (NCCD) is a duty exempted under Notification No.32/99 - CE dated 08.07.1999 and if not whether CENVAT credit availed under Cenvat Credit Rules, 2004 can be utilized for payment of such duty which is not exempted under such Notification - Hon ble High Court held that NCCD is nothing but a duty of Excise and in para 8 of the said judgment the question whether the CENVAT credit can be utilized for payment of NCCD was discussed and held in favour of assessee. The Hon ble Supreme Court in the case Unicorn Industries [ 2019 (12) TMI 286 - SUPREME COURT] has observed that the duty on NCCD, Education Cess and Secondary Higher Education Cess are in the nature of additional Excise duty and it would not mean that the area based exemption Notification dated 09.09.2003 would be applicable to these duties (NCCD), particularly, when there is no reference to the Notification issued under Finance Act 2001. The Hon ble jurisdictional High Court had considered the decision in the case of M/s, Unicorn Industries also to reach the conclusion that Cess being duty of excise the importer can pay Ces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the appellant has wrongly utilized the credit for payment of Education Cess / Secondary Higher Education Cess. 3. Ld. Counsel submitted that the very same issue has been considered and decided by the Tribunal in the case of M/s. Vendanta Ltd., Vs CCE, Tirunelveli 2018 (7) TMI 158 CESTAT Chennai. The Tribunal in the said case relied upon the decisions of the Hon'ble High Court of Gujarat in the case of CCE Vs. Madhura Industries Textiles 2012 (TIOL) 1094 HC AHM - CX. A similar view was taken by the Hon'ble High Court of Guwahati in the case of UOI Vs. Kamakya Cosmetics and Pharmaceuticals Pvt. Ltd., 2015 (323) ELT (33) (Gau), Dharampal Satyapal Ltd., Vs CCE, Delhi I, dated 21.04.2005, CCE Dibrugarh Vs. Prag Bomsimi Synthetics Ltd., 2013(295) ELT 682 (Gau). The Ld. Counsel prayed that the appeal may be allowed. 4. Ld. AR Shri. Anoop Singh appeared and argued for the department. The relevant provisions contained in Cenvat Credit Rules was adverted to by the LR AR which is reproduced as under:- RULE 3. CENVAT credit. -- (1) A manufacturer or producer of final products or a [provider of output service] shall be allowed to take credit (hereinafter referred to as the CENVAT credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are not levied or collected under the Central Excise Act 1944. These Cesses do not fall under category of "duty of Excise" mentioned in Section 2 (A) of Central Excise Act 1944. The words "same as otherwise expressly provided and unless the context otherwise require" used in Rule 2A has to be read along with Sub Rule (4) of Rule 3 of Cenvat Credit Rules, 2004. It has been mentioned in clause (a) of Rule 4 of CCR, 2004 as "any duty of Excise" on final product. Whereas, in clause (b) and clause (c) the word CENVAT is expressly mentioned. Similarly in clause (b) of Sub Rule 7 to Rule 3 of Cenvat Credit Rules, 2004 the words "duty, Education Cess and Secondary Higher Education Cess" has been mentioned separately. 6. The charging Section for levy of duty is Section 3 of Central Excise Act 1944. It reads as "duties specified in the first schedule and second schedule in the Central Excise Tariff Act 1985 to be levied". The expression, duty, duties, duty of excise and duties of excise shall be same as otherwise expressly provided in the Central Excise Act 1944 and unless the context otherwise requires, be construed to include the reference to the special duty of excise specified in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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, 1944 or the rules, as the case may be. 11. The Ld. AR emphasized much on Rule 3 (7)(b) of CCR 2004. Rule 3 (7)(b) of CCR 2004 reads as under :- RULE 3. CENVAT credit (7) Notwithstanding anything contained in sub-rule (1) [, sub-rule (1a)] and sub-rule (4) [(b) CENVAT credit in respect of - (i) the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , if such inputs are removed as such or after being partially processed or on any output service 11.1 The Ld. AR stressed that as per the above rule the Basic Excise Duty which is levied under CEA cannot be utilized for payment of EC and SHEC which though are duty of excise but are levied under Finance Act 2004 and 2007 respectively, and not under Central Excise Act, 1944. 12. The decision in the case of M/s. Unicorn Industries Vs. UOI - 2019 (12) TMI 286 SC was relied to support the above arguments. The relevant paras of the said judgment adverted to by the Ld. AR are reproduced as below: 13. Learned counsel appearing on behalf of the appellant submitted that NCCD, education cess, and secondary and higher education cess form part of the excise duty. Hence, the decision of the High Court is bad in law. Reliance has been placed on SRD Nutrients Private Limited v. Commissioner of Central Excise, Guwahati, (2018) 1 SCC 105 and the decision of this Court in Bajaj Auto Limited v. Union of India & others, 2019 SCC OnLine SC 421, decided on 27.3.2019. It is submitted that the education cess was introduced by Sections 91 and 93 of the Finance Act, 2004 and higher education cess by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption from payment of special excise duty? The presumption is that when a notification granting exemption from payment of excise duty is issued by the Central Government under Rule 8(1), the Central Government would have applied its mind to the question whether exemption should be granted and if so, to what extent. And obviously, that can only be with reference to the duty of excise, which is then leviable. The Central Government could not be presumed to have projected its mind into the future and granted exemption in respect of excise duty which may be levied in the future, without considering the nature and extent of such duty and the object and purpose for which such levy may be made and without taking into account the situation which may be prevailing then. It is only when a new duty of excise is levied, whether special duty of excise or auxiliary duty of excise or any other kind of duty of excise, that a question could arise whether any particular article should be exempted from payment of such duty of excise and the Central Government would then have to apply its mind to this question and having regard to the nature and extent of such duty of excise and the object and pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009) 15 SCC 458, Dashrath Rupsingh Rathod v. State of Maharashtra (2014) 9 SCC 129, and Central Board of Dawoodi Bohra Community & Ors. v. State of Maharashtra & Ors. (2005) 2 SCC 673. It was held that a smaller bench could not disagree with the view taken by a larger bench. 43. Thus, it is clear that before the Division Bench deciding SRD Nutrients Private Limited and Bajaj Auto Limited (supra), the previous binding decisions of threeJudge Bench in Modi Rubber (supra) and Rita Textiles Private Limited (supra) were not placed for consideration. Thus, the decisions in SRD Nutrients Private Limited and Bajaj Auto Limited (supra) are clearly per incuriam. The decisions in Modi Rubber (supra) and Rita Textiles Private Limited (supra) are binding on us being of Co ordinate Bench, and we respectfully follow them. We did not find any ground to take a different view. 44. Resultantly, we have no hesitation in dismissing the appeals. The judgment and order of the High Court are upheld, and the appeals are dismissed. No costs. (emphasis supplied) The Ld. AR prayed that the appeal may be dismissed. 13. Heard both sides. 14. The issue to be decided is whether CENVAT Credit availed of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be utilized only to the extent such credit is available on the last day of the month or quarter, as the case may be, for payment of duty or tax relating to that month or the quarter, as the case may be : Provided further that the CENVAT credit of the duty, or service tax, paid on the inputs, or input services, used in the manufacture of final products cleared after availing of the exemption under the following notifications of Government of India in the Ministry of Finance (Department of Revenue), - (i) No. 32/99-Central Excise, dated the 8th July, 1999 [G.S.R. 508(E), dated 8th July, 1999]; (ii) No. 33/99-Central Excise, dated the 8th July, 1999 [G.S.R. 509(E), dated 8th July, 1999]; (iii) No. 39/2001-Central Excise, dated the 31st July, 2001 [G.S.R. 565 (E), dated the 31st July, 2001]; (iv) No. 56/2002-Central Excise, dated the 14th November, 2002 [G.S.R. 764(E), dated the 14th November, 2002]; (v) No. 57/2002-Central Excise, dated 14th November, 2002 [G.S.R. 765(E), dated the 14th November, 2002]; (vi) No. 56/2003-Central Excise, dated the 25th June, 2003 [G.S.R. 513 (E), dated the 25th June, 2003]; and (vii) No. 71/2003-Central Excise, dated the 9th Septembe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for payment of NCC duty on the final product. Simply put, the contention is that payment of NCC duty through utilization of CENVAT credit on basic excise duty is not prohibited. The question is whether this is permissible or not. According to the Revenue, CENVAT credit on NCC duty can be utilized only for paying NCC duty and CENVAT credit on basic excise duty cannot be utilized for paying NCC duty. 14. On the above broad facts, the matter was adjudicated before the Commissioner of Central Excise at Dibrugarh and he came to the conclusion that CENVAT credit of duty paid on inputs can be utilized only for payment of duty on the final product as per the second proviso to Rule 3(4) but CENVAT credit on any other duty could not be utilized for payment of NCC duty. Accordingly, the said Commissioner confirmed the demand of ` 82,07,125/- and passed an order for recovery of NCC duty from the assessee. 15. Feeling aggrieved, the assessee preferred an appeal before the Customs, Excise and Service Tax Appellate Tribunal at Kolkata. The appeal filed by the assessee was registered as Excise Appeal EDM 648/2006. The CESTAT noticed the provisions of Rule 3(4) as well as the provisions of Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the appeal, but in the view that we have taken, it is not necessary to decide that issue. 15.2 The adjudicating authority as well as the Ld. AR has much emphasized on the word "respectively" used in the Rule 3 (7) (b) of Cenvat Credit Rules, 2004. In para 17 of the above judgment, Hon'ble High Court categorically held that the said provision does not bar the utilization of credit of duty for payment of NCCD. The issue being identical argument of department that Rule 3(7) (b) uses the word 'respectively' and therefore there is a bar to use the credit availed for Basic Excise Duty for payment of Education Cess / Secondary Higher Education Cess cannot be accepted. The Ld. AR has relied upon the decision in the case of M/s. Unicorn Industries (supra). The Hon'ble Supreme Court in the said judgment was analyzing an area based exemption notification and the issue was not with regard to availment of credit. The Hon'ble Supreme Court in para 40 of the said judgment in the case Unicorn Industries has observed that 'the duty on NCCD, Education Cess and Secondary Higher Education Cess are in the nature of additional Excise duty and it would not mean that the area based exemption Notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption for north-eastern states) would also apply to NCCD which is in the nature of a duty of excise. The Hon'ble Apex Court followed the view taken in Modi Rubber Limited 1986 (25) ELT 849 S.C and held that when a particular kind of duty is exempted, other types of levy of duty or Cess imposed by different legislation for a different purpose do not get automatically exempted. It is to be noted that exemption granted by the above notification is by which the excise duty has to be paid by assessee and thereafter refund claimed. The issue here is not eligibility of exemption from duty, but utilizing the credit availed for payment of Cess which is imposed by a different legislation and not Central Excise Act, 1944. Need less to say, Cenvat Credit Rules, is the law which comprehensively deals with availment of credit and utilization of credit. These Rules provide for availment and utilization of credit on excise duty, additional excise duty imposed under other legislations / notifications and cess, surcharge etc imposed vide various notification. These Rules cannot be interpreted to be applicable only within the frame work of Central Excise Act, 1944. The imposition of cess is in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has come forward to issue a show cause notice on the ground that, while paying the duty by using the scrips, the petitioner also paid the education cess to the tune of Rs. 66,66,582/-. That kind of payment for other heads other than the duty or additional duty of customs cannot be paid through MEIS scrips. Therefore, insofar as the said amount is concerned, that was demanded with interest and also it was proposed to impose the penalty under Section 117 of the Customs Act. This is how the show cause notice was issued on 19-11-2019, which was responded by the petitioner on 2-12-2019, where the petitioner by citing Circular No. 2/2020, dated 10-1-2020, has sought for the benefit especially, in the context of clause 11 referred to above. 19. When that was considered, the Customs department has come to a conclusion that, if at all any duty or additional duty had been paid using scrips that could be accepted as a payment of the revenue and insofar as the other payments like the education cess or higher education or secondary education cess are concerned, the same cannot be treated as form part of the customs duty or additional customs duty. Therefore, since it is a different compone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rate of two per cent., 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) the safeguard duty referred to in Sections 8B and 8C of the Customs Tariff Act, 1975; (b) the countervailing duty referred to in Section 9 of the Customs Tariff Act, 1975; (c) the anti-dumping duty referred to in Section 9A of the Customs Tariff Act, 1975; and (d) the Education Cess on imported goods. (2) The Education Cess on imported goods shall be in addition to any other duties of customs chargeable on such goods, under the Customs Act, 1962 or any other law for the time being in force. (3) The provisions of the Customs Act, 1962 and the rules and regulations 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 imported goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her duties of customs chargeable on such goods, under the Customs Act, 1962 or any other law for the time being in force and the Education Cess chargeable under section 94 of the Finance (No. 2) Act, 2004. (3) The provisions of the Customs Act, 1962 and the rules and regulations 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 Secondary and Higher Education Cess on imported goods as they apply in relation to the levy and collection of the duties of customs on such goods under the Customs Act, 1962 or the rules or the regulations made thereunder, as the case may be." 24. In Section 126 of the Finance Act, 2007, a cess to be called the Secondary and Higher Education Cess, to fulfil the commitment of the Government to provide and finance secondary and higher education shall be levied. Therefore, the levy of secondary or higher education cess was first introduced in Finance Act, 2007, by the aforesaid Section 126. In the very same Finance Act, Section 129 makes it clear that the secondary and higher education cess levied under Section 126, in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view of the aforestated legal position, is untenable and unacceptable. 27. The quoting of the Hon'ble Supreme Court judgment in Unicorn Industries case is a wrong fitment of the citation, as the issue decided in the said case, in fact the principle enunciated in that case if it is culled out, certainly would support the case of the petitioner and not the respondent. Therefore, this Court has no hesitation to state that, the reasons stated in the impugned order rejecting to give the benefit under Circular No. 2/2020 is not supported by any legal basis. Therefore, the said reasons are unsustainable and therefore, based on such reason, since the rejection has been made through the impugned order, it is also equally unsustainable. Hence, it is liable to be interfered with. 28. In view of the aforesaid discussions, this Court is inclined to pass the following orders : "The impugned order is hereby quashed. As a sequel, there shall be a direction to the respondent to give the benefit of Clause 11 of Circular No. 2/2020, dated 10-1-2020 to the petitioner." 29. With the above directions, the writ petition stands allowed. However, there shall be no order as to costs. Consequentl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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