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TMI Blog2024 (8) TMI 1327X X X X Extracts X X X X X X X X Extracts X X X X ..... nit in Reliance Jamnagar SEZ. In the said SEZ, the Respondent manufactures Motor Spirit (MS), High Speed Diesel (HSD) and Aviation Turbine Fuel (ATF) which fall under Sub-Headings 27101241, 27101944 and 27101939 respectively of the Fourth Schedule to the Central Excise Act 1944. 1.2 The said goods manufactured in a SEZ are excluded from the charge of Excise Duty (Central Value Added Tax) levied under Section 3 (1) of the Central Excise Act 1944, which reads as follows: "3. (1) There shall be levied and collected in such manner as may be prescribed a duty of excise to be called the Central Value Added Tax (CENVAT) on all excisable goods (excluding goods produced or manufactured in special economic zones) which are produced or manufactured in India as, and at the rates, set forth in the Fourth Schedule" (emphasis supplied) 1.3 Since goods manufactured by the Respondent in SEZ unit are excluded from the charge of the Excise duty levied under said Section 3(1), the Respondent was not paying such Excise duty on the MS, HSD and ATF manufactured by the Respondent SEZ unit and removed from the SEZ by way of export. 1.4 Further, since the Surcharge (SAED) and the Roa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter by amending the Eighth Schedule to the Finance Act 2002, by insertion of Sr. No.4 in the said Eighth Schedule. Accordingly, with effect from 1-7-2022, ATF became liable to SAED at the rate of Rs.6/- per liter. d) That by Notification no.10/2022-CE dated 30-6-2022, partial exemption from AED (Road and Infrastructure Cess) in excess of Rs.1 per liter on MS and HSD, cleared for export, was granted with effect from 1-7-2022, in exercise of powers under Section 5A of the Central Excise Act 1944 read with Section 112 of the Finance Act 2018. Accordingly, with effect from 1-7-2022 the effective rate of AED on MS and HSD manufactured and cleared for export was Rs.1 per liter. e) That by Notification No.19/2022-CE dated 19-7-2022, issued in exercise of powers under Section 5A of the Central Excise Act 1944 read with Section 147 of the Finance Act 2002 and Section 112 of the Finance Act 2018, SAED on MS, HSD and ATF and AED on MS and HSD, when exported from SEZ unit, were exempted with effect from 20-7-2022. f) Based on the aforesaid provisions, the department was of the view that during the period 1-7-2022 to 19-7-2022, MS, HSD and ATF manufactured in an SEZ unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to reject the said refund application on the ground that SAED (Surcharge) and AED (Cess) were payable on MS, HSD and ATFwith effect from 1-7-2022 under the said Notification no.4/2022-CE dated 30-6-2022, Notification No.5/2022-CE dated 30-6-2022 and Notification no.10/2022-CE dated 30-6-2022 and that it was only with effect from 20-7-2022 that Notification No.19/2022-CE dated 19-7-2022 granted exemption from the SAED (Surcharge) and AED (Cess) to MS, HSD and ATF when exported from SEZ. The Show Cause Notice further contended that the SAED (Surcharge) and AED (Cess) had been self-assessed and paid by the Respondent and that the Respondent should have filed appeal against the same to the Commissioner (Appeals) and that since no such appeal was filed, the Respondent was not entitled to claim refund of the said SAED and AED. 1.9 The Respondent replied to and contested the said Show Cause Notice by their letter dated 13-10-2023, inter alia submitting as follows: a) That the levies of the Surcharge and Cess by the two Finance Acts in question, if viewed in isolation on standalone basis, lack certainty and completeness in respect of the four components of Tax laid down by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot at the same time, be treated as having been manufactured in India and be made liable to any form of Excise duty, f) that without prejudice to the aforesaid submissions, in any event, the very issuance of Notification no. 19/2022-CE dated 19-7-2022, exempting SAED (Surcharge) and AED (Cess) on MS, HSD and ATF when exported from SEZ, is an acknowledgment and realization on the part of the Government that the said goods manufactured in a SEZ cannot be made liable to the said Surcharge and Cessand consequently the same must be considered as being clarificatory in nature, g) that the contention that the payment under protest was in nature of self-assessment and that Respondent should have preferred appeal against the self-assessment of the SAED (Surcharge) and AED (Cess) to the Commissioner (Appeals) is totally misconceived since appeal to the Commissioner (Appeals) under Section 35 of the Central Excise Act 1944 lies only against any decision or order passed under the said Act by a Central Excise officer, lower in rank than a Principal Commissioner and that the so-called self-assessment is not such decision or order passed by such Central Excise officer. 1.10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oleum products and the specific rate of duties were imposed on the export of these products. So, the duties were properly imposed under the notification by the Government. 2.2 It appears that after few days of the imposition of the duties on export of the petroleum products, the government had taken the stock of the situation. After analysing everything in proper manner, the government has decided to exempt the petroleum products i.e. HSD, MS and ATF from the imposition of Special Additional Excise Duty and Additional Excise Duty, when they have been exported from SEZ. The goods were exempted from these duties from 20.07.2022 and the date was clearly mentioned in the notification itself. So, the intention of the government was clear that the exemption to these duties in SEZ will be applicable from 20.07.2022. So when a specific date has been given in the notification for the implication, there cannot be taken any argument to effect that the exemption should be read as retrospectively. 2.3 In this regard, further attention is invited to Para 19 of the subject Show Cause Notice which reads as under: "In this regard, it appears that levy of Special Additional Excise Duty is leviab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Acts is separate from the levy imposed under the Central Excise Act. These levies are independent and are not subject to Central Excise Act. 2.7 Further it is to submit that new levy can be imposed under the Finance act. Also the rates of the existing levies can be increased. Reliance is placed on the decision of Supreme Court in the case of Madurai Distt. Central Cooperative v/s The Third Income Tax Officer, Madurai dated 28.07.1975. 2.8 Further, reference is invited to the judgement of the Hon'ble High Court of Karnataka in the case of RM Dhariwal (Huf) vs Union of India dated 04.01.2022, whereby he submits that the Hon'ble court held that levy of surcharge i.e. NCCD by way of provision under the Finance Act of 2001 is not open to be questioned. 2.9 In this regard, reliance is also placed on the decision of Hon'ble High Court of Delhi in the case of Orient Papers Mills Limited Vs Deputy Director of Inspection, Customs and Central excise and others' (1982(10) ELT 247 (Del). 2.10 Attention is invited to the provisions of section 147 (3) of The Finance Act, 2002; which reads as under- "The provisions of the Central Excise Act, and the rules made thereund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Unicorn Industries Vs Union of India - 2019 (370) E.L.T. 3 (S.C.), where discussed the exemption to other duties of Excise in scenario where the Basic Excise Duty is exempted and held that when notification exempts basic excise duty, other duties will not be automatically eligible to the same exemption. 2.16 Similar view had been taken by Hon'ble Supreme Court earlier too in case of Union of India VsModi Rubber Ltd 1986 (25) E.L.T. 849 (S.C.) 2.17 Reliance is further placed upon decision of Hon'ble High Court of Karnataka in case of 'Ghodawat Packers LLP Vs. Union of India' {2022(382) ELT 300 Kar)}, where it was observed by the Hon'ble Court- "NCCD is a surcharge and a type of excise duty which can be levied independently of the excise duty as contemplated under the provisions of Fourth schedule to the Central Excise Act, 1944. Thus levy of NCCD in the absence of levy of excise duty cannot be considered as bad in law." 2.18 While passing the order-in-appeal, the Commissioner (Appeals) had conveniently ignored the law position settled by the Hon'ble Supreme Court of India. Here it's worth to mention the basic principle of law that the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst of all, it is very clear that a duty of Customs would be a duty that has been notified by the Customs Act, 1962 and similarly, a duty of excise would be a duty that has been notified by the Central Excise Act, 1944. Such duties, which have been passed by Legislation, cannot be interpreted to be inter-changed in a generalized manner between Customs and Central Excise. These are two totally different Acts and have to be seen as such. Duty of Excise is levied on the activity of manufacture and collected at the time when the goods are cleared. Hence, levy and collection of the duty are two different events and since the goods have been cleared to the export rather than the Domestic area, the nature of duty cannot be changed to Customs duty. Reliance is placed on the Judgment of Apex Court in case of 'Vazir Tobbaco Company'. 2.24 Further, it appears that the Commissioner (Appeals) has misinterpreted the reading of Section 26 (a) and 26 (b) of the SEZ Act. In Section 26(a), while interpreting the exemption from any duty of customs, it appears that shelter has been taken of 'or any other law for the time being in force'. The strict interpretation keeping in view the ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce is also placed on the judgement of the Hon'ble High Court of Judicature for Andhra Pradesh in Tirupati Udyog Ltd Versus Union of India 2011 (272) E.L.T. 209 (A.P.). 2.28 The Commissioner (Appeals) in his order has held that the Notification should be applied retrospectively. He had recorded that there was the continuous policy of the government not to impose any tax on the export undertaken by the SEZ. There was no intention of government to impose duty on SEZ export. That was the reason on realising, the government had issued the exemption notification and waived the duty on the goods exported by SEZ, where the goods exported by the domestic Units were continued to subject of export duty. 2.29 The argument taken by the respondent looks attractive, but fails on merit. First, it was the conscious decision of the government to impose the export duty on the petroleum goods cleared for export and Notifications number 04/2022, 05/2022 and 10/2022 were issued to give it effect. Later on, when government had issued the Exemption notification 19/2022 dated 19.07.2022, it was specifically mentioned in the Notification that it shall have effect from 20.07.2022. If the governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the case of 'Commissioner of Customs, Mumbai Vs Dilip Kumar & Company' (2018 (361) ELT 577 SC). 2.33 Further it is also the settled law that the principles of 'Casus Omissus' cannot be applied by the courts while interpreting the provisions of statute. In this regard, reliance is placed on the decision of Hon'ble Supreme court in the case of 'Padmasundara Rao (dead) and ors Vs State of Tamilnadu and ors (2002 (3) SCC 533) and on the decision of Hon'ble High Court of Madras in the case of The Commissioner of Income Tax Vs TVS Lean Logistics Ltd. 2.34 Commissioner (Appeals) has heavily relied upon the decision of the Hon'ble Supreme Court in the case of Govind Saran Ganga Saran, wherein it was held that for there to be a valid levy, four aspects viz. (i) character or nature of impost attracting the taxable event (ii) person on whom levy is imposed and is liable to discharge the levy (iii) rate of tax and (iv) the measure or value to which the rate is to be applied have to be clearly spelt out. In this regard, it is required to be mentioned that this Hon'ble Tribunal itself is a creature of statute and derives its jurisdiction and powers on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Commissioner (Appeals) suffers with the legal infirmities and bad in law, where he has wrongly allowed the appeal filed by the respondent. Hence, the Hon'ble Tribunal is requested to allow the appeal filed by the department against the order-in-appeal and restore the OIO passed by the AC in this matter. 2.39 He placed reliance upon the following judgements, some of which were also discussed in foregoing paras:- * Madurai Distt Central Cooperative Bank Ltd...vs The Third Income-Tax Officer, Madurai Passed by Hon'ble SC in appeal No 1795 of 1970 * All India Fedn. Of Tax Practitioners v UOI - 2007 (7) STR 625 (SC) * 1983(14) ELT 2270 (Kar)- Passed by Hon'ble High Court of Karnataka in the case of British Physical Laboratories India Ltd Vs AC, DRI * 1984(16) ELT 47(Ker)- Passed by Hon'ble High Court of Kerala in the case of Raja Lakshmi Mills Ltd Vs Uol & Others * 2000(120) ELT 53 (SC)- Passed by Hon'ble SC in the case of Kathayee Cotton Mills Ltd Vs Uol * 2011(267) ELT 28(Kar)- Passed by Hon'ble High Court of Karnataka in the case of Commissioner of CEx, Bangalore Vs Biocon Ltd * 2010(20) STR 591 (Mad)- Passed by Hon'ble High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s viz. taxable event, person on whom the levy is imposed and Measure. The said Sections therefore, under subsection (3) thereof, expressly refer to and adopt the provisions of the Central Excise Act and Rules relating to levy of Excise duty under the said Act and make the same applicable to levy of the Surcharge and Cess under the said two Finance Acts and thereby give completeness and certainty to all the said components. The provisions of the Central Excise Act relating to levy of Excise duty under the said Act having been made applicable to levy of the Surcharge and Cess under the said two Finance Acts, it would follow that the exclusion of goods manufactured in SEZ from the charge/ levy under the Central Excise Act 1944 would equally apply to the levy of the Surcharge and Cess under the said two Finance Acts and consequently goods manufactured in SEZ are not liable to the said Surcharge and Cess, c) The taxable event in the said two Finance Acts is uncertain and vague since the charging provision therein viz. Section 147 (1) and Section 112(1) respectively, merely refer to manufacture without any reference to the taxable territory in which such manufacture should take p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inance Act 2002 and 112 of the Finance Act 2018 become clear, definite and certain by reason of the adoption under Sections 147 (3) and 112 (3) of the provisions of the Central Excise Act and Rules made thereunder relating to levy and collection of the Excise duty thereunder and by applying the same to the levy and collection of the said Surcharge and cess respectively, g) The result of such application of the provisions of the Central Excise Act and Rules made thereunder relating to levy of the Excise duty to the levy of the said Surcharge and cess is that the scope of levy of the said Surcharge and Cess cannot cover goods manufactured in SEZ since the same are excluded from the charge and levy under Section 3(1) of the Central Excise Act 1944, h) Section 147 (3) of Finance Act 2002 and Section 112 (3) of Finance Act 2018 adopt and apply the provisions of the Central Excise Act and the rules thereunder relating to levy of Excise duty, as far as may be, to the levy of the said SAED (Surcharge) and AED (Cess). As laid down by the Hon'ble Supreme Court in Dr. Pratap Singh and anr v Director of Enforcement - (1985) 3 SCC 72, the expression "as far as may be" means to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has merely on interpretation of the provisions of Section 147 of Finance Act 2002 and Section 112 of Finance Act 2018 held that the SAED (Surcharge) and AED (cess) levied by the said provisions do not cover within their scope, goods manufactured in SEZ. Decision of Five Judges Bench of Hon'ble Supreme Court in the case of Ujagar Prints v UOI - 1988 (38) ELT 535 (SC) clearly supports the Respondent's case: 3.6 Briefly stated, the facts in this case were that the definition of "manufacture" in Section 2 (f) of the Central Excise Act 1944 was widened by Amending Act of 1980 to cover the processes of Bleaching, Dyeing, Printing, Sizing, Mercerizing, etc. Section 3(1) of the Additional Duties of Excise (Goods of Special Importance) Act 1957 levied on certain fabrics produced or manufactured in India, Additional duty of Excise and Section 3(3) of the said Act provided that the provisions of the Central Excise Act 1944 and Rules thereunder, shall so far as may be, apply in relation to the levy and collection of additional duties as they apply in relation to the levy and collection of the Excise duty under the Central Excise Act. 3.7 One of the issues which arose for consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty were borrowed and made applicable by the Additional Duties Act for the purposes of additional duty of excise. It was held by the Hon'ble Court in Pioneer Silk Mills P. Ltd case that when the Additional Duties Act borrowed the provisions of the Central Excise Act 1944 relating to levy and collection, that did not make the provisions of Central Excise Act 1944 relating to confiscation of goods and imposition of penalty applicable for purposes of the Additional duty. The present case is not one relating to confiscation and penalty but relates to levy of duty to which the ratio of decision in Ujagar Prints squarely applies. 3.11 Notification No.5/2022-CE dated 30-6-2022 amended the Eighth Schedule to the Finance Act 2002, by inserting Sr. No.4 which imposed SAED (Surcharge) on ATF at the rate of Rs.6/- per liter. Clearly, the power to amend the Eighth Schedule of the Finance Act 2002 by means of a Notification issued by the Government is traceable to Section 147 (3) of the said Act read with Section 3B of the Central Excise Act 1944. The said Section 3B which gives emergency power to the Central Government to increase duty of excise under Section 3, by its very nature cannot be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Orissa - (1983) 2 SCC 82. In support of his case, he also placed reliance on the following judgments:- * Md. Safi v State of Bengal - AIR 1951 Cal 97 * Sarojini Tea Co P. Ltd v Collector - (1992) 2 SCC 156 * Maheshwari Mills Ltd v UOI- 1992 (58) ELT 9 (Guj) 3.16 It also follows from a conjoint reading of Articles 270 and 271 of the Constitution of India, that a Surcharge is an increase in an existing duty or tax. Article 270 provides that all duties and taxes referred to in the Union List (with a few exceptions which are not relevant for our purpose) shall be levied and collected by the Government of India and shall be distributed between the Union and the States. Article 271 then provides that the duties or taxes so levied may at any time be increased by Parliament by a surcharge for purposes of the Union. It therefore follows that while the basic excise duty is levied and collected by the Union and has to be distributed between the Union and the States, such duty may be increased by way of surcharge, which shall only be for the purposes of the Union and is not to be shared with the States. It therefore follows that surcharge is in the nature of increase of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided in Jammu and Kashmir or on negative list of services. The department has never demanded Krishi Kalyan Cess on services provided in Jammu and Kashmir or on negative list of services. This is for the obvious reason that Section 161 (5) of the Finance Act 2016 has adopted and borrowed the provisions of Chapter V of the Finance Act 1994 relating to levy of service tax and made them applicable to levy of Krishi Kalyan Cess. By reason of the provisions of said Chapter V relating to levy of Service tax having been made applicable to levy of Krishi Kalyan Cess, it would follow that whatever is excluded from the scope of the charge/ levy of service tax is equally excluded from the scope of levy of the Krishi Kalyan Cess viz. services provided in Jammu and Kashmir and negative list of services. 3.22 The aforesaid reasoning equally applies to the Additional Duties of excise levied under Section 147 of Finance Act 2002 and Section 112 of Finance Act 2018 which have borrowed and applied the provisions of Central Excise Act 1944 relating to levy of Central Excise duty to the levy of Additional duties under the said two Finance Acts. It would therefore follow that since goods manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ured in SEZ are not at all subject to the levy of the said Surcharge and Cess, no exemption Notification for the same is at all required. 3.27 In support of the aforesaid submissions, reliance is placed on the decision of the Hon'ble Supreme Court in the case of CCE v Larsen and Toubro Limited - 2015 (39) STR 913. Alternate Submissions: SEZ Act 2005 is a complete code in itself and has overriding effect on other laws: 3.28 Without prejudice to the aforesaid submissions, even if one takes a view that exception provided in Section 3(1) to goods produced or manufactured in Special Economic Zones, cannot be made applicable while interpreting the provisions of the two Finance Acts, referred to above, any levy of surcharge and cess under the said two Finance Acts cannot be justified or sustained since such an interpretation would be wholly inconsistent and contrary to the object and framework of SEZ law. 3.29 Without prejudice to the aforesaid submissions, in any event, it is submitted the SEZ Act 2005, which under Section 53 deems SEZ to be a territory outside the customs territory of India and therefore treats bringing of goods from SEZ to Domestic tariff area as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ured in and exported from SEZ, in fact is an acceptance and acknowledgement by the Government that goods manufactured in SEZ cannot be subject-matter of levy of any form of Excise duty. Therefore, the said Notification must be considered to be clarificatory in nature and therefore retrospective. It is made clear that this submission is only in alternative and without prejudice to the primary submission that the said goods manufactured in SEZ are outside the scope of the very levy of the said SAED (Surcharge) and AED (Road and Infrastructure Cess) and therefore no exemption notification is at all required. 3.32 Without prejudice to the above, since the very inception of the SEZ Act, 2005 in fact even prior thereto, no duties of excise have ever been levied or collected on goods manufactured and removed from a SEZ. The Notifications which were issued on 30.06.2022 brought about certain changes in the effective rate of excise duty under the Central Excise Act as also the two Finance Acts, referred to above, all of which were products specific, however, none of them either specifically or implicitly suggested that the same would apply to goods manufactured and removed from a SEZ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 3(1). It has been the specific case of the Respondent that goods manufactured in SEZ were excluded from the charge under said Section 3 (1) and therefore not covered by the charge under said Section 3 (1) and it has never been the case of the Respondent that the goods manufactured in SEZ were exempted by some Notification issued under the Central Excise Act 1944. Consequently, the arguments of the department proceed on an incorrect understanding of the Respondent's case and hence the decisions relied upon by learned Authorized representative in support of such arguments are of no significance. 3.35 Had it been the Respondent's case that goods manufactured in SEZ are exempted from Central Excise duty levied under Section 3 (1) of the Central Excise Act 1944 by means of a Notification issued under that Act and that such exemption Notification would ipso facto apply to the SAED (Surcharge) and AED (Cess) since Section 147 (3) of the Finance Act 2002 and Section 112 (3) of the Finance Act 2018 had borrowed the provisions of Central Excise Act 1944 including those relating to exemption, that would have been untenable in law in view of the decision of the Hon'ble Supreme Court in Uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imagination, imply levy on SEZ units when the provisions of section 3(1) remained unchanged 3.39 Reliance placed by learned Authorized representative on Notification No.8/2022-CE dated 30-6-2022 is totally misplaced. The said Notification has no relevance whatever to the present case. The very fact that the said Notification grants exemption from the Basic Excise duty levied under Section 3 (1) of the Central Excise Act 1944, itself means that it applies to goods which are covered by the levy/ charge under said Section 3 (1). The very fact that goods manufactured in SEZ are excluded from the levy/charge under said Section 3 (1) would mean that the said Notification has no relevance to goods manufactured in SEZ. 3.40 The contention of the Authorised Representative on behalf of the revenue that if it was the intention of the Central Government to exempt goods manufactured in a SEZ, from the surcharge and cess leviable under the two Finances Act, referred to above, then an exemption notification similar to Notification No. 8/22-CE dated 30.06.2022 would have been issued, this submission is untenable and misplaced in as much as the question of granting exemption would hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposed on part of the Banking income which was exempt from Income tax. This contention was rejected by the Hon'ble Supreme Court. This decision has no application in the present case since in the present case the goods manufactured in SEZ are not exempted from excise duty but are excluded from the very charge of excise duty and therefore cannot be liable to surcharge as held in Ashok Service Centre. 3.43 The decisions in Associated Cement Co Ltd v Director of Inspection and Orient Paper Mills Ltd v Dy Dir of Inspection- 1982 (10) ELT 247 relied upon by learned AR have no application to the facts of the present case. In those cases, Section 280ZD of the Income Tax Act 1961, provided for grant of tax credit certificate by way of incentive for increased production of Cement. The amount of tax credit to which a manufacturer of cement was entitled was calculated at a rate not exceeding 25% of the amount of duty of excise payable by him on the quantity of excess production during the financial year as compared to the production in the base year. Section 280ZD (6) (b) defined the expression "duty of excise" for the said purpose to mean duty of excise leviable under the Central Excise and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Central Excise duty to the levy of the said SAED and AED. Such was not the case with Chapter V of the Finance Act 1994 by which Service tax was introduced, with which Supreme Court was concerned in the said case. Reliance placed by Learned AR for department on Proviso to Section 5A of the Central Excise Act 1944 is untenable: 3.46 Learned Authorized Representative for department relied upon Clause (i) of the Proviso to Section 5A (1) of the Central Excise Act 1944, which provides that an exemption Notification issued under Section 5A (1) shall not apply to goods which are produced or manufactured in SEZ and brought to a place in India unless the Notification specifically provides that it shall apply to such goods. Based on the said Proviso, it was contended by learned AR that the very fact that the said Proviso contemplates that an exemption Notification issued under Section 5A (1) can specify that it shall apply to goods produced or manufactured in SEZ, would show that goods produced or manufactured in SEZ are liable to Central Excise duty. The said contention is untenable for reasons herein after set out. 3.47 When Section 3(1) of the Central Excise Act 1944 specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CHAPTER I PRELIMINARY 1. Short title and commencement. - (1) This Act may be called the Finance Act, 2002. (2) Save as otherwise provided in this Act, sections 2 to 116 shall be deemed to have come into force on the 1st day of April, 2002. ------------------------------------------------------------------------------ 147. Special additional excise duty. - (1) In the case of goods specified in the Eighth Schedule, being goods manufactured, there shall be levied and collected, for purposes of the Union, by surcharge, a duty of excise, to be called the Special Additional Excise Duty, at the rates specified in the said Schedule. (2) The Special Additional Excise Duty chargeable on goods specified in the Eighth Schedule shall be in addition to any other duties of excise chargeable on such goods under the Central Excise Act, or any other law for the time being in force. (3) The provisions of the Central Excise Act, 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 Special Additional Excise Duty l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or produced, at the rates specified in the said Schedule for the purpose of financing infrastructure projects. The (2) cess leviable under sub-section (1), chargeable on the scheduled 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. The provisions of the Central Excise Act, (3) 1944 (1 of 1944) and the rules made thereunder, including those relating to assessment, non-levy, short levy, refunds, exemptions, interest, appeals, offences and penalties shall, as far as may be, apply in relation to the levy and collection of the cess leviable under this section in respect of scheduled goods as they apply in relation to the levy and collection of the duties of excise on scheduled goods under the said Act or the rules, as the case may be. --------------------------------------------------------------------------------------------- THE SIXTH SCHEDULE [See sections 111 and 112] Item No. Description of goods Rate of duty (1) (2) (3) 1. Motor spirit, commonly known as petrol 2 [Rs. 18 per litre] 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation No.19/2022-CE dated 19.07.2022 the aforesaid duties levied under Section 147 of the Finance Act, 2002 and Section 112 of the Finance Act,2018 on MS, HSD and ATF were exempted w.e.f. 20.07.2022 when exported from SEZ unit. The respondent in view of the above statutory provisions, paid the duties on the export of the goods 'UNDER PROTEST' on the ground that the respondent's unit being a SEZ unit is not required to pay the aforesaid duties, hence they filed a refund claim which was rejected by the sanctioning authority. However, the same was sanctioned by Learned Commissioner (Appeals) in the impugned order, against which this appeal is filed by the Revenue contending that the duties of the SAED and AED were levied under an independent Finance Act, 2002 and 2018 respectively and particularly when the Notification No.19/2022-CE dated 19.07.2022 issued under Section 5(A) of Central Excise Act, 1944 exempts from the duties of SAED and AED only when cleared for export from SEZ unit. 4.1 It is the contention of the revenue that prior to this Notification dated 19.07.2022 SEZ was also required to pay SAED and AED levied under Section 147 of the Finance Act,2002 and under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r place in India, shall be an amount equal to the aggregate of the duties of customs which would be leviable under the Customs Act, 1962 (52 of 1962), or any other law for the time being in force, on like goods produced or manufactured outside India if imported into India, and where the said duties of customs are chargeable by reference to their value, the value of such excisable goods shall, notwithstanding anything contained in any other provision of this Act, be determined in accordance with the provisions of the Customs Act, 1962(52 of 1962) and the Customs Tariff Act, 1975 (51 of 1975). Explanation 1.-Where in respect of any such like goods, any duty of customs leviable for the time being in force is leviable at different rates, then, such duty shall, for the purposes of this proviso, be deemed to be leviable at the highest of those rates. Explanation 2.-In this proviso,- 2 (i) Omitted (ii) "hundred per cent export-oriented undertaking" means an undertaking which has been approved as a hundred per cent export-oriented undertaking by the Board appointed in this behalf by the Central Government in exercise of the powers conferred by section 14 of the Industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 3 of Central Excise Act, 1944, it clearly provides that not only the levy of duty of excise as mentioned under Section 3 (1) (a) and/ or (b) but also SAED in terms of Section 147 of Finance Act, 2002 and AED in terms of Section 112 of Finance Act, 2018 will not be levied on the goods manufactured or produced in special economic zones whether cleared for DTA or for export. Therefore, in view of the clear statutory provision as reproduced above. In respect of goods manufactured or produced in special economic zones, no excise duty as well as SAED and AED is levied. 4.2 The Revenue contended for levying these duties, that since both the levies of SAED and AED were brought by Section 147 of Finance Act, 2002 and Section 112 of Finance Act, 2018 which are independent act and enacted by the Parliament, therefore, the same is leviable on SEZ units also. In this regard, we find that both the Sections 147 and 112 of the Finance Act, 2002 and 2018 respectively do specify in terms of sub Section (2) and (3) of the both the Sections that provision of Central Excise Act and Rules, in as much as, both the duties in addition to duties of Excise, are applicable in levy of the duty under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve. Further, in Para 18 of the judgment, the Hon'ble Supreme Court held that the word "additional" in said Section 3(1) involves the idea of joining or uniting one thing to another so as thereby to form one aggregate. It was accordingly held that the scope of the surcharge cannot take within its fold that which was not subject to the charge in the Principal Act and consequently the additional sales tax did not apply to a Dealer whose turnover was Rs.50,000/- and below and further the additional sales tax cannot be levied as multi-point tax. The ratio of the said decision squarely applies to the present case. In the present case the charge under the Principal Act i.e. Section 3(1) of the Central Excise Act 1944 does not extend to goods manufactured in SEZ and consequently the Additional duties viz. SAED (Surcharge) and AED (Cess) also cannot extend to goods manufactured in SEZ. 4.3 Learned Authorized Representative for the department sought to distinguish the said decision in Ashok Service Centre on the ground that Section 3(3) of the said Additional Sales Tax which adopted and applied the provisions of the Principal Act used the expression "shall mutatis mutandis apply" wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation No.19/2022-CE dated 19.07.2022 was issued the same will not alter the provision of Section 3 of the Central Excise Act 1944. 4.7 It is a settled law that the subordinate legislation cannot overrule the primary legislation. The primary legislation is enacted by parliament and under the said legislation the executive power is given to make laws in order to implement and administer the requirements of the primary legislation. Such law is the law made by a person or body other than the legislature but with the legislature's authority. Article 13(3) of the Indian Constitution includes within the definition of law forms of subordinate legislation such as order, rule, regulation, notification. Therefore, the subordinate legislation in the present case i.e. Notification No.19/2022-CE dated 19.07.2022 which was issued contrary to the provision of Section 3 of Central Excise Act read with Section 147 and 112 of Finance Act, 2002 and 2018 respectively. Hence the same cannot prevail over the primary legislation. The Revenue vehemently argued that this Tribunal being a creature under the Central Excise Act and Custom Act cannot ignore the Statutory Notification provided under 19/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion from service tax, to suggest that works contract were liable to service tax even prior to 1st June 2007. 4.8 We find force in the submission of the respondent that levy of SAED and AED are in isolation. The levies lack the completeness and certainty in respect of four components namely the taxable event, the person to whom levy is imposed and measure. This is the reason that Section 147 of 2002 Act and 112 of 2018 Act clearly provide that for the levy of these duties the provision of Central Excise Act and Rules made thereunder shall apply. Therefore, to arrive at the completion of the levy it is necessary that the Section 147 of Finance Act, 2002 and Section 112 of Finance Act, 2018 cannot alone be applied for the levy of SAED and AED. To give completeness, the provision of the said both the Sections to apply along with the relevant provision of Section 3 of the Central Excise Act which clearly exclude the SEZ unit, the levy of SAED (surcharge )and AED (Cess) cannot be levied on the SEZ unit. It is also undisputed that Section 147 and 112 of Finance Act, 2002 and 2018 respectively do not provide any reference to the taxable territory which otherwise provide under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of SAED, RIC and AIDC under respective Finance Acts, has already been levied and collected. 4.2 Faced with the challenge of justifying how a clearance which is regarded as an import into India and applicable customs duties recovered on the same could be subjected to a levy of Central Excise duty in addition to additional duty under Section 3(1) of Customs Tariff Act, the Adjudicating Authority has in para 3.4.5.1 and 3.4.5.2 concluded that "............. consequently, it is safe to conclude that the clearance from the SEZ unit to the DTA is normal clearance of manufactured goods within India i.e. domestic tariff area and all the levy duty, SEZ created under Central Law enactments in respect of clearance of manufacture goods shall apply............." 4.3 It is indeed shocking as to how the Adjudicating Authority could have concluded that the removal from the SEZ to the DTA is just a normal clearance of manufactured goods within India, when Section 30 of the SEZ Act stipulates that, any goods removed from the SEZ will be chargeable to duties of customs, as leviable on such goods when imported. Further, Rule 47 of the SEZ Rules, 2006 envisages that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le that duty is payable on goods cleared into DTA from 100% EOU should be on par with duty leviable on goods imported into the country from abroad. 4.6 The ratio laid down by the Larger Bench of this Tribunal applies in all force to the present factual situation also, in as much as an SEZ is deemed to be a territory outside the customs territory of India for undertaking authorized operations. It is for this reason that on clearances from the SEZ to the DTA, duties of customs as leviable on such goods when imported into India is a required to be discharged, this being the case there cannot be any logic or rational in requiring the SEZ to pay duties and taxes higher than those payable on imports of goods into the country. If the reasoning propounded by the Adjudicating Authority is accepted then on clearance from the SEZ to the DTA the goods would have to once again suffer the duties of SAED/RIC and AIDC, under the Finance Acts as a duty of excise, which already from a part of addition duty under section 3(1) of Customs Tariff Act. Such an interpretation cannot be countenanced as it would lead to an invidious situation of removal from the SEZ to DTA, being tax higher than im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout the support and reference to the provisions of the Central Excise Act, 1944 and the Rules made thereunder relating to levy and collection, as made applicable in terms of Section 147(3)/112(3)/125(4) of Finance Acts 2002/2018/2021 respectively. We will first deal with this aspect as it goes to the very fulcrum of the proceedings initiated against the Appellant. For doing so we are extracting herein below the relevant provisions of the Finance Act, 2002, 2018 and 2021. Relevant extracts of Finance Act, 2002: 147. Special additional excise duty . - (1) In the case of goods specified in the Eighth Schedule, being goods manufactured, there shall be levied and collected, for purposes of the Union, by surcharge, a duty of excise, to be called the Special Additional Excise Duty, at the rates specified in the said Schedule. (2) The Special Additional Excise Duty chargeable on goods specified in the Eighth Schedule shall be in addition to any other duties of excise chargeable on such goods under the Central Excise Act, or any other law for the time being in force. (3) The provisions of the Central Excise Act, and the rules made thereunder, including those relating to refunds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehalf, utilise such sums of money of the Agriculture Infrastructure and Development Cess levied under this section for the purposes specified in sub-section (1), as it may consider necessary. (3) The cessleviable under sub-section (1), chargeable on the scheduled 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. (4) The provisions of the Central Excise Act, 1944 (1 of 1944), and the rules and the regulations made thereunder, including those relating to assessment, non-levy, shortlevy, refund, exemptions, interest, appeals, offences, and penalties shall, as far as may be, apply in relation to the levy and collection of the cessleviable under this section in respect of scheduled goods as they apply in relation to the levy and collection of duties of excise on such goods under the said Act or the rules or regulations, as the case maybe. 4.9. To recapitulate, the four components identified by the Apex Court as constituting necessary and essential elements which have to be present in the taxing statute in a clear, unambiguous, and a definitive manner fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Service Tax law as provided for in Chapter V of the Finance Act, 1994, as also the provisions of the levy of Goods and Services Tax under the Central Goods and Services Tax Act, 2017 and as also the Integrated Goods and Services Tax Act, 2017 and see if they define the taxable event with reference to the location/territory. For ease of comparison we are extracting the charging provision under the Central Excise Act, 1944, the Customs Act, 1962, Service Tax law as provided for in Chapter V of the Finance Act, 1994, as also Central Goods and Services Tax Act, 2017 and the Integrated Goods and Services Tax Act, 2017: Central Excise Act, 1944 [SECTION 3. Duty specified in the Fourth Schedule to be levied. - (1) There shall be levied and collected in such manner as may be prescribed a duty of excise to be called the Central Value Added Tax (CENVAT) on all excisable goods (excluding goods produced or manufactured in special economic zones) which are produced or manufactured in India as, and at the rates, set forth in the Fourth Schedule : Provided that the duty of excise which shall be levied and collected on any excisable goods which are produced or manufactured by a hundred p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson to another and collected in such manner as may be prescribed.] (52) "taxable territory" means the territory to which the provisions of this Chapter apply; SECTION 64. Extent, commencement and application. - (1) This Chapter extends to the whole of India except the State of Jammu and Kashmir. (2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. (3) It shall apply to taxable services provided on or after the commencement of this Chapter. Central Goods & Services Tax Act, 2017 SECTION 9. Levy and collection. - (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person. SECTION 8. Intra-State supply. - (1) Subject to the provisions of section 10, supply of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 (51 of 1975) on the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962 (52 of 1962). SECTION 7. Inter-State supply. - (1) Subject to the provisions of section 10, supply of goods, where the location of the supplier and the place of supply are in - (a) two different States; (b) two different Union territories; or (c) a State and a Union territory, shall be treated as a supply of goods in the course of inter-State trade or commerce. (2) Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-State trade or commerce. (3) Subject to the provisions of section 12, supply of services, where the location of the supplier and the place of supply are in - (a) two different States; (b) two different Union territories; or (c) a State and a Union territory, shall be treated as a supply of services in the course of inter-State trade or commerce. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legislature has consciously in sub-section 3 of Section 147 of the Finance Act, 2002, Sub-section 3 of Section 112 of Finance Act 2018 and Sub-section 4 of Section 125 of the Finance Act, 2021 stipulated that the provision of the Central Excise Act 1944 and the Rules made thereunder shall, as far as may be apply in relation to levy and collection of the duties under the Finance Acts, as they apply in relation to levy and collection of duties under the Central Excise Act, 1944 or the Rules made thereunder. In our view this statutory prescription has to be given a meaning and effect. If the provision for levy in sub-section (1) of Section 147/Section 112/Section 125 of the Finance Act 2002, 2018 and 2021 were enough to sustain the levy, then there would have been no need to provide that the provisions of the Central Excise Act, 1944 and the Rules made thereunder to be made applicable as far as may be, to levy and collection of duties under the relevant Finance Acts. 4.14. The expression "as far as may be" has been explained by the Apex Court in the case of Dr.Pratap Singh vs the Directorate of Enforcement reported in AIR 1985 SC 989 to mean that the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in the Special Economic Zones. This is the only way that the said charging sections can be made operational and effective, by reading in the provisions relating to levy and collection provided for under the Central Excise Act, 1944 and the Rules made thereunder. 4.18. We find that the adjudicating authority has not assigned any reason in the impugned order for rejecting the appellant's contention regarding levy under the Finance Acts being inapplicable to goods manufactured or produced in the Special Economic Zone. According to the Respondent since the levy under the Finance Acts was over and above the levy under the Central Excise Act, the provisions of the later Act could not have been invoked. This finding in our view is at odds with the specific provision under the Finance Acts providing for the provisions of the Central Excise Act and the Rules, made thereunder relating to levy and collection being applicable, as far as they may be, apply to levy and collection under the Finance Acts. 4.19. We also find force in the appellant's submission that had it not been for invocation of the provisions of the Central Excise Act, 1944 particularly Section 3B thereof, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angent by referring to Central Excise Laws (Amendment and Validation) Act, 1982 to contend that if under any Central Law, the levy and collection of the duty of excise is in terms of the provision of the Central Excise Act, 1944, then the exemption provided for in the Central Excise Act, 1944 would not ipso facto apply to the levy of duty of excise under the other Central Acts. In support of this proposition, reliance is also being placed on the judgement of the Apex Court in the case of Unicorn Industries vs UOI reported in 2019 (370) ELT 3. We find that in the case of Unicorn Industries the issue in dispute was whether the exemption from levy of Central Excise duty provided for under the Central Excise Act, 1944 would ipso facto result in exemption being extended from the levy of Education cess under the Finance Act, 2004 as also NCCD under the Finance Act, 2001 and Additional Excise duty (Pan Masala and Tobacco Products) under Finance Act, 2005. The Apex Court did not agree with the assessee's contention therein that an exemption granted from the levy of Central Excise duty under the Central Excise Act, 1944 would ipso facto apply to the levy of other excise duties under the oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with regard to levy and collection of Central Excise duty, to the extent they are not inconsistent, apply equally to the provisions of the Finance Act and accordingly the levy under the Finance Act will apply to goods manufactured or produced in India, other than the goods produced or manufactured in SEZ. 4.25. We also find substance in the appellant's contention to the effect that the duties under the concerned Finance Acts, being in addition to any other duty of excise, chargeable on such goods under the Central Excise Act, is a clear indication that the levy under the relevant Finance Acts is in itself in the nature of a duty of excise chargeable on goods under Section 3 of the Central Excise Act, 1944. Further the use of the expression 'in addition to any other duties of excise' makes it clear that when no other duty of excise can be levied on goods manufactured in an SEZ by virtue of Section 3 of the Central Excise Act, the levy under the respective Finance Acts, being in addition to a nil excise duty is not contemplated or permitted under the respective Finance Acts. 5. In light of the above discussions, we hold that the impugned order is not sustainable and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions by the Developer or entrepreneur (d) drawback or such other benefits as may be admissible from time to time on goods brought or services provided from the Domestic Tariff Area into a Special Economic Zone or Unit or services provided in a Special Economic Zone or Unit by the service providers located outside India to carry on the authorised operations by the Developer or entrepreneur (e) exemption from service tax under Chapter V of the Finance Act, 1994 (32 of 1994) on taxable services provided to a Developer or Unit to carry on the authorised operations in a Special Economic Zone: (f) exemption from the securities transaction tax leviable under section 98 of the Finance (No. 2) Act, 2004 (23 of 2004) in case the taxable securities transactions are entered into by a non-resident through the International Financial Services Centre, (g) exemption from the levy of taxes on the sale or purchase of goods other than newspapers under the Central Sales Tax Act, 1956 (74 of 1956) if such goods are meant to carry on the authorised operations by the Developer or entrepreneur (2) The Central Government may prescribe the manner in which and, the terms and conditions subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply to the additional excise duty. Therefore, SAED and AED levied through independent Section 147 of Finance Act, 2002 and Section 112 of the Finance Act, 2018 should be treated separately and the exemption of the basic excise duty to SEZ unit shall not apply to SAED and AED. In this regard, we find that the Hon'ble Apex Court in the Unicorn Industries decided the interpretation of the Notification exempting the basic excise duty in that context it was held that since the Notification does not specify the exemption in respect of additional duty of excise the exemption is not available to said additional Excise duty. However, in the present case, since we are taking a firm view that there is no levy of SAED and AED on SEZ unit, the question of applicability of the notification is not the issue herein. This is a case of levy or non levy of SAED and AED on SEZ unit. Since by virtue of Section 3 (1) of the Central Excise Act, 1944 the provision of the same is applicable to the levy of SAED and AED under Section 147 and 112, and Section 3 excludes the SEZ unit for levying excise duty there cannot be levy of SAED and AED on the SEZ unit. Therefore, the fact of the present case is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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