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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 ..... .2022, 10/2022-CE dated 30.06.2022 and 19/2022 dated 19.07.2022 in respect of SEZ unit is correct and if not whether the respondent are eligible for the refund of the duty which has already been paid by the respondent? HELD THAT:- Under both the Sections 147 and 112 of the Finance Act, 2002 and 2018 respectively, it is clear that both the duties are in addition to the duties of excise chargeable on such goods under the Central Excise Act. Therefore, these duties are in other words become a part of duties of excise chargeable on such goods in terms of Section 3 of the Central Excise Act, 1944. Moreover, sub section (3) of both the Sections 147 of the Finance Act, 2002 and Section 112 of Finance Act, 2018 clearly provide that the provision of Central Excise Act and the Rules made there under, shall as far as may be apply in relation to levy and collection the SAED and AED on the goods in question under that Act or those rules as the case for. In view of this clear position since the levy of SAED and AED under Section 147 and 112 of the Finance Act 2002 and 2018 respectively are in addition to the duties of excise chargeable on such goods under the Central Excise Act, the provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es the territory of SEZ. Therefore as regard the taxable territory such exclusion shall apply mutatis mutandis for levy of SAED and AED under Section 147 of 2002 Act and 112 of 2018 of Finance Act. Similar issue has been considered in the respondent s own case by this Tribunal RELIANCE INDUSTRIES LTD. VERSUS C.C.E ST-CGST CE-RAJKOT [ 2024 (2) TMI 1419 - CESTAT AHMEDABAD] wherein, this Tribunal held that goods manufactured in the SEZ unit are not liable to said SAED ( surcharge ) AED (road and infrastructure cess) under Section 147 of Finance Act, 2002 and Section 112 of Finance Act 2018 respectively. From the plain reading of the Section 51 of SEZ Act, 2005, it makes clear that the provision of SEZ Act shall have overriding effect on any law or Act in respect of the provision which is inconsistent with the provision of SEZ Act. In the present case, the SEZ Act exempts all duties in respect of the goods manufactured in the SEZ whereas the Revenue contented that Section 147 of Finance Act 2002 and Section 112 of Finance Act, 2018 are independent Act under which the levy of SAED and AED are applicable on SEZ unit also. In this position, since the Section 147 of the Finance Act, 2002 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch 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 Road and Infrastructure Cess (AED) levied under Section 147 of the Finance Act 2002 and Section 112 of the Finance Act 2018 respectively, are in the nature of additional duties of excise i.e. by way of increase in the basic excise duty charged under said Section 3(1), the Respondent holds the view that the goods manufactured in SEZ being excluded from the said charge of basic excise duty, the same are also outside the purview of the said Surcharge and Cess. It is the Respondent s view that the said Surcharge and Cess, which are in the nature of increment in the existing duty charged under said Section 3(1), cannot apply to goods manufactured in SEZ, since the same are excluded from the said basic charge under Section 3(1). Therefore, according to the Respondent the said Surcharge and Cess were not payable on the MS, HSD and ATF manufactured by the Respondent SEZ unit and removed from the SEZ by way of export. 1.5 The department, however, was of the view that the MS, HSD and ATF manufactured by the Respondent SEZ uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and cleared for export were liable to SAED (Surcharge) at Rs.5/- per liter, Rs.12/- per liter and Rs.6/- per liter respectively and that MS and HSD manufactured in an SEZ unit and cleared for export were liable to AED (Road and Infrastructure Cess) at Rs.1/- per liter. 1.6 In the Respondent s view, the aforesaid Notifications cannot in law, have the effect of making the MS, HSD and ATF manufactured in an SEZ unit liable to the said Surcharge and Cess levied respectively by Section 147 of the Finance Act 2002 and Section 112 of the Finance Act, 2018. The question whether the MS, HSD and ATF manufactured in SEZ are liable to the said Surcharge and Cess has to be determined with reference to the provisions of the said Sections 147 and 112 of the Finance Act, 2002 and 2018 respectively and not by reference to the said Notifications. It is evident from a plain reading of the said Sections 147 and 112 of the Finance Act, 2002 and 2018 respectively that the Surcharge and Cess levied there under are Additional Excise duties in the nature of increment in the existing Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is, lack certainty and completeness in respect of the four components of Tax laid down by the Hon ble Supreme Court in the case of Govind Saran Ganga Saran-AIR 1985 SC 1041and for attaining such completeness and certainty, the said two Finance Acts have expressly referred to and adopted the provisions of the Central Excise Act relating to levy of Excise duty under the said Act and made the same applicable to levy of the Surcharge and Cess under the said two Finance Acts, b) That in view of 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) That the SAED (Surcharge) and AED (Cess) having been levied as additional duties of excise, are in the nature of incrementing the existing duty charged under said Section 3(1), and therefore, cannot apply to goods m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by such Central Excise officer. 1.10 By Order-in-Original dated 26-10-2023, the Assistant Commissioner rejected the refund claim, against which the Respondent preferred appeal to Commissioner (Appeals), who has by Order-in-Appeal dated 5-2-2024 upheld the contentions of the Respondent and allowed the said Appeal with consequential reliefs by way of grant of refund claimed by the Respondent. 1.11 Department has preferred the present Appeal and Stay application against the said Order-in-Appeal dated 5-2-2024. In the present Appeal, the Appellant has not disputed and challenged the finding of the Commissioner (Appeals) that the refund claim was maintainable and that the Respondent was not required to file any appeal to Commissioner (Appeals) against the so-called self-assessment, 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 a decision or order passed by such Central Excise officer. 1.12 On the merits of the refund claim, the department s appeal has pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y is leviable thereon under Section 147 read with the Eighth Schedule to the said Finance Act, 2002, and additional duty of excise leviable thereon under Section 112 to the said Finance Act, 2018 in respect of excisable goods when exported from units located in the Special Economic Zone (SEZ). The said levy was exempted vide Notification No. 19/2022 dated 19.07.2022, with effect from 20.07.2022. Intention of legislature is clearly came out by the specific wording of the para 2 of the Notification, in as much as, 'this Notification shall come into force on the 20th day of July, 2022' and no other meaning can be drawn from the categorically mentioning in the Notification itself. Under no circumstances, the exemption can be construed retrospectively. The Central Govt. by issuing Notification No. 19/2022Central Excise exempting SEZ from payment of export duty from 19th July 2022 onwards, in itself makes it obvious that earlier the SEZ were to be taxed for the prior period due to which this notification was necessitated. 2.4 So, the intent of the government has been clearly brought out in the subject Show Cause Notice and the departmental stand is very clear that the levy of Spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 leviable under this section in respect of the goods specified in the Eighth Schedule, as they apply in relation to the levy and collection of the duties of excise on such goods under the Act, or those rules, as the case may be 2.11 The wordings of the section are quite clear. It categorically mentions that the provisions of the Central excise Act will be applicable 'As far as may be' for the levy and collection of SAED and AED. The phrase 'as far as may be' means to the extent possible. The literal meaning of the phrase is that the provisions of Central excise Act and rules will be applicable to the levy and collection of these duties only to the extent possible and not in entirety. So, there is no logic to argue that the provisions of Section 3 of Central Excise Act will be applicable for the levy and collection of SAED and AED. The provisions in respect of AED are at par with section 147 (3). 2.12 Reliance in this respect is placed on the decision of Hon'ble High Court of Ke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court of India are law of the land under Article 141 of Indian Constitution and any order passed in ignorance of the order passed by Supreme Court, is against the Doctrine of Judicial Discipline and can only be termed as Per in curium'. In this regard, reliance is placed on the judgement of the Hon'ble High Court of Karnataka in the case of Bharti Airtel Ltd Versus State of Karnataka reported at 2012 (25) S.T.R.514(Kar.). 2.19 The Commissioner (Appeals) has discussed the Section 26 of SEZ Act and held that the goods cleared from SEZ for export cannot be subject of any duty. He had held that the duty imposed on the export can only be termed as Customs duty. He had also mentioned that any proposal to tax the export in SEZ will be against the provisions of SEZ and in case of conflict among the provisions of SEZ Act and any other statute; Section 51 of SEZ Act will have the override effect. 2.20 In the present case, duties have been imposed vide Central Excise notifications on export of products including exports from SEZs. The relevant argument of Commissioner (Appeals) of Para 10.1 is referred. 2.21 With regard to the above, It needs not be emphasized that whenever any no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m any duty of customs under the Customs Act, 1962, any duty of customs under the Customs Tariff Act, 1975 or any duty of customs under any other law for the time being in force. So, it is very clear, that for the exemption under Section 26(a), the duty compulsorily has to be a duty of Customs and for 'any other law', a generalized view cannot be taken to specify any duty under any other Act as a duty of Customs under the garb that any duty on exports is generally understood by the trade as well as government as duty of customs. 2.25 Further, as per Section 26 (b) of the SEZ Act, the exemption to duty of excise is clearly on goods brought from DTA to SEZ and so do not apply in the present case. 2.26 As such, if such a generalized view was to be taken while interpreting any law or notification, there would have been no need for the Hon'ble Supreme Court and the Hon'ble High Courts to waste their time in interpretation of the same and pass detailed judgements, which are scrupulously followed by the lower courts as well as in quasi-judicial proceedings. Further, with regard to the over-riding of Section 51 of the SEZ Act, the wording is very clear that the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notification, it could have done by inserting the prior date, but rather it has been clearly mentioned that the notification is prospective and will come into effect from the later date given on. 2.30 The finding of the Commissioner (Appeals) to give the retrospective effect to the notification on the count that the government had continuous policy not to tax on the goods cleared for export from SEZ, is also fallacious. Had the government would have any such object; they could have mention specifically in the notification itself. An exemption from the tax cannot be extended on the basis of interpretations of some other provisions or any kind of assumptions or presumptions, till it has been categorically mentioned in the notification. 2.31 Reliance is placed on the judgment of High Court of Madras in case of Life Cell International (P) Ltd Vs Union of India' (2015 (40) STR 77 (Mad), the Hon'ble court had refused to give retrospective effect to the service tax exemption to the Healthcare services in absence of any specific entry. 2.32 It is the trite principle of law that the first and foremost principle of interpretation of the statute in every system of interpretation i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Supreme Court in the case of Northern Plastics Ltd v/s Hindustan Photo Films Mfg Co Ltd 2002-TIOL-604-SC- CUS that The Appellate Tribunal is constituted as per Section 129 of the Act. Subsection (1) thereof lays down that, 'the Central Government shall constitute an Appellate Tribunal to be called the Customs, Excise and Gold (Control) Appellate Tribunal consisting of as many judicial and technical members as it thinks fit to exercise the powers and discharge the functions conferred on the Appellate Tribunal by this Act. It is, therefore, obvious that the Appellate Tribunal CEGAT is a creature of statute and derives its jurisdiction and powers only from the statute creating it and not outside the same. In view of the same, it is not within the jurisdiction of this Hon'ble Tribunal to take a decision regarding the validity of a levy that has been passed by the Legislature. 2.36 Further, the respondents have placed reliance on Final Order No. 10444/2024 dated 20.02.2024 passed in the case of Reliance Industries Ltd vs CCE ST-CGST CE-Rajkot by this Hon'ble Tribunal. In this regard, this case pertains to payment of applicable duties of Customs in terms of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of P C Joshi Vs Uol M/s Snow tex Investment Ltd Vs Principal Commissioner of Income Tax-Kolkata Passed by Hon'ble SC in Civil Appeal No 4483 of 2019 Raghunath Raj Bareja and another Vs PNB Others-Passed by Hon'ble SC in Civil Appeal No 5634 of 2006 (1995) 09 GUJ CK 0028-Passed by Hon'ble High Court of Gujarat in case of Commissioner of Gift Tax Vs CDR Laxmidevi 1992 (58) ELT 9 (Guj)- Passed by Hon'ble High Court of Gujarat in case of Maheshwari Mills Ltd Vs Uol 3. Shri J C Patel, learned counsel with Shri Vishal Agarwal, Advocate, Ms. Shilpa Balani, Advocate, Mrs. Dimple Gohil, Advocate and Shri Arvind Bhansali, Senior Ex. Vice-President of the respondent company appearing on behalf of the respondent made the following submission:- 3.1 At the outset, it is submitted that the issue whether goods manufactured in SEZ are liable to SAED (Surcharge) under Section 147 of Finance Act 2002 and AED (Road and Infrastructure Cess) under Section 112 of Finance Act 2018 stands decided by this Hon ble Tribunal in Respondent s own case by Final Order No.10444/2024 dated 20-2-2024 in Excise Appeal No.10541 of 2023. This Hon ble Tribunal has in the said decision held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Act relating to levy of excise duty, which under Section 3(1) specifies the taxable event with certainty, as production or manufacture of all excisable goods (excluding goods produced or manufactured in special economic zones) in India. d) The taxable event cannot be said to have been specified with completeness and certainty if the taxable territory in which such event should occur, to attract the tax, is not specified. A comparison with the charging provisions of various Acts such as Central Excise Act 1944, Customs Act 1962, Finance Act 1994 relating to Service tax, CGST 2017 and IGST 2017 would show that while each of these Acts specify the taxable territory in which the taxable event should occur to attract tax, such is not the case with Section 147 (1) of the Finance Act 2002 and Section 112(1) of the Finance Act 2018 when viewed in isolation. Therefore, as mandated by Section 147 (3) and 112 (3) of the said two Finance Acts respectively, the taxable event has to be ascertained by reference to the charging provisions contained in Section 3(1) of the Central Excise Act 1944 and upon such reference it follows that manufacture of goods in SEZ are outside the scop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e) and AED (Cess) respectively. Except for some such provision, which may not be possible to be applied, all other provisions of the Central Excise Act and Rules thereunder relating to levy of Central Excise have to be applied to the levy of the said SAED (surcharge) and AED (Cess). i) Further, the very fact that the said SAED (Surcharge) and AED (cess) are levied as Additional duties of excise, itself means that they are levied as an increment in the existing duty charged under Section 3(1) of the Central Excise Act 1944, and therefore, cannot apply to goods manufactured in SEZ, which are excluded from and not subject to the charge of the existing duty under said Section 3(1). 3.3 In view of the said decision of this Hon ble Tribunal, in Respondent s own case by Final Order No.10444/2024 dated 20-2-2024 in Excise Appeal No.10541 of 2023, it would follow that SAED (Surcharge) under Section 147 of the Finance Act 2002 and AED (Road and Infrastructure Cess) under Section 112 of the Finance Act 2018 cannot and does not apply to goods manufactured by the Respondent in SEZ and removed from the SEZ for export. 3.4 Learned Authorized Representative for the department sought to distinguish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Additional Duties of Excise (Goods of Special Importance) Act 1957. 3.8 It was argued on behalf of the assessee that the said widened/expanded definition of manufacture in Section 2 (f) of the Central Excise Act 1944 cannot apply for the purpose of levy of additional duty on manufacture under Section 3(1) of the Additional Duties of Excise (Goods of Special Importance) Act 1957. 3.9 The ratio of the decision of the Constitution Bench squarely applies in the present case. In the instant case also, Section 147 (3) of Finance Act 2002 and Section 112 (3) of the Finance Act 2018 specifically provide that the provisions of the Central Excise Act 1944 and Rules thereunder, shall as 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. As held by the Hon ble Supreme Court the term levy includes imposition of tax and therefore the provisions of Section 3 (1) of the Central Excise Act 1944, which provide for the levy/ imposition of tax, will govern the scope of levy/ imposition of tax under the said Sections 147 (1) and 112 (1) respectively of the two Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y virtue of Section 147(3) of the Finance Act, 2002, the provisions of the Central Excise Act are invocable for the purpose of levy under the said Finance Act. 3.12 Learned authorized representative for department contended that the said Notification does not refer to Section 3B of the Central Excise Act 1944. This, it is submitted, makes no difference, since the power of the Central Government to amend Schedule of a Parliamentary Act is traceable only to Section 3B of the Central Excise Act 1944 read with Section 147 (3) of the Finance Act 2002. Learned AR has not been able to show any other provision as to the source of that power. SAED (Surcharge) and AED (Road and Infrastructure Cess) having been levied as Additional Duties of excise are in the nature of increment to the existing duty charged under Section 3 (1) of the Central Excise Act 1944 and therefore cannot apply to goods manufactured in SEZ which stand excluded from the Charge in said Section 3(1): 3.13 A Surcharge is a charge, which is super-imposed on that which is subject to a charge. It is in the nature of an increment to what is subjected to a charge. It therefore follows that, what is not subject-matter of charge c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v Mohit Mineral P. Ltd 2018 (17) GSTL 561 (SC). 3.18 The proposition of law canvassed herein above, can be aptly illustrated, with the help of the provisions of Chapter V of the Finance Act 1994 relating to Service tax and the provisions of Section 161 of the Finance Act 2016 relating to Krishi Kalyan Cess. 3.19 The charging provision contained in Section 66B of the Finance Act 1994 provides for levy of Service tax on value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory and taxable territory is defined in Section 65B (52) as the territory to which the provisions of Chapter V apply. As per Section 64, the said Chapter applies to the whole of India except the State of Jammu and Kashmir. It therefore follows that the charge of Service tax under the Principal Act i.e Chapter V of the Finance Act 1994 is on all services, other than those services specified in the negative list, which are provided in the taxable territory i.e. whole of India except the State of Jammu and Kashmir. 3.20 As regards Krishi Kalyan Cess, the same is levied under Section 161 (2) (3) of the Finance Act 2016, as an additional S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Government issued Notification No.19/2022-CE dated 19-7-2022, granting exemption from SAED (Surcharge) and AED (Road and Infrastructure Cess) on MS, HSD and ATF exported from SEZ, with effect from 20-7-2022, would mean that the said goods when exported from SEZ prior to 20-7-2022 were liable to the said SAED and AED under the Finance Acts 2002 and 2018 respectively. 3.24 It is submitted that the said contention is thoroughly misconceived and totally untenable in law. 3.25 It is settled law that charge of duty cannot be created by an exemption Notification and if any goods are not covered by the charging provision of the Act, any purported exemption granted to such goods by a Notification cannot result in such goods being otherwise chargeable to duty. Any exemption granted on the erroneous presumption that the goods are chargeable to duty cannot result in the goods being subject to the charge under the Act. Exemption Notification is different from statute enacted by the Parliament and cannot create a charge or a levy, which the Parliamentary enacted statute does not provide for. 3.26 The question whether MS, HSD and ATF manufactured in SEZ are liable to the said Surcharge and Cess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f instead of being brought into Domestic Tariff area, the goods manufactured in a SEZ are exported therefrom. Notification No.19/2022-CE dated 19-7-2022, if at all relevant, is to be considered as being clarificatory in nature and therefore retrospective: 3.30 Without prejudice to the aforesaid submissions, Notification no. 19/2022-CE dated 19-7-2022, if at all relevant, has to be considered as clarificatory and therefore retrospective. The very issuance of the said Notification exempting SAED (Surcharge) and AED (Cess) on MS, HSD and ATF when exported from SEZ, though the same was not required in law, 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 CESS and consequently the same must be considered as being clarificatory in nature. 3.31 Learned Authorized representative placed reliance on various press reports which suggested that facility to export MS, HSD and ATF without payment of Central Excise duty under Rule 19 of the Central Excise Rules 2017 was withdrawn with effect from 1-7-2022 to overcome domestic shortage of the said goods. There is no legal basis or authority f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of W.P.I.L. vs Commissioner of Central Excise, Meerut 2005 (181) E.L.T. 359 (S.C.), held that exemption Notification would be considered as clarificatory and hence retrospective, if the grant of the exemption/non-levy was historically justified. Response to submissions of and case-law relied upon by learned authorised representative for department: 3.33 As stated herein above in Para 2.14, the department s appeal (See grounds of appeal Nos. 1.1 and 2.1) has proceeded on the totally erroneous premise and assumption that it is the Respondent s case that the SAED (Surcharge) and AED (Cess) under the Finance Acts 2002 and 2018 respectively were not payable on goods manufactured by SEZ since such goods were exempt from the excise duty levied under Section 3(1) of the Central Excise Act 1944. The same stand has been repeated by learned Authorized Representative for the department in his arguments and he has argued that mere exemption from Central Excise duty does not ipso facto result in exemption from SAED (Surcharge) and AED (Road and Infrastructure Cess) levied under the Finance Acts 2002 and 2018 respectively in absence of a specific exemption granting exemption from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch duty has then to be issued in exercise of such power. The exemption Notification issued under the Central Excise Act does not ipso facto apply to the duty levied under the Finance Act. 3.36 That however, is not the Respondent s case. The Respondent has not relied upon any exemption Notification issued under the Central Excise Act 1944 to contend that the same would apply to and also exempt SAED (Surcharge) and AED (Cess) levied under the two Finance Acts, 2002 and 2018 respectively. 3.37 The Respondent s case is that goods manufactured in SEZ are excluded from the charge/levy under Section 3 (1) of the Central Excise Act 1944 and since Section 147 (3) of the Finance Act 2002 and Section 112 (3) of the Finance Act 2018 adopt/ borrow the provisions of the Central Excise Act relating to levy of Central excise duty and apply them to the levy under the said two Finance Acts, it would follow that goods manufactured in SEZ also stand excluded from the levy under the said two Finance Acts. 3.38 The Appeal filed by the Revenue proceeds on the presumption that the non-levy of SAED and Cess on goods manufactured in a SEZ and exported therefrom was by virtue of Rule 19 of the Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , was not concerned with determination of scope of Surcharge imposed by Finance Act, when the income in question was excluded from the Charge under Section 4 of the Income Tax Act. The Surcharge imposed by the Finance Act in that case was in respect of Income which was subject to charge levied under Section 4 of the Income Tax Act. Unlike the said case, in the present case the issue is whether the surcharge applies to goods manufactured in SEZ which are excluded from the charge, for which the decision in Ashok Service Centre (supra)is the relevant and applicable decision. 3.42 The facts of the case in Madurai District Central Co-operative Bank Ltd v ITO, were that the assessee was a co-operative Bank, whose total income comprised Banking income and Non-Banking income (residual income). The charge under Section 4 of the Income Tax Act was on Total income of previous year of every person. Section 81 (a) of the Income Tax Act, which pertained to Incomes forming part of Total income on which no tax was payable, granted exemption to the Banking income of a Co-operative Bank. Therefore, while the total income comprising Banking income and residual income was subject to the charge of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decided in this case is whether in respect of Tobacco and Tobacco Products, Duties of Excise can continue to be levied under Article 246 of the Constitution post the levy of GST on the said products under Article 246A of the Constitution. It was held that Article 246A provides that notwithstanding anything contained in Article 246, Parliament has power to make laws with respect to Goods and Service tax. It was held that Tobacco and Tobacco Products can be subjected both to levy of Duties of excise as well as GST. The further issue which was decided was whether exemption from Excise duty under Notification 11/2017 would itself result in NCCD being not applicable. The said issue has no relevance to the present case since it is not the Respondent s case that Excise duty on goods manufactured in SEZ is exempted by a Notification and therefore the SAED and AED are not payable on such goods. The Respondent s case is that goods manufactured in SEZ are excluded from the very charge/ levy of excise duty. 3.45 The reliance placed by learned AR on observations in Para 21 of the decision in All India Fedn. Of Tax Practitioners v UOI 2007 (7) STR 625 (SC) do not advance the department s case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in SEZ and brought to DTA, was introduced when goods produced or manufactured in SEZ were liable to Central Excise duty. The same, no more remained necessary, when with the enactment of SEZ Act 2005, Section 3(1) of the Central Excise Act 1944 excluded goods produced or manufactured in SEZ from the charge of Excise duty. If at any time in the future, such exclusion is done away with, the said enabling provision will again become relevant. 3.49 In light of the aforesaid submissions, the present appeal has no merit and is liable to be dismissed. 4. We have carefully considered the submissions made by both the sides and perused the records. Since the appeal itself is taken for disposal, the revenue s Stay application is dismissed as infructuous. The core issue in the present appeal involved is whether the levy of special additional excise duty as surcharge under Section 147 of the Finance Act, 2002 and additional duty of excise levied as road and infrastructure cess under Section 112 of Finance Act, 2018 read with relevant Notifications Nos.04/2022-CE dated 30.06.2022, 05/2022-CE dated 30.06.2022, 10/2022-CE dated 30.06.2022 and 19/2022 dated 19.07.2022 in respect of SEZ unit is cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 27-03-2020 before it was read as Rs. seven per litre 2. Substituted vide Finance Act. 2020 dated 27-03-2020 before it was read as Re. one per litre 3. Inserted vide NOTIFICATION NO. 05/2022-Central Excise dated 30-06-2022 w.e.f. 01-07-2022 4. Substituted vide NOTIFICATION NO, 25/2022-Central Excise dated 31-08-2022 w.e.f. 01-09-2022 before it was read as, Rs. 6 per Litre ---------------------------------------------------------------------------------------------------------- THE FINANCE ACT, 2018 [Act No. 13 of 2018] [29th March, 2018] An ACT to give effect to the financial proposals of the Central Government for the financial year 2018-2019. BE it enacted by Parliament in the Sixty-ninth Year of the Republic of India as follows : CHAPTER I PRELIMINARY 1.Short title and commencement. (1) This Act may be called the Finance Act, 2018. (2) Save as otherwise provided in this Act, sections 2 to 55 shall come into force on the 1st day of April, 2018. ************ NOTES:- 1. As Corrected Vide CORRIGENDA THE FINANCE ACT. 2018 No. 18 OF 2018 Dated 03-04-2018, before it was read as, [28th March, 2018.] ------------------------------------------------------------------- 112. Road and Infr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above levy was only limited to the goods manufactured in India and cleared for DTA as in terms of Rule 19 of Central Excise Rules, 2017. The aforesaid duties were not required to be paid in terms of Rule 19 of Central Excise Rules, 2017 when the goods manufactured in India is exported out of India. However, with effect from 01.07.2022 Rule 19 of Central Excise Rules,2017 was amended and as per the amended Rule vide Notification No.02/2022-CE dated 30.06.2022, the goods namely MS, HSD and ATF were excluded from the scope of Rule, 19. Accordingly, it is the contention of the revenue that the export of the said goods also liable for payment of special additional excise duty and additional excise duty on MS, HSD and ATF. By Notification No.04/2022-CE dated 30.06.2022 partial exemption was granted from SAED (surcharge) in excess of Rs.5 per litre and in excess of Rs.12 per litre on HSD cleared for export w.e.f 01.07.2022. Similarly special additional excise duty (surcharge) on ATF was imposed at the rate of Rs.6 per litre by amending the 8th Schedule to Finance Act, 2002. By inception of serial No.4, the said 8th Schedule accordingly w.e.f. 01.07.2022 ATF became liable to SAED at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch goods under the Central Excise Act, the provision of relevant Section 3 of Central Excise Act, 1944 shall be statutorily invoked and applied in this case. Section 3 of the Central Excise Act 1944 is reproduced below:- Section 3. Duties specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 to be levied.- (1) There shall be levied and collected in such manner as may be prescribed,- (a) a duty of excise to be called the Central Value Added Tax (CENVAT), on all excisable goods(excluded goods produced or manufactured in special economic zones) which are produced or manufactured in India as, and at the rates, set forth in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); (b) a special duty of excise, in addition to the duty of excise specified in clause (a) above, on excisable goods (excluding goods produced or manufactured in special economic zones) specified in the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) which are produced or manufactured in India, as, and at the rates, set forth in the said Second Schedule: Provided that the duties of excise which shall be levied and collected on any excisable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tured by different classes of producers or manufacturers; or (ii) sold to different classes of buyers: Provided that in fixing different tariff values in respect of excisable goods falling under sub-clause (i) or sub-clause (ii), regard shall be had to the sale prices charged by the different classes of producers or manufacturers or, as the case may be, the normal practice of the wholesale trade in such goods. From the above Section 3 which is Parent Act for levy of Excise duty clearly provides that the duties of excise to be called as central value added tax shall be levied and collected on all excisable goods which are produced or manufactured in India. However, it clearly eschewed the goods produced or manufactured in Special Economic Zone. The levy of SAED and AED cannot be made in isolation in terms of Section 147 of the Act, 2002 and Section 112 of Finance Act, 2018 without applying the provision of Section 3 of the Central Excise Act as per the mandate given in sub Section (3) of Section 147 and Section 112 of the Finance Act, 2002 and 2018 respectively. Accordingly when we do conjoint reading of Section 147 of 2002 and Section 112 of Finance Act, 2018 with Section 3 of Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting the additional sales tax to single point levy. Section 3 (3) of the said Additional Sales Tax Act provided that the provisions of the Orissa Sales Tax Act 1947 (Principal Act) shall, mutatis mutandis apply in relation to the said additional tax as they apply in relation to the tax under the principal Act. The contention on behalf of the State was that since Section 3(1) of the said Additional Sales tax Act, mentioned Every Dealer and did not exclude a Dealer whose turnover in a fiscal year was Rs.50,000/- and below, the additional sales tax would be payable by every dealer irrespective of his turnover. It was also contended that since the said Additional Sales Tax Act did not confine the levy to single point levy, it was open to the State to levy the additional sales at multi points. Both the contentions were rejected by the Hon ble Supreme Court. In Para 17 of the judgment, the Hon ble Supreme court held that the Additional sales tax was in the nature of a Surcharge over and above what was due and payable by an assessee under the principal Act and therefore the Additional Sales tax Act has to be read together with the principal Act to be effective. Further, in Para 18 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Excise (Textiles and Textiles Articles) Act 1978 which imposed additional duty of excise had to be read together with the Central Excise Act 1944 in view of Section 3 (3) of the Additional Duties Act which provided that the provisions of the Central Excise Act 1944 and the rules there under, shall so far as may be apply in relation to levy and collection of the additional duty as they apply in relation to the levy of the excise duty. 4.6 The Revenue has heavily relied upon the exemption Notification No.19/2022-CE dated 19.07.2022 whereby specific exemption was granted to excisable goods when exported from the units located in special economic zone that shows that even the goods manufactured and exported from SEZ for the period of 01.07.2022 to 19.07.2022 was liable to duties of SAED and AED. In this regard we find that before applying the Notification, first the provisions of levy has to be seen which is the foundation for any levy, the foundation of any levy of duties of excise is provided under Section 3 of the Central Excise Act 1944. Once there is clearly no levy in respect of SEZ units, even though Notification No.19/2022-CE dated 19.07.2022 was issued the same will not alt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.07.2022 specifically mentioned the exemption for SEZ unit from payment of SAED and AED on MS, HSD and ATF when exported from the SEZ but in the primary legislation i.e. Section 3 of the Central Excise Act read with Section 147 of Finance Act 2002 and Section 112 of Finance Act, 2018 when there is no levy on the SEZ unit as the same was excluded in Section 3 of Central Excise Act 1944, the Notification No.19/2022-CE cannot suggest that there was levy of SAED and AED in respect of MS, HSD and ATF during the period 01.07.2022 to 19.07.2022. It is settled law that when the levy itself lacks, merely by notification, the levy cannot be created. This our view is supported by the Hon ble Supreme Court judgment in the case of CCE v Larsen and Toubro Limited 2015 (39) STR 913. In this case the Hon ble Supreme Court held that there was no charging provision in the Finance Act 1994 levying service tax on Works Contract prior to 1st June 2007. As regards reliance placed by revenue on Exemption Notifications in force prior to 1st June 2007, purportedly granting exemption from service tax, to suggest that works contract were liable to service tax even prior to 1st June 2007. 4.8 We find force i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1975, includes the levy of SAED, RIC and AIDC). The question that we need to deliberate and decide upon is whether the said levy of SAED, RIC AIDC could be once again imposed and recovered by the Central Excise field formation, as a duty of excise. 4.1 We find it surprise that the Adjudicating Authority who is an integral part of the department of Revenue has conveniently ignored the fact that any goods removed from the SEZ to the DTA are regarded to as having been imported into the DTA and accordingly in terms of Section 30 of the SEZ Act, subjected to duties of customs, including anti dumping duty, countervailing duty, and safeguard duty under the Customs Tariff Act, 1975. It is undisputed that the HSD in question has been subjected the levy of additional duty under Section 3 (1) of the Customs Tariff Act, which is equal to the Excise duty for the time being leviable on like article, produced or manufactured in India. As a part of the said additional duty under Section 3(1) of the Customs Tariff Act, the amount leviable 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 clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom EOU to the DTA. Once as a part of additional duty under Section 3 (1), the second time as a part of customs duty, since what was to be paid by an EOU was an amount equal to the duty of customs, as if the goods were imported. The third cess was sought to be levied on the premise that EOU being within India the major of the duty was the customs duty however, what was leviable was excise duty and on this Excise duty cess was required to be discharged. The Larger Bench rejected this contention of the Revenue on various counts, one of which being that the duty payable on goods cleared from an EOU to the DTA as to be on Par with the duties payable on goods imported from abroad into the country. It was held that the interpretation suggested by the Revenue would have the effect of goods cleared from the EOU to the DTA suffering a higher duty vis-a-vis that leviable on import of goods into the country. Such an interpretation was held to be clearly at odds with the principle 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent in any other law for the time being in force. The law with regard to the deeming fiction is that 'in case of any deeming fiction in statute, it s full legal effect must be given, one cannot go behind such deeming fiction in law and imagine contrary. We are therefore of the view that, removal from SEZ to the DTA being an import, the Adjudicating Authority had no justification in ignoring the fact that the removal from SEZ to the DTA had already suffered additional duty under Section 3(1), which included the duties leviable under the Finance Acts and there was no justification in once again seeking to recover the very same amount separately as a duty of excise. 4.8. Notwithstanding the above, we also find that applying the ratio laid down by the Apex Court in the case of Govind Saran Ganga Saran Vs. Commissioner of Sales Tax 1985 SUPP (SCC) 205 the levy of SAED, RIC and AIDC under the relevant Finance Acts, cannot be given effect to without 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 respectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cessleviable 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. Relevant extracts of Finance Act, 2021: 125. Agriculture Infrastructure and Development Cess on excisable goods. (1) There shall be levied and collected, in accordance with the provisions of this section, for the purposes of the Union, an additional duty of excise, to be called Agriculture Infrastructure and Development Cess, on the goods specified in the Seventh Schedule (hereinafter referred to as scheduled goods), being the goods manufactured or produced, at the rates specified in column (3) of the said Schedule, for the purposes of financing the agriculture infrastructure and other development expenditure. (2) The Central Government may, after due appropriation made by Parliament by law in this behalf, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to provide the event attracting the levy to tax for example, manufacture or production of goods in a given geographical location or territory. In our view, if the Finance Acts, in question are read on a standalone basis the taxable event has been prescribed in an incomplete manner, inasmuch as, merely specifying that the levy is on manufacture or production is not enough, it also needs to be specified that the levy would be attracted when the production or manufacture takes place at a particular location, territory, etc., failing which the nature of levy is vague and uncertain and falls foul of the criteria laid down by the Apex Court in the case of Govind Saran Ganga Saran (supra). 4.11. It will be relevant to compare the charging provision of the aforesaid Finance Acts vis- -vis 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under [the Customs Tariff Act, 1975 (51 of 1975)], or any other law for the time being in force, on goods imported into, or exported from, India. [(2) The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government.] Service Tax-Chapter V of Finance Act, 1994 SECTION [66B. Charge of service tax on and after Finance Act, 2012. There shall be levied a tax (hereinafter referred to as the service tax) at the rate of [fourteen per cent.] on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person 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 notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SECTION 5. Levy and collection. (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-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 of the Central Goods and Services Tax Act and at such rates, not exceeding forty 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 : Provided that the integrated tax on goods [other than the goods as may be notified by the Government on the recommendations of the Council] imported into India shall be 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 differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is thus evident and elementary that every Act has to stipulate the taxable event attracting the levy. If Section 147(1) of the Finance Act, 2002, Section 112(1) of the Finance Act 2018 and Section 125(1) of the Finance Act, 2021 are read on a standalone basis, they will fall foul of the requirement of prescribing the taxable event as they do not prescribe that the production or manufacture has to happen in any particular location. In the absence of such a prescription the levy cannot be given effect to, as the taxable event itself is uncertain and vague. 4.13. It appears to us that to obviate any challenge to the levy being vague and uncertain 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 presc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in India, excluding the production or manufacture in Special Economic Zone is applied to the charging provisions under Section 147(1)/112(1)/125(1) of the Finance Act, 2002, 2018 and 2021 respectively, then, the taxable event under the said Finance Acts would not be vague and unascertainable and would not fall foul of the test laid down in the case of Govind Saran Ganga Saran (supra). 4.17. In our view the levy under Section 147(1)/112(1)/125(1) of the Finance Act, 2002, 2018 and 2021 respectively, applies to goods manufactured or produced in India, excluding goods produced or manufactured 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 2021. It is only by virtue of the provision relating to levy and collection under the Central Excise Act and the Rules made thereunder, which have been made applicable to levy and collection under the Finance Act that the Central Government has been able to by virtue of Section 3B of the Central Excise Act, 1944 amend the 8th Schedule to the Finance Act, 2002 and increase the rate of SAED on ATF. There is absolutely no answer that the Revenue has to this submission. 4.21. We find that the Respondent has in the impugned order proceeded on a tangent 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Central Excise Act, 1944 which the Appellant seeks to apply to the levy under the Finance Acts in question. The fact situation covered under the Central Excise Laws (Amendment and Validation) Act, 1982 and Unicorn Industries (supra) being completely different and poles apart, the principle laid down therein does not further the case of the Respondent in the present case. 4.24. We are therefore of the view that the appellant was completely justified in contending that the provisions of the Central Excise Act, 1944 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 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riff Act, 1975 (51 of 1975) or any other law for the time being in force, on goods exported from or services provided from a Special Economic Zone or from a Unit, to any place outside India, c) exemption from any duty of excise, under the Central Excise Act, 1944 (1 of 1944) or the Central Excise Tariff Act, 1985 (5 of 1986) or any other law for the time being in force, on goods brought from Domestic Tariff Area to a Special Economic Zone or Unit to carry on the authorised operations 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n also, the Revenue s proposal for levy of SAED and AED on the respondent s SEZ unit is illegal and incorrect. 4.12 We find that learned AR heavily relied upon the Hon ble Supreme Court judgment in the case of Unicorn Industries and Modi Rubber Ltd(supra) to submit that duty of excise and additional duty imposed under Finance Act are different and as per the Supreme Court judgment when exemption is granted to basic excise duty same shall not apply 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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