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SUPREME COURT OF INDIA
L. NAGESWARA RAO, SANJAY KISHAN KAUL, JJ.
BAJAJ AUTO LIMITED – APPELLANT
VERSUS
UNION OF INDIA AND ORS. – RESPONDENTS
CIVIL APPEAL NO. 3239 OF 2019 [ARISING OUT OF SLP(C) NO. 21968 OF 2017]
Decided on : 27-03-2019
(B) Interpretation of Statute – Exemption Notifications – Exemption notifications must be read in a manner that give them a liberal interpretation provided that no violence is done to language employed – In such cases, it is not as if principle of strict interpretation of tax law has been given a complete go by, but that rule of interpretation would apply at a different stage, i.e., to determine whether exemption is applicable to assessee or not – Once such exemption is indeed found to be applicable to assessee in question, a liberal approach is to be adopted by Court in construing language, such as to allow benefit to be reaped by beneficiary in question. (Para 19)
Facts of Case:
Appeal raises legal question of liability towards National Calamity Contingent Duty (NCCD), Education Cess and Secondary & Higher Education Cess of a manufacturing establishment, which is exempted from payment of Central Excise Duty (CENVAT) under Central Excise Act, 1944.
Findings of Court:
When NCCD, at the time of collection, takes character of a duty on product, whatever may be the rationale behind it, it is also subject to provisions relating to excise duty, applicable to it in manner of collection as well as obligation of taxpayer to discharge duty. Once excise duty is exempted, NCCD, levied as an excise duty cannot partake a different character and, thus, would be entitled to benefit of exemption notification. Exemption notification also states that exemption is from “whole of the duty of excise or additional duty of excise.” Exemption itself is for a period of ten years from date of commercial production of unit.
Result : Appeal allowed.
JUDGMENT
Sanjay Kishan Kaul, J.
Leave granted.
2. The appeal raises the legal question of the liability towards National Calamity Contingent Duty (for short 'NCCD'), Education Cess and Secondary & Higher Education Cess of a manufacturing establishment, which is exempted from payment of Central Excise Duty (for short 'CENVAT') under the Central Excise Act, 1944 (hereinafter referred to as the 1944 Act').
3. In order to encourage development of industries and to generate employment in the States of Uttarakhand and Himachal Pradesh, certain special measures were considered appropriate to be taken by the Government of India. On the visit of the Prime Minister of India to Uttarakhand, in March, 2002, an announcement was made that tax and Central Excise concessions, to attract investments in the industrial sector will be worked out for the Special Category States including Uttaranchal (now Uttarakhand). The industries eligible for such incentives were to be environment friendly, with potential for local employment generation and use of local resources. Subsequently, an Office Memorandum was issued on 7.1.2003, announcing a package of incentives providing for "New Industrial Policy and other concessions for the State of Uttaranchal and the State of Himachal Pradesh." Para 3.1 (I) stipulated the fiscal incentives. It is not necessary to reproduce the complete paragraph, but suffice to reproduce the relevant portion as under:
"3.1: Fiscal Incentives to new Industrial Units and to existing units on their substantial expansion:
(I). New industrial units and existing industrial units on their substantial expansion as defined, set up in Growth Centres, Industrial Infrastructure Development Centres (IIDCs), Industrial Estates, Export Processing Zones, Theme Parks (Food Processing Parks, Software Technology Parks, etc.) as stated in Annexure-I and other areas as notified from time to time by the Central Government, are entitled to :
(a) 100% (hundred percent) outright excise duty exemption for a period of 10 years from the date of commencement of commercial production.
(b) 100% income tax exemption for initial period of five years and thereafter 30% for companies and 25% for other than companies for a further period of five years for the entire states of Uttarakhand and Himachal Pradesh from the date of commencement of commercial production."
(emphasis supplied)
4. In order to implement the aforesaid policy initiative, the Central Board of Excise & Customs (for short 'CBEC') issued Notification No. 50/2003-Central Excise, dated June 10, 2003, in exercise of powers conferred under Section 5A of the 1944 Act. The relevant portion of the Notification reads as under:
"GENERAL EXEMPTION NO. 41
Exemption to goods other than specified goods cleared from units located in the Industrial Growth Centre or Industrial Infrastructure Development Centre or Export Promotion Industrial Park or Industrial Estate or Industrial Area or Commercial Estate or Scheme Area of Uttarakhand and Himachal Pradesh.-In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944) read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section (3) of section 3 of the Additional Duties of Excise (Textiles and Textiles Articles) Act, 1978 (40 of 1978), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act. 1985 (5 of 1986). other than the goods specified in Annexure-I appended hereto, and cleared from a unit located in the Industrial Growth Centre or Industrial Infrastructure Development Centre or Export Promotion Industrial Park or Industrial Estate or Industrial Area or Commercial Estate or Scheme Area, as the case may be. specified in [Annexure-II and Annexure III1 appended hereto, from the whole of the duty
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