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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SONIA GOKANI, RAJENDRA M. SAREEN, JJ.
AJANTA MANUFACTURING PRIVATE LIMITED - Appellant
Versus
UNION OF INDIA - Respondent
R/SPECIAL CIVIL APPLICATION NO. 3320, 3318 of 2021
Decided on : 14-10-2021
Company - Earthquake - Granting Exemption To Excisable Goods - Education Cess - Constitution of India, 1950 - Article 226 - Companies Act - Central Excise Tariff Act, 1985 - Central Excise Act, 1944 – Section 35G, (1), 35E, 35 - Finance Act, 2004 - Section 95(1) - Finance Act, 2007 - Section 140(1) - Whether appellant is liable to pay education cess again on amount which has been worked out by calculating customs duty payable on goods in respect of clearances made by 100% EOU to domestic tariff area.
Finding of the Court:
Reason employed in SRD Nutrients Private Limited (supra) that there was nil excise duty, as such, additional duty cannot be charged, is also equally unacceptable as additional duty can always be determined and merely exemption granted in respect of a particular excise duty, cannot come in way of determination of yet another duty based thereupon - Proposition urged that simply because one kind of duty is exempted, other kinds of duties automatically fall, cannot be accepted as there is no difficulty in making computation of additional duties, which are payable under NCCD, education cess, secondary and higher education cess - Moreover, statutory notification must cover specifically duty exempted - When a particular kind of duty is exempted, other types of duty or cess imposed by different legislation for a different purpose cannot be said to have been exempted - This nowhere requires reopening of process which had already attained finality and quietus – Court accept version of learned ASG that this is not a case where Court can impute any mala fides to respondent No.2 - It is over enthusiasm of officer to advance departmental cause that without grasping ratio on subject – Court do not hold this against officer concerned to direct anything or of awarding cost in this matter - Suffice to note that apt training for observance of judicial discipline be rendered and in event of any difficulties, recourse to provision under Section 35 E can always be taken as permissible.
Result: Petitions disposed of.
JUDGMENT :
SONIA GOKANI, J.
1. These are two petitions preferred under Article 226 of the Constitution of India challenging the legality and validity of the show cause notices issued by the respondent authorities on the ground that the said show cause notice is ex facie without jurisdiction and authority of law and in clear disregard to the binding order of the superior authority amounting to abuse of process of law, illegal and void.
2. Both these petitions, since, involve identical question of law, they are being decided by this common judgment where necessary, facts for adjudication are drawn from Special Civil Application No.3320 of 2021.
2.1 The petitioner No.1 is a company incorporated and registered under the Companies Act and the petitioner claims to be one of the larger manufacturing plants at Kutchch, District Gujarat. It manufactures the excisable products such as Electric Energy Saving Lamp, Vitrified Tiles, Quartz Clock, etc. falling under Chapter 69, 85 and 91 of the Central Excise Tariff Act, 1985. The petitioner NO. 2 is a shareholder and Director of the petitioner No.1-Company.
2.2 Massive earthquake in the State of Gujarat and particularly, in the District of Kutch in the year 2001 led the Central Government to issue the Notification No. 39/2001-CE dated 31.07.2001 granting exemption to excisable goods other than those specified in the Notification, cleared from units in Kutch. The said Notification was amended from time to time and the petitioner’s unit since is located in the District Kutch, it availed the benefits of the said Notification.
2.3 The petitioner had filed refund claims pursuant to the amendment in the said Notification in respect of Central Excise Duty, Education Cess and Secondary & Higher Secondary Education Cess (‘ECSHEC’ hereinafter) for the period from June 2007 to March 2008. It was partially sanctioned by the Assistant Commissioner, Bhuj, but rejected the part of the claim including the claim in respect of ECSHEC.
2.4 The petitioner No.2 challenged the said order by way of appeals before the Commissioner (Appeals), vide orders dated 7.03.2008 and 27.06.2008 which upheld the refund orders passed by the Assistant Commissioner, Bhuj.
2.5 Aggrieved petitioners preferred appeals before the Central Excise and Service Tax Appellate Tribunal (‘the CESTAT’ hereinafter), Ahmedabad, which remanded the matters vide its orders dated 10.8.2009 and 9.11.2009 to the adjudicating authority.
2.6 On 10.6.2010, the adjudicating authority sanctioned certain refund claims, however, it chose not to sanction the refund claims of Rs.54,10,810/- pertaining to ECSHEC on the ground of the exemption under the said Notification No.39/2001-CE with a reasoning that only Central Excise Duty or Additional Central Excise Duty can be exempted and the said Notification did not cover the ECSHEC.
2.7 Aggrieved by the said refund order dated 10.6.2010, the petitioners filed appeal before the Commissioner (Appeals), Rajkot on various grounds including on the ground that Education Cess is an excise duty and is therefore refundable under Notification No.39/2001-CE as all “duty leviable under the Act” is refundable under the said Notification.
2.8 The Commissioner (Appeals), with a detailed order dated 19.12.2018, allowed the petitioner’s refund claim of Rs. 54,10,810/- pertaining to ECSHSEC. While so doing, it held that these are in nature of a surcharge levied as duty of excise and all provisions of the Central Excise Act, 1944, including those relating to exemptions and refunds were made applicable to this levy and the Notification No. 39/2001 had granted 100% exemption from levy of excise duty by way of refund/recredit of excise duty and ECSHSEC were levied on excise duty and when the excise duty itself is under exemption, there would be no question of levy of any surcharge or cess by whatever name it is called. It depended on a Circular dated 10.8.2004 of the Central Board of Excise and Customs (‘the CBEC’ hereinafter). It also relied
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