J U D G M E N T

Arun Mishra, J.

1. Leave granted.

2. The question involved in the appeals is with respect to the levy of education cess, higher education cess, and National Calamity Contingent Duty (NCCD) on it. The appeals arise out of common judgment. The High Court has held that duties in question are not part of the exemption notification. The writ petitions have been dismissed. Hence, the appeals Signatureh Nota Vervifieed been preferred.

Digitaly signed by JAYANT KUMAR ARORA Date: 2019.12.06

16:05:24 IST Reason:

3. The Government of India in order to promote industrial development in the North Eastern Region, announced vide Office Memorandum dated 24.12.1997, specific fiscal incentives including total exemption from tax to the new industrial units and substantial expansion of existing unit in the North Eastern Region for a period of 10 years from the date of commencement of production. Government of Sikkim vide Notification dated 17.2.2003, notified new industrial policy whereby all fiscal incentives available to the industries in the North Eastern Region would be available to the units set up in the State of Sikkim.

4. The Central Government issued a Notification dated 9.9.2003, granting exemption from payment of duty of excise for goods specified in the notification and cleared from a unit located in the Industrial Growth Centre or other specified areas within the State of Sikkim. Under the notification, a manufacturer of specified goods was required to pay excise duty on the goods cleared from its unit. The manufacturer has to first utilize the Cenvat Credit for discharging duty liability on final products, and the remaining amount of duties had to be paid through Personal Ledger Account (PLA) or Current Account, i.e., in cash. Thus, the exemption scheme was to discharge the liability on the final product and then claim or avail the refund or re-credit of the duties paid in cash.

5. The Unicorn Industries established a unit in 2006 for manufacturing “Indian Mouth Freshener” an excisable commodity covered under Chapter 21 of the First Schedule of Central Excise Tariff Act, 1985. It was registered under the Central Excise Act. In June 2006, the appellant had started manufacturing its product.

6. The appellant has submitted that following excise duties were recovered under diverse names/nomenclature and rates on Indian Mouth Freshener manufactured and cleared by the appellant:

a. Basic Excise Duty @ 37.5 % ad valorem;

b. National Calamity Contingent Duty (NCCD) @ 23% ad Valorem (under Section 136 of the Finance Act, 2001);

c. Additional Excise Duty (Pan Masala & Tobacco Products) @

5.5% ad valorem (under Section 85 of the Finance Act, 2005);

and d. Education Cess @ 2% ad valorem (under Section 91 of the Finance Act, 2004) aggregating to 68% ad valorem.

7. As per Notification No.71/2003-CE dated 9.9.2003, the appellant was entitled to refund of the abovesaid duties of excise. The respondents extended benefits and used to grant refund to the appellant as per the abovementioned notification. The Excise Authorities used to issue a certificate of re-utilization of excise duty for the particular month. The appellant used to re-credit the amount of excise duty.

8. The Deputy Commissioner of Central Excise issued a show cause notice dated 2.1.2007, requiring the appellant to repay the amount of NCCD for the period July, 2006 to December, 2006, on the ground that exemption was not permissible under the notification for the units located in the State of Sikkim. The appellant filed a writ petition before the High Court for quashing the abovementioned communication dated 2.1.2007. The High Court disposed of the same with liberty to show cause to the said communication. The appellant filed its reply. On 4.7.2007, the Commissioner, Central Excise issued show cause notice, it was submitted that grounds phrased in the response were unsustainable. The appellant was asked to show cause why amount should not be recovered under Section 11-A of the Centr