Customs, Excise and Gold Tribunal - Mumbai
Collector Of C. Ex. vs Mahindra And Mahindra Ltd. on 20 November, 1990
Equivalent citations: 1993ECR38(TRI.-MUMBAI), 1991(53)ELT408(TRI-MUMBAI)
ORDER R. Jayaraman, Member (T)
1. Both the stay application as well as the appeal are directed against the order of the Collector of Central Excise (Appeals), Bombay bearing No. ADN-736/90.B.I. dated 25-7-1990 allowing the appeal of the respondents.
2. Since it was urged that the issue involved in the stay application as well as in the appeal is one and the same, both the parties urged for hearing the appeal itself. Hence, we take up the appeal itself for hearing.
3. The brief facts for the purpose of disposal of the appeal can be stated as below:
Respondents herein, who are manufacturers of motor vehicles, are liable to pay automobile cess imposed under the provisions of Section 9 of the Industries (Development and Regulation) Act, 1951 read with the provisions of the Automobile Cess Rules, 1984. They also export the motor vehicles. They claimed rebate of cess paid on the motor vehicles exported, which was rejected by the Assistant Collector (Refunds) on the ground that the cess is not allowed rebate under the Notification issued under Rule 12 of the Central Excise Rules. The Respondents went in appeal before the Collector (Appeals), who has allowed the appeal of the respondents and directed the Assistant Collector to grant rebate of cess in respect of motor vehicles exported. The Department, feeling aggrieved by this order, have come in appeal before us.
4. Shri Mondal, the Id. SDR on behalf of the appellant, contended that the order of the Collector (Appeals) is mainly based on the ground that as per the provisions of Rule 3 of Automobile Cess Rules, 1984, the provisions of the Central Excises & Salt Act, 1944 and the Rules made thereunder including those relating to refund of duty shall be applicable to the levy and collection of cess. Refund of duty sanctioned under Section 11 B also includes rebate. The Collector (Appeals) has also held that cess is also collected as a duty of excise and hence the provisions of the Central Excise Act and the Rules made thereunder are made applicable specifically to the levy and collection of cess and therefore rebate of cess is admissible. Shri Mondal stated that there is no dispute that the provisions of Central Excises & Salt Act, 1944 and the Rules made thereunder, are made applicable to the levy and Collection of cess. There is also no dispute that refund includes rebate of excise duty. It is also not disputed by the Department that cess is collected as a duty of excise. But, the Collector (Appeals) has seriously erred in failing to take note of the provisions of Rule 12, definition of duty as given under Rule 2(v) of the Central Excise Rules and also the provisions of Section 3 of the Central Excises & Salt Act, 1944. Elaborating his argument, he stated that as per the definition of "duty" under Rule 2(v) of the Central Excise Rules, 'duty' means the duty payable under Section 3 of the Central Excises & Salt Act. As per Section 3 of the Central Excises & Salt Act, 1944, duties of excise shall be levied and collected on goods produced or manufactured in India at the rates set forth in the schedule to the Central Excise Tariff Act, 1985. Hence, the duty of excise can only refer to the 'duty of excise' as set out in the Central Excise Tariff Schedule and it cannot be contemplated to mean 'cess' which is levied under a separate enactment. Even if cess is collected as duty of excise, it cannot be construed as a duty of excise figuring in the Schedule to the Central Excise Tariff Act. Thereafter, by referring to Rule 12 of the Central Excise Rules, he contended that Rule 12 is not an automatic provision granting rebate in respect of all excisable goods. There should be a Notification issued under Rule 12 specifying the excisable goods eligible for grant of rebate of duty, also prescribing such conditions and safeguards as may be considered necessary. He took us through the provisions of Rule 12 to bring home the aforesaid point. Thereafter, he referred to the Not. No. 197/62-C.E. dated 17-11-1962 issued under Rule 12 of the Central Excise Rules and he particularly drew our attention to the table given in the said notification which refers to all goods specified in the schedule to the Central Excise Tariff Act, 1985. He also referred to the body of the aforesaid notification to show that it has been issued under Rule 12 of the Central Excise Rules only without invoking any provisions of the Automobile Cess Rules, 1984. His argument, in short was, that no doubt, Rule 12 can be made available for granting rebate in respect of automobile cess as per the provisions of Rule 3 of the Automobile Cess Rules, 1984, but when Rule 12 prescribes issue of a notification for grant of rebate and such a notification is issued only under Rule 12 without invoking Rule 3 of the Automobile Cess Rules, 1984 this cannot be automatically applied for giving rebate of cess paid on motor vehicles. In this context, he also referred to the three Members judgment of the Special Bench-D in the case of Nellimar-la Jute Mills reported in 1987 (12) ECR 1018 (CEG AT SB-D) wherein, it has been clearly held by the Bench that goods exempt from duty are not exempt from cess in the absence of seperate notification issued under Rule 8(1) read with Section 3(4) of the Central Cess Act. The ratio of this judgment would be squarely applicable in this case, where Rule 12 of the Central Excise Rules contemplates issue of a notification for exemption from rebate. He also referred to the judgment of the Supreme Court in the case of Modi Rubber Limited and Anr. reported in 1986 (8) ECR 723 (SC), where it has been held that when an exemption notification is issued under Rule 8(1) simpliciter without reference to any other source of power, the exemption applies only to 'duty of excise' leviable under Section 3 of CESA. Following the aforesaid decisions in this case, the Notification issued under Rule 12 is a notification referring to the goods specified in the Central Excise Tariff and does not invoke provisions of Rule 3 of the Automobile Cess Rules, 1984. He, therefore, contended that this point of law has not been properly appreciated by the Collector (Appeals), which has resulted in passing of the impugned order. He, therefore, pleaded for setting aside the order of the Collector (Appeals) and restoring the order of the Assistant Collector.
5. Shri Pikle, on the other hand, contended that cess is also a duty of excise and the provisions of Section 3 of the Central Excises & Salt Act and the Rules made thereunder are applicable. Hence, Rule 12 of the Central Excise Rules is also applicable including the notification issued thereunder. The notification No. 197/62 issued under Rule 12 refers to rebate of duty paid on the excisable goods specified in the table. In the table all excisable goods are mentioned. Motor Vehicle is also one of the goods specified in the Central Excise Tariff Act. It is not disputed that cess is collected as a duty of excise hence the term 'duty paid' referred to in the notification cannot be construed to mean only 'duty paid' under Section 3 of the Central Excises & Salt Act, 1944. It can refer to even cess paid on the goods, which are figuring in the schedule to the Central Excise Tariff Act. He, therefore, opposed the appeal filed by the revenue and contended that the order of the Collector (Appeals) is legally sustainable. He also cited the following decisions in his favour:
(i) Special Bench 'C of the Tribunal's decision in the case of Andhra Pradesh Paper Mills Ltd. reported in 1986 (23) ELT 242 (Tri.) - wherein, it has been held that cess is also an excise duty;
(ii) Special Bench 'D' of the Tribunal's decision in the case of Mahabir Jute Mills Ltd., reported in 1984 (16) ELT 477 (Tri.) to urge that even the wordings and definitions used in the Central Excise Act & Rules would be valid for interpretation for levy and collection of cess; and
(iii) The decision of Madhya Pradesh High Court in the case of Mata Prasad Anantram reported in AIR 1971 M.P. 136 to urge that 'tax' includes a tax, toll, cess, rate, fee or other impost leviable under the Act prescribing conditions to be a Panch or a Sarpanch.
6. After hearing both the sides, we find that the only issue to be decided in this case is whether the respondents are entitled to grant of rebate of cess paid on motor vehicles exported out of India in terms of Not. No. 197/62-C.E., dated 17-11-1962 issued under Rule 12 of the Central Excise Rules. We are particularly to take note of the fact that the learned SDR does not contest the following prepositions :
(i) Automobile cess is collected as a duty of excise duty;
(ii) Provisions of the Central Excise Act and the Rules made thereunder shall apply as far as to the levy and collection of the cess; and
(iii) In view of the provisions of Rule 3 of the Automobile Cess Rules, even Rule 12 of the Central Excise Rules would be made applicable in the case of automobile cess.
7. However, Shri Mondal's main contention is that if rebate is to be granted in respect of cess paid on motor vehicles, notification under Rule 12 read with Rule 3 of the Automobile Cess Rules is legally necessary. In the absence of any such notification, Not. No. 197/62 dated 17-11-1962 cannot be automatically applied for granting rebate of cess paid on automobiles. The aforesaid notification is issued under Rule 12 of the Central Excise Rules and can only refer to rebate of excise duty paid on the goods levied under Section 3 of the Central Excises & Salt Act, 1944. He draws his support mainly from the decision of the Special Bench reported in 1987 (12) ECR1018 (Tri.) and the decision of the Supreme Court reported in 1986 (8) ECR 723. He also contended that in the case of grant of rebate of additional excise duty in lieu of sales tax and excise duty levied under the Finance Act are issued under Rule 8(1) read with relevant provisions of the concerned Acts. The argument of Shri Pikle and the citations made by him mainly confirm the position that the provisions of the Central Excise Act and the Rules made thereunder are also applicable to the levy and collection of cess and cess is also collected as a duty of excise. The decision of the Madhya Pradesh High Court referred to by the learned representative Shri Pikle is in the context of payments of tax being the eligible condition for nomination as a Panch or Sarpanch, where the Madhya Pradesh High Court has held that 'tax' includes 'duty'. In our view this judgment does not apply to the facts of the present case. On the contrary, the two citations referred to by Shri Mondal are covering the same issue raised in the present appeal. For proper appreciation of the position, we would like to reproduce the relevant para of the decision of the Special Bench in the case of Nellimarla Jute Mills reported in 1987 (12) ECR 1018 (Cegat SB-D):
"Now coming specifically to the provisions relating to exemption from cess, the authority or power of the Central Government to grant exemption to any jute manufacture from the cess leviable under the Cess Act would be Central Excise Rule 8 as made applicable by Section 3(4) of the Central Cess Act. A Notification issued under Section 3(4) of the Cess Act read with Central Excise Rule 8(1) would achieve the object. The learned counsel's contention is that since Central Excise Notification No. 56/72 issued under Rule 8(1) exempts from payment of Central Excise duty on jute manufactures used captively for the manufacture of other jute manufacturers, a similar exemption from the Cess leviable under the Cess Act would be the result in so far as the present cases are concerned, because of the operation of Section 3(4) of Cess act. In our opinion, this result will not follow from Central Excise Notification No. 56/72. Our reasons for saying so are the following. Firstly, that notification exempts goods in the circumstances stated therein from 'duty'. The expression 'duty' for the purpose of the Central Excise Rules is defined as "duty payable under Section 3 of the Act". [Central Excise Rule 2(v).] Section 3 of the Act (i.e. the Central Excises Act) provides for levy and collection of duties of excise on all excisable goods produced or manufactured in India as, and at the rates set forth, in the First Schedule to the Act. This duty is not the same thing as the duty levied in terms of Section 3(1) of the Cess Act. Though both levies are described as duties of excise, the authority for levy is, as already noted, through seperate and different enactments. Therefore, the exemption by means of a notification issued under Central Excise Rule 8(1) exempting goods from duty (leviable under the Central Excises Act) will not constitute an authority for exemption from the cess leviable under the Cess Act. For this purpose, there has to be an exemption notification specifically in terms of Section 3(4) of the Cess Act read with Central Excise Rule 8(1). No such notification has been placed before us, nor is it contended that there is any such notification."
8. From the above, it can be seen that the authority of the Central Government to grant exemption of cess can be derived from Rule 8 of the Central Excise Rules by virtue of the relevant provisions being made applicable to the provisions of the Central Excise Act and Rules thereunder. However, when a notification is issued under Rule 8(1) without invoking the corresponding provisions of the Cess Act or the Rules, that Notification could only be made applicable to the duty of excise levied under Section 3 of the Central Excises & Salt Act. This view is also reiterated in the decision of Supreme Court in the case of Modi Rubber Ltd. cited supra. The relevant portions of the judgment of the Supreme court are reproduced below:
"This argument is, in our opinion, not well-founded and. cannot be sustained. It is obvious that when a notification granting exemption from duty of excise is issued by the Central Government in exercise of the power under Rule 8(1) simpliciter, without anything more, it must, by reason of the definition of 'duty' contained in Rule 2 clause (v) which according to the well-recognised canons of construction would be projected in Rule 8(1), be read as granting exemption only in respect of duty of excise payable under the Central Excises and Salt Act, 1944. Undoubtedly, by reason of Sub-section (4) of Section 32 of the Finance Act, 1979 and similar provision in the other Finance Acts, Rule 8(1) would become applicable empowering the Central Government to grant exemption from payment of special duty of excise, but when the Central Government exercises this power, it would be doing so under Rule 8(1) read with Sub-section (4) of Section 32 or other similar provision. The reference to the source of power in such a case would not be just to Rule 8(1), since it does not of its own force and on its own language apply to granting of exemption in respect of special duty of excise, but the reference would have to be to Rule 8(1) read with Sub-section (4) of Section 32 or other similar provision. It is significant to note that during all these years, whenever exemption is sought to be granted by the Central Government from payment of special duty of excise or additional duty of excise, the recital of the source of power in the notification granting exemption has invariably been to Rule 8(1) read with the relevant provision of the statute levying special duty of excise or additional duty of excise, by which the provisions of the Central Excises and Salt Act, 1944 and the rules made thereunder including those relating to exemption from duty are made applicable."
9. Shri Pikle's argument is that both the aforesaid decisions are with regard to the notification issued under Rule 8(1) and not with regard to the notification issued under Rule 12. This argument is to be recorded only for dismissal. It is not disputed that both these decisions covered the question of interpretation of notification issued in ex-ercise of the powers conferred on the Government under the Central Excise Rules and hence, whether it be Rule 8 or Rule 12 of the Central Excise Rules, the principle laid down is required to be applied. It is not the case of the respondents that any notification has been issued under Rule 12 read with Rule 3 of the Automobile Cess Rules.
It is also not the case of the respondents that Rule 12 grants rebate of duty paid without requirement of issue of notification so as to make it applicable automatically to the rebate of cess. In the circumstances, when Rule 12 envisages issue of the notification, that rule will be available for issue of a specific notification to grant rebate of cess on export read with Rule 3 of the Automobile Cess Rules. When no such notification is issued, it is clear that the policy makers have not thought it fit to grant rebate of cess on export. Moreover, it is not an empty formality or an unnecessary ritual that the Government is performing every year by issuing a seperate notification under Rule 12 read with the relevant provisions of the Finance Act to make the special excise duty also eligible for rebate of cess. In the circumstances, we do not see any merit in the argument of Shri Pikle. Since the citations made by the Id. SDR are directly on the point and the order of the Collector (Appeals) does not appear to have taken into account this legal position as set out by the Supreme Court, we allow the appeal of the revenue, set aside the order of the Collector (Appeals) and restore the orders of the Assistant Collector.
Since we disposed of the appeal itself, stay application does not survive for consideration.