In a ruling in favour of Reliance Industries Ltd, the Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that Levy under the Finance Act will apply to goods manufactured or produced in India other than goods produced in Special Economic Zone ( SEZ ).
The issue was whether the Central Excise authorities could have levied and recovered Special Additional Excise Duty in terms of Section 147 of the Finance Act, 2002 ( SAED ); Road and Infrastructure Cess in terms of Section 112 of Finance Act, 2018 ( RIC ) and Agriculture Infrastructure and Development Cess in terms of Section 125 of Finance Act, 2021 ( AIDC ) as a duty of Excise/Additional duty of Excise on the removal of High-Speed Diesel, which was manufactured in the Special Economic Zone ( SEZ ) to the Domestic Tariff Area ( DTA ).
The demand for SAED/RIC/AIDC has been raised against Reliance Industries Ltd, a unit in the Special Economic Zone ( SEZ ) and is over and above the duties of Customs already discharged at the time of removal to the DTA in terms of Section 30 of the SEZ Act, which as a part of Additional duty under Section 3(1) of the Customs Tariff Act, includes SAED, RIC as also AIDC, being Additional duties equal to the duty of excise leviable on like articles for the time being produced or manufactured in India.
The adjudicating authority has confirmed the demand for levy and recovery of Excise duty under Section 11A read with Section 147 of Finance Act, 2002, Section 112 of Finance Act, 2018 and Section 125 of Finance Act, 2021 in the form of SAED, RIC and AIDC respectively along with interest thereon under Section 11AA and penalty under Rule 28 of the Central Excise Rules, 2017.
The demand for Central Excise Duty has been confirmed over and above what has already been assessed and paid in terms of Section 30 of the SEZ Act, 2005 on the removal of HSD from the SEZ to the DTA by rejecting the appellant’s contention to the effect that the additional duty recovered under Section 3(1) of the Customs Tariff Act, had already factored in the said levies under the Finance Act as a part of the additional duty leviable under Section 3(1) of the Customs Tariff Act.
The adjudicating authority has rejected the contention that in terms of Section 30 of SEZ Act, duties of Customs including anti-dumping, countervailing and safeguard duty under the Customs Tariff Act, 1975 as leviable on such goods, when imported into India, stood levied and collected and that there would be duplication of the duties, if the levy under the Finance Acts were once again levied and collected, by holding that if the SEZ was deemed to be a territory outside the Customs Territory of India for undertaking authorised operations then clearances from SEZ into DTA should have been reckoned as exports for the SEZ and imports for the DTA.
Shri Vishal Agarwal, counsel with Ms. Dimple Gohil, Advocate appearing on behalf of the appellant. Shri Rajesh R. Kurup, Superintendent ( Authorised Representative ) appearing on behalf of the Revenue reiterated the findings of the adjudicating authority in the impugned order.
The dispute was whether the provisions of the Central Excise Act, 1944 can be resorted to while construing the provisions governing levy and collection of duty under the three Finance Acts viz: SAED under the Finance Act 2002; RIC under the Finance Act 2018 and AIDC under the Finance Act, 2021.
The judgement in the case of Unicorn, in fact, supports the case of the appellant since the Apex Court held that while construing the levy and collection provisions concerning Education cess under the Finance Act, 2004 as also NCCD under the Finance Act, 2001 and Additional Excise duty (Pan Masala and Tobacco Products) under Finance Act, 2005, to which also the provision regarding levy and collection under the Central Excise Act, 1944 and the Rules made thereunder has been made applicable, that provision of Section 5A of the Central Excise Act, 1944 providing for exemption from the levy could have been applied if the Central Government so choose.
A two-member bench comprising of Mr Ramesh Nair, Member ( Judicial ) and Mr Raju Member ( Technical ) viewed that the appellant was completely justified in contending that the provisions of the Central Excise Act, 1944 about 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.
The CESTAT set aside the impugned order and allowed the appeal.
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