Area-based exemption from basic excise duty doesn’t extend to Education Cess , SHEC and National Calamity Contingent Duty

Bajaj Auto Ltd. v. Union of India – Uttarakhand High Court


An area-based exemption from basic excise duty or special excise duty leviable under Central Excise Tariff Act, 1985 does not extend to education cesses and National Calamity Contingent Duty leviable under various Finance Acts.

a) Assessee, a unit in specified area at Uttarakhand, was eligible for area-based exemption. However, department argued that in absence of reference to National Calamity Contingent Duty (NCCD) and Education Cesses (EC/SHEC) in exemption Notification No. 50/2003-CE, said duty was payable by assessee.

b) Assessee argued that said duty should be treated as exempted in view of Industrial Policy envisaging 100 per cent outright exemption from excise duty.

The High Court held in favour of revenue as under:

1) Main submission of learned Senior Advocate for the petitioner is on the concept of liberal interpretation. It is vehemently contended by him that implementing notification has to be interpreted liberally and general principle of strict interpretation of an exemption notification in taxation, is not applicable.

2) In addition, he submitted that in interpretation of an implementing notification, the industrial policy would prevail. This submission of learned Senior Advocate for the petitioner is not acceptable to this Court, as exemption from paying NCCD cannot be read into the notification no. 50 of 2003 by simply applying the principles of liberal interpretation. Notification is to be read in plain and simple manner.

3) Therefore, exemption granted by a notification must be read limited to duty of excise as mentioned in notification, and by simple interpretation, it cannot be extended to cover any other kind of excise duty.

4) Moreover, assessee : (a) was getting and availing benefit of exemption notification, (b) was not aggrieved by any condition contained in notification (c) had not challenged notification, hence, present writ petition was dismissed. Thus, assessee was liable to pay NCCD, EC and SHEC as demanded – Bajaj Auto Ltd. v. Union of India (2015) 54 202 (Uttarakhand).

Source – Taxmann


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