The Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad held that Reliance SEZ is not liable to pay special additional excise duty.
The tribunal observed that the Parliament has legislative power to legislate an Act through which levy of duty can be brought in the statute. In the case the bench only interpreted the provision for the levy of duty under the provision of Section 3 and Section 147 and 112 of the Finance Act, 2002 and 2018 respectively.
The tribunal further observed that since the SEZ unit has been excluded from the levy of the duty of excise the same exclusion shall apply in respect of levy of SAED and AED. Since there is no specific mention about SEZ unit in Section 147 and 112 of the Finance Act, 2002 and 2018 respectively and in view of the provision of sub Section (3), the provision of Section 3 has to be applied which exclude SEZ from levy of duty, for this reason levy of SAED and AED is not applicable on SEZ unit.
The tribunal opined that respondent was not liable for payment of SAED and AED being an SEZ unit. Hence the said duties so paid are refundable to the respondent along with interest, in accordance with law.
Facts
Respondent is a SEZ unit in Reliance Jamnagar SEZ. In the said SEZ, the Respondent manufactures Motor Spirit (MS), High Speed Diesel (HSD) and Aviation Turbine Fuel (ATF) which fall under Sub-Headings of the Fourth Schedule to the Central Excise Act 1944.
The said goods manufactured in a SEZ are excluded from the charge of Excise Duty (Central Value Added Tax) levied under Section 3 (1) of the Central Excise Act 1944.
Since goods manufactured by the Respondent in SEZ unit are excluded from the charge of the Excise duty levied under said Section 3(1), the Respondent was not paying such Excise duty on the MS, HSD and ATF manufactured by the Respondent SEZ unit and removed from the SEZ by way of export.
Further, since the Surcharge (SAED) and the Road and Infrastructure Cess (AED) levied under Section 147 of the Finance Act 2002 and Section 112 of the Finance Act 2018 respectively, are in the nature of additional duties of excise i.e. by way of increase in the basic excise duty charged under said Section 3(1), the Respondent holds the view that the goods manufactured in SEZ being excluded from the said charge of basic excise duty, the same are also outside the purview of the said Surcharge and Cess. It is the Respondent‟s view that the said Surcharge and Cess, which are in the nature of increment in the existing duty charged under said Section 3(1), cannot apply to goods manufactured in SEZ, since the same are excluded from the said basic charge under Section 3(1). Therefore, according to the Respondent the said Surcharge and Cess were not payable on the MS, HSD and ATF manufactured by the Respondent SEZ unit and removed from the SEZ by way of export.
The department, however, was of the view that the MS, HSD and ATF manufactured by the Respondent SEZ unit and removed from the SEZ by way of export were liable to the said SAED (Surcharge) and AED (Cess) during the period 1-7-2022 to 19-7-2022.
Submissions
The contention of the Respondent was that the SAED and AED levied on exports of Motor Spirit (Petrol), HSD and ATF appeared to be an inadvertent mistake which was corrected by way of exempting SEZ from the above duties vide Notification. This appears to be the incorrect version and the argument without any merit.
Conclusion
The tribunal observed that since Section 147 of the Finance Act, 2002 and 112 of Finance Act, 2018 creating an inconsistency with the provision of SEZ Act then the provision of SEZ Act overrides the provision of Finance Act, 2002 and 2018. For this reason also, the Revenue‟s proposal for levy of SAED and AED on the respondent‟s SEZ unit is illegal and incorrect.
Case Details
Case Name: Commissioner Appeals – CGST & Central Excise Rajkot V/S M/S. Reliance Industries Ltd, Unit Of Rsez Jamnagar
Citation: Excise Appeal No. 10070 of 2024
Court: CESTAT Ahmedabad
Judge: Ramesh Nair, Member (Judicial) And Raju, Member (Technical)
Decision Date: 14/08/2024
