BAJAJ AUTO LIMITED versus UNION OF INDIA & ORS.

Citation: [2019] 5 S.C.R. 139 · Decided: 27-03-2019 · Supreme Court of India · Bench: L. NAGESWARA RAO · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

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 BAJAJ AUTO LIMITED
v.
                                UNION OF INDIA & ORS.
 (Civil Appeal No.3239 of 2019)
 MARCH 27, 2019
[L. NAGESWARA RAO AND SANJAY KISHAN KAUL, JJ.]
Central Excise Act, 1944 – Central Excise Tariff Act, 1985 –
National Calamity Contingent Duty (NCCD), Education Cess and
the Secondary & Higher Education Cess – Liability of – Appellant-
limited company was exempted from, inter alia, Central Excise Duty
(CENVAT) under the second schedule of the Act, 1985 – Appellant
was not paying National Calamity Contingent Duty, Education Cess
and Secondary & Higher Education Cess – Dispute arose pertaining
to the liability of the appellant to pay three cesses referred – An
audit objection report was prepared on account of the failure of
the appellant to pay the aforementioned three cesses – A show cause
notice was given to the appellant – Writ petition filed by the appellant
before the High Court against the show cause notice was dismissed
– On appeal, held: The issue of the Education Cess and the
Secondary & Higher Education Cess is covered by the SRD Nutrients
Pvt. Ltd. case, which held that these cesses are a surcharge levied
and collected on the total value of the excise duty and the excise
duty itself is exempted, there cannot be any question of any recovery
of these cesses, as the substratum does not exist – Therefore,
appellant not liable to pay the Education Cess and the Secondary
& Higher Education Cess – Insofar as NCCD is concerned, it is
levied on the product – However, it is in nature of excise duty – It
has to bear the same character as those respective taxes to which
the surcharge is appended – NCCD will not cease to be an excise
duty, but is the same as an excise duty, even if it is levied on the
product – Once the excise duty is exempted, NCCD, levied as an
excise duty cannot partake a different character and, thus, would
be entitled to the benefit of the exemption notification – Thus,
appellant not liable to pay NCCD as well – Finance Act, 2001 –
s.136 – Finance Act, 2004 – ss. 91 and 93 – Finance Act, 2007 –
ss.136 and 138.
      [2019] 5 S.C.R. 139
 139
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SUPREME COURT REPORTS
[2019] 5 S.C.R.
Allowing the appeal, the Court
HELD: 1.  The controversy before this Court is now in a
narrow compass, on account of the subsequent judicial
pronouncement in SRD Nutrients Pvt. Ltd. v. Commissioner of
Central Excise, Guwahati.  The issue of the Education Cess and
the Secondary & Higher Education Cess, is covered against the
Department in view of this judgment and that is how, also, the
Department appears to have understood now, in view of the
written synopsis placed before this Court. In the facts of that
case, there was an initiative for development of industries in the
North-Eastern States of Assam, Tripura, Meghalaya, Mizoram,
Manipur, Nagaland, Arunachal Pradesh, etc.  A Notification
exempting goods from payment of excise duties was issued in
respect of those States.  Education Cess and Secondary & Higher
Education Cess, as imposed under the Finance Acts of 2004 and
2007, respectively were also sought to be levied on the appellant
therein.  The gravamen of the reasoning of this Court is that
since these cesses are a surcharge levied and collected on the
total value of the excise duty, and the excise duty itself is
exempted, there cannot be any question of any recovery of these
cesses, as the substratum does not exist.  Not only that, this
Court also took into account how the Department itself had viewed
the situation regarding Education Cess and Secondary & Higher
Education Cess, which are payable as surcharge on the excise
duty, once the excise duty is exempted. The Circular dated
10.08.2004 issued by the Department also clarified this position.
Therefore, the result of the aforesaid discussion is that the
appellant is not liable to pay Education Cess and Secondary &
Higher Education Cess. [Paras 12, 13 and 24] [146-G; 151-A]
3.  The real bone of contention which survives for
consideration is the NCCD.  The reason for this is that while the
two cesses discussed aforesaid were in the nature of levy on the
excise duty payable, the NCCD is levied on the product itself, as
per Section 136 of the Finance Act, 2001.  It is this aspect, inter
alia, which was canvassed by the Department to persuade this
Court to take a different view from the one taken qua the other
two cesses.  [Para 16] [149-A-B]
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4.  On a proper appreciation of the judicial prono

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