Calcutta High Court
Howrah Commissionerate vs M/S. Bengal Beverages Private Limited on 21 May, 2025
Author: T.S. Sivagnanam
Bench: T.S Sivagnanam
OD-13
IN THE HIGH COURT AT CALCUTTA
SPECIAL JURISDICTION
ORIGINAL SIDE
CEXA/17/2022
IA NO: GA/2/2023
COMMISSIONER OF CGST & CENTRAL EXCISE,
HOWRAH COMMISSIONERATE
VS
M/s. BENGAL BEVERAGES PRIVATE LIMITED
BEFORE :
THE HON'BLE THE CHIEF JUSTICE T.S SIVAGNANAM
-A N D-
HON'BLE JUSTICE CHAITALI CHATTERJEE (DAS)
DATE : 21st May, 2025.
Appearance :
Mr. Uday Shankar Bhattacharya, Adv.
Ms. Aishwarya Rajyashree, Adv.
...for appellant
Mr. Ankit Kanodia, Adv.
Ms. Megha Agarwal, Adv.
...for respondent
The Court :- This appeal is filed by the revenue challenging the order
passed by the Customs, Excise & Service Tax Appellate Tribunal, Eastern
Zonal Bench, in Excise Appeal No. 76748 of 2019, dated 24 th February, 2022.
The appeal was admitted on the following substantial questions of law :
a) Whether the availment of Cenvat Credit of a sugar cess by respondent
is irregular since, there were no provisions of the same more
specifically in Rule 3(I) of the Cenvat Credit Rules, 2004 for
availament of Cenvat Credit on sugar cess ?
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b) Whether the Respondent is entitled to Cenvat Credit on sugar cess
under sub-section (i) of Section 3 of Sugar Cess Act, 1982, since, the
sugar cess on sugar was collected for development of industry and for
matters connected therewith ?
c) Whether the Learned Tribunal erred in law in not holding that once
the SLP has been filed before the said Hon'ble Supreme Court of India
and the same has entertained, the judgment of the Hon'ble High
Court is in jeopardy and subject matter of this unless determined by
the last court, cannot be said to have attained finality in view of the
settled principles of law as held by the Hon'ble Apex Court ?
d) Whether the Learned Tribunal erred in law in not considering that the
Hon'ble Supreme Court of India was pleased to grant leave in the
petition for Special Leave to Appeal (C) No.26630 of 2014 and
adjourned the hearing of SLP(C) No.5101, 5104 and 5086 of 2015
filed by the Commissioner of Central Excise, Custom & Service Tax,
Belgaum along with order dated 06.08.2013 passed by the Hon'ble
Karnataka High Court in the case of Shree Renuka Sugar Limited
being CEA No.14 of 2008 [2014(302) ELT 33 (Kar.)] ?
We have heard Mr. Uday Shankar Bhattacharya, learned counsel for the
appellant/revenue and Mr. Ankit Kanodia, learned counsel for the respondent.
The above substantial questions of law were considered by this Court in
the case of Commissioner of CGST & Central Excise, Kolkata South, GST
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Bhawan Vs. M/s. Diamond Beverages Pvt. Ltd. in CEXA 9 of 2020 and the
appeal filed by the revenue was dismissed and the substantial questions of law
were answered against the revenue. The operative portion of the judgment
reads as follows :
"Before we proceed to discuss further, it needs to be pointed out that
the appeal filed by the revenue before the Hon'ble Supreme Court against
the decision in Shree Renuka Sugars Ltd. (supra) in Civil Appeal
1531/2016, has been disposed of as not pressed on the ground that the
appeal falls below the threshold contained in the Circular dated August
22, 2019 of the Central Board of Indirect Tax and Customs. Thus, as on
date, the decision rendered by the Hon'ble Division Bench of the High
Court of Karnataka in the case of Shree Renuka Sugars Ltd. (supra) holds
the field. The issue which came up for consideration in the case of Shree
Renuka Sugars Ltd., is identical to the questions of law raised in this
appeal which have been admitted, they being whether the entitled for
Cenvat Credit on Sugar Cess levied under section 3(4) of the Sugar Cess
Act, 1982 on the ground that the revenue contended that it is not one of the
duties allowed for Cenvat Credit under Rule 3(1) of the CENVAT Credit
Rules, 2004.
The contention of the revenue in Shree Renuka Sugars Ltd. is
identical to the contention raised by the revenue before us, namely, that
the cess levied under the Cess Act, 1982 and collected under the Act does
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not partake the character of a duty of excise. It is in the nature of a fee for
rendering specific service as contemplated under the Sugar Development
Fund Act, 1982 and therefore the assessee is not entitled to the benefit of
CENVAT credit.
The assessee, on the other hand, contended that the cess levied and
collected under the Act is nothing but a duty of excise on sugar produced
by the assessee; the levy of such cess is in addition to the duty of excise
leviable on sugar under the Central Excise Act or any other law for the
time being in force. Further, it was contended that sub-section 4 of section
3 of the Act incorporates the provisions of the Central Excise Act and Rules
made thereunder in relation to the levy and collection of the duty of excise
on sugar in the Act. Therefore, by virtue of Section 2A of the Central Excise
Act, 1944, the cess paid under the Act which is in the nature of a duty of
excise shall be construed to include Central Value Added tax, that is,
CENVAT and therefore the assessee is entitled to the benefit of CENVAT
Credit.
The Hon'ble Court after taking note of the above submissions
proceeded to first take up for consideration the question as to whether the
cess paid under the Act is a fee or tax. After elaborate discussions and
after referring to several decisions of the Hon'ble Supreme Court including
the Constitutional Bench of the Hon'ble Supreme Court it was held that the
traditional view that there must be actual quid pro quo for fee has
undergone a sea change in the recent years. The tax recovered by a public
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authority invariably goes into the Consolidated Fund, which ultimately is
utilized for public purposes; whereas a cess levied by way of fee is not
intended to be and does not become a part of the Consolidated Fund.
Thereafter, the Court took into consideration Article 266 ad 270 of the
Constitution of India and with the following reasoning it was held that the
sugar cess paid under the Act is tax and to be precise it is duty of excise
and not fee. Paragraph 27 of the judgment is quoted hereinbelow :
"In the instant case, Section 4 of the Act explicitly provides that the
proceeds of the duty of excise levied under Section 3 shall be
credited to the Consolidated Fund of India. Sub-section (2) of Section
3 of the Sugar Development Fund Act. 1982, provides that the
amount so credited, shall after due appropriation made by
Parliament by law be credited to the Sugar Development Fund. Thus
the cess collected under the Act invariably goes to the Consolidated
Fund, which ultimately is utilized for all public purposes. Therefore,
there is no quid pro quo between the cess levied and collected and
the services rendered for such payment. On the contrary, the
proceeds are credited to the Consolidated Fund of India which is
meant to be utilized for all public purposes, may be including the
purpose contemplated under the Sugar Development Fund Act,
1982. In the light of the aforesaid statutory provisions, the cess
imposed under the Act is a duty of excise or a tax. The contention
that it is a fee and the assessee is not entitled to Cenvat credit has
no substance. Therefore, the sugar cess paid under the Act is tax,
and to be precise it is Duty of Excise and not fee."
The other contention which was raised by the revenue in Shree
Renuka Sugars Ltd. which is also argued before us is that to be eligible for
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Cenvat credit, it is necessary that the Act should have been mentioned in
Rule 3 of the Cenvat Credit Rules. This issue was answered by the Court
after taking into consideration Section 3 of the Central Excise Act, 1944
which is the charging section and the other provisions of the Act and the
Cenvat Credit Rules and it was held that excise duty is leviable under the
Central Excise Act and also the Sugar Cess Act, 1982. Paragraph 35 of the
judgment is quoted below :
"In view of the aforesaid provisions, when an assessee imports
goods into India in addition to payment of basic Customs Duty, he
shall be liable to pay additional duty of customs equal to the excise
duty for the time being leviable on a like article if produced or
manufactured in India and if such excise duty on a like article is
leviable at any percentage of its value, the additional duty to which
the imported article shall be so liable shall be calculated at that
percentage of the value of the imported article. Therefore, on
imported goods or articles, in addition to basic Customs Duty, an
assessee is also liable to additional duty of customs, equivalent to
excise duty. The excise duty is leviable under the Central Excise Act,
1944 and also the Sugar Cess Act, 1982".
Ultimately, the Court held that Section 3 of the Act provides for levy
and collection as a cess for the purpose of Sugar Development Fund Act,
1982, a duty of excise on all sugar produced by any sugar factory in India
and, therefore, the cess leviable and collected is at the stage of production
of sugar in the sugar factory. Because it is a tax on production, it is
described as a duty of excise.
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In light of the above decision, the view taken by the learned Tribunal
was perfectly right and the learned Tribunal partly set aside the order
passed by the commissioner and granted consequential relief, namely, the
refund claim by the assessee.
For the above reasons, the appeal filed by the revenue is dismissed
and the substantial questions of law are answered against the revenue."
In the light of the above decision, this appeal has to be dismissed and
accordingly the same is dismissed and the substantial questions of law are
answered against the revenue.
The application, IA NO: GA/2/2023, also stands dismissed.
.
(T.S. SIVAGNANAM, CJ.)
(CHAITALI CHATTERJEE (DAS), J.)
SN.
AR(CR)
