Madras High Court
M/S. Ktv Health Food Pvt. Ltd vs The Commissioner Of Customs ... on 6 August, 2021
W.P.(MD)No.11003 of 2020
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 06.08.2021
CORAM:
THE HONOURABLE MR.JUSTICE R.SURESH KUMAR
W.P.(MD)No.11003 of 2020
and
W.M.P.(MD)No.9656 of 2020
M/s. KTV Health Food Pvt. Ltd.,
Represented by its Director, Shri B.Babu,
No.1, Sivasakthi Nagar,
Keela Anandhanpettai, Manjakollai Post,
Nagapattinam – 611 006. ... Petitioner
Vs.
The Commissioner of Customs (Preventive),
No.1, Williams Road,
Cantonment,
Tiruchirapalli – 620 001. ... Respondent
PRAYER: Writ Petition filed under Article 226 of the Constitution
of India for issuance of Writ of Certiorari, calling for the records
pertaining to the impugned order-in-original No.TCP-CUS-PRV-
COM-04-2020 dated 16.06.2020 in C.No.VIII/10/121/2019-
Cus.ADJN passed by the respondent and quash the same or
alternatively issue any writ or order or direction most particular in
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W.P.(MD)No.11003 of 2020
the nature of Writ of Mandamus and direct the respondent to
refund the amount of Rs.66,66,582/- debited from the MEIS scrips
issued to the petitioner in cash.
For Petitioner : Mr.Hari Radhakrishnan
For Respondent : Mr.B.Vijay Karthikeyan
Standing Counsel
ORDER
************
The prayer sought for herein is for a Writ of Certiorari,
calling for the records pertaining to the impugned order-in-original
No.TCP-CUS-PRV-COM-04-2020 dated 16.06.2020 in
C.No.VIII/10/121/2019-Cus.ADJN passed by the respondent and
quash the same and direct the respondent to refund the amount of
Rs.66,66,582/- debited from the MEIS scrips issued to the
petitioner in cash.
2. The petitioner is an importer / manufacturer and in their
course of business, they had imported RBD Palmolein, falling under
Customs Tariff Heading 1511 9020, for the purpose of manufacture
of refined oil. During the period 2017-2018, the petitioner had filed
10 warehouse bills of entry with regard to such import. Thereafter,
the petitioner had filed 52 bills of entry for ex-bond clearance for
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the aforesaid 10 warehouse bills of entry. At the time of filing the
ex-bond bills of entry, the petitioner claimed the benefit of
Notification No.24/2015-Cus dated 08.04.2015, which enables an
importer to use the scrip issued under Merchandize Export from
India Scheme (MEIS), which is a scheme notified under the Foreign
Trade Policy 2015-20. As per the said notification, an importer who
is liable to pay the customs duty, instead of paying the duty by
cash, debit the customs duty from the scrips that is issued to him
under the said scheme. Accordingly, by using the scrips under the
MEIS, the petitioner had debited a total amount of customs duty of
Rs.22,88,86,212/-. Out of the said duty paid, an amount of
Rs.66,66,582/- was debited in respect of education cess and
secondary and higher secondary education cess that were payable
as a percentage of basic customs duty leviable on the goods.
3. It is the further case of the petitioner that, after the
assessment was over and the clearance of the goods were given,
however, the respondent has issued a show cause notice dated
19.11.2019, on the ground that, the education cess that was
wrongly debited from MEIS scrips of the petitioner was not
permissible in terms of Notification No.24/2015-Cus dated
08.04.2015. In this context, it seems to be the contention of the
respondent that, only basic customs duty can be debited from the
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scrips and education cess and secondary and higher education cess
are to be paid only by way of cash. Therefore, on that basis, the
show cause notice proposed to demand an amount of
Rs.66,66,582/- that was paid by the petitioner by way of debit in
MEIS scrips along with interest and there was also a proposal to
impose a penalty under Section 117 of the Customs Act, 1962.
4. In response to the show cause notice, the petitioner had
given a reply on 02.12.2019. However, the respondent has passed
order-in-original dated 16.06.2020, whereby, rejecting the show
cause given by the petitioner, the proposal already made through
the show cause notice had been confirmed by which they
demanded the petitioner to pay the said amount of Rs.66,66,582/-
along with applicable interest and also had imposed a penalty of
Rs.2,00,000/- in terms of Section 117 of the Customs Act. Felt
aggrieved over the said order, the petitioner has preferred this writ
petition with the aforesaid prayer.
5. Heard Mr.Hari Radhakrishnan, learned Counsel appearing
for the petitioner, who straightaway took the Court to the reasons
cited by the respondent in rejecting the claim of the petitioner by
permitting the petitioner to debit the percentage of cess payable by
way of education and higher education cess also through the scrip.
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In the impugned order, mainly, the respondent has given the
following reasons for rejecting the claim of the petitioner:
“14.04. From the above, it is clear that only
Customs duties which are leviable under First
Schedule of Customs Tariff Act, 1975 and additional
duty leviable thereon under sub-section (1), (3) and
(5) of Section 3 of the said Customs Tariff Act are
allowed to be debited against MEIS Scrips.
14.05. I find that the Education Cess and
Secondary Higher Education Cess are being debited
against the MEIS Scrip despite being leviable under
Finance Act, 2004 and Finance Act, 2007
respectively and hence not eligible for debit against
MEIS Scrips.
14.06. I find that the decision of the Hon'ble
Supreme Court judgment dated 06.12.2019 in the
case of Unicorn Industries Vs. Union of India and
others (Civil Appeal No.9237 & 9238 of 2019)
wherein it has been inter-alia been held that “A
notification has to be issued for providing exemption
under the said source of power. In the absence of a
notification containing an exemption to such
additional duties in the nature of Education Cess and
Secondary Higher Education Cess, they cannot be
said to have been exempted. The proportion urged
that simply because one kind of duty is exempted,
other kinds of duties automatically fall, cannot be
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accepted as there is no difficulty in making the
computation of additional duties, which are payable
under NCCD, Education Cess, secondary and Higher
Education Cess. Moreover, statutory notification must
cover specifically the duty exempted. When a
particular kind of duty is exempted, other types of
duty or cess imposed by different legislation for a
different purpose cannot be said to have been
exempted.”
14.07. CBIC vide para 4 of Circular No.
02/2020-Customs dated 10.01.2020 has stated that
the duty credit scrips issued under schemes such as
MEIS, SEIS, etc. are granted as rewards / incentives
for exporters under the respective FTP, as per para
3.02 of the Foreign Trade Policy 2015-2020, these
scrips can be used for payment of Basic Customs
Duty and Additional Customs Duty specified under
Section 3(1), 3(3) and 3(5) of the Customs Tariff Act,
1975 for import of inputs or goods and for payment
of Central Excise duties on domestic procurement of
inputs of goods. The relevant Customs exemption
notifications also allow debit of Basic Customs Duty
and Additional Duties of Customs in the duty scrips.
It is to mention that the debit of SWS through duty
credit scrip is not envisaged in the FTP and the
exemption notifications. Further it is clarified that in
para 11 of the said circular that in respect of past
cases of debits of SWS already made in duty credit
scrips, it has been decided by the Board that for
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ensuing ease of doing business, such past cases
should not be disturbed and the payments made
through debit in duty credit scrips may be accepted
as revenue duly collected and recoveries in cash not
be insisted for these cases.
14.08. From the above circular, it is very clear
that the past cases of debits of SWS made through
duty credit scrips alone need to be accepted as
revenue duty collected and there is no instruction
about the debits of Education Cess and Secondary
Higher Education Cess through Scrips in the said
circular. Hence, as per the said circular, the past
cases pertain to debits of SWS and not the debit of
Education Cess and Secondary Higher Education
Cess in the MEIS scrip. Hence debit of Education
Cess and Secondary Higher Education Cess in the
MEIS Scrip is not proper and hence the importer is
liable for payment of said amount through cash only.
Hence, the importer is liable to pay the Education
Cess and Secondary Higher Education Cess in cash
which are levied under Finance Act, 2004 and
Finance Act, 2007 and not as Customs duty under
First Schedule of Customs Tariff Act, 1975 and
additional duty leviable thereon under sub-section
(1), (3) and (5) of Section 3 of the said Customs Tariff
Act.”
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6. Insofar as the said reason cited by the respondent through
the impugned order, the learned Counsel for the petitioner submits
that, the quoting of the judgment of the Supreme Court dated
06.12.2019, made in the case of Unicorn Industries Vs. Union of
India and others (Civil Appeal No.9237 & 9238 of 2019) is
concerned, in the said judgment, in fact, exemption had been
sought for by the assessee in the said case under Notification No.
71/2003 of Central Excise that, the said assessee was exempted to
pay excise duty and this was, when confronted, the Hon'ble
Supreme Court in the said Unicorn Industries case has held that,
since the SWS components are a separate entity which cannot be
included, unless and until if specific exemption is granted in this
regard.
7. The education cess was brought in to the statute book for
levying the same through the Finance Act, 2004, both in Central
excise duty as well as the customs duty by two separate provisions
under Sections 91 and 94 of the Finance Act and since such levy of
education cess had come, which had been considered to be part
and parcel of duty of excise and customs duty, that position since
was not prevailing till the regime of Notification No.71/2003, such
exemption sought for in the Unicorn Industries case was negated
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by the Hon'ble Supreme Court. In support of his case, he relied on
the following:
“19. The education cess came to be imposed
vide notification dated 10.9.2004 issued under the
Finance Act, 2004. Sections 91 and 93 are extracted
hereunder:
“91. Education Cess- (1) Without
prejudice to the provisions of sub section
(11) of Section 2, there shall be levied and
collected, in accordance with the provisions
of this Chapter as surcharge for purposes
of the Union, a cess to be called the
Education Cess, to fulfil the commitment of
the Government to provide and finance
universalized quality basic education.
(2) The Central Government may,
after due appropriation made by Parliament
by law in this behalf, utilize, such sums of
money of the Education Cess levied under
subsection (11) of Section 2 and this
Chapter for the purposes specified in sub-
section (1), as it may consider necessary.
93. Education Cess on Excisable
Goods. - (1) The Education Cess levied
under Section 81, in the case of goods
specified in the First Schedule to the
Central Excise Tariff Act, 1985 (5 of 1986),
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being goods manufactured or produced,
shall be a duty of excise (in this section
referred to as the Education Cess on
excisable goods), at the rate of two per
cent, calculated on the aggregate of all
duties of excise (including special duty of
excise or any other duty of excise but
excluding Education Cess on excisable
goods) which are levied and collected by
the Central Government in the Ministry of
Finance (Department of Revenue) under
the provisions of the Central Excise Act,
1944 (1 of 1944) or under any other law for
the time being in force.
(2) The Education Cess on excisable
goods shall be in addition to any other
duties of excise chargeable on such goods
under the Central Excise Act, 1944 (1 of
1944) or any other law for the time being in
force.
(3) The provisions of the Central
Excise Act, 1944 (1 of 1944) and the rules
made thereunder, including those relating
to refunds and exemptions from duties and
imposition of penalty shall, as far as may
be, apply in relation to the levy and
collection of the Education Cess on
excisable goods as they apply in relation to
the levy and collection of the duties of
excise on such goods under the Central
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Excise Act, 1944 or the rules, as the case
may be.”
20. – 39. ......
40. Notification dated 9.9.2003 issued in the
present case makes it clear that exemption was
granted under Section 5A of the Act of 1944,
concerning additional duties under the Act of 1957
and additional duties of excise under the Act of
1978. It was questioned on the ground that it
provided for limited exemption only under the Acts
referred to therein. There is no reference to the
Finance Act, 2001 by which NCCD was imposed,
and the Finance Acts of 2004 and 2007 were not in
vogue. The notification was questioned on the
ground that it should have included other duties
also. The notification could not have contemplated
the inclusion of education cess and secondary and
higher education cess imposed by the Finance Acts
of 2004 and 2007 in the nature of the duty of excise.
The duty on NCCD, education cess and secondary
and higher education cess are in the nature of
additional excise duty and it would not mean that
exemption notification dated 9.9.2003 covers them
particularly when there is no reference to the
notification issued under the Finance Act, 2001.
There was no question of granting exemption
related to cess was not in vogue at the relevant time
imposed later on vide Section 91 of the Act of 2004
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and Section 126 of the Act of 2007. The provisions
of Act of 1944 and the Rules made thereunder shall
be applicable to refund, and the exemption is only a
reference to the source of power to exempt the
NCCD, education cess, secondary and higher
education cess. A notification has to be issued for
providing exemption under the said source of power.
In the absence of a notification containing an
exemption to such additional duties in the nature of
education cess and secondary and higher education
cess, they cannot be said to have been exempted.
The High Court was right in relying upon the
decision of threeJudge Bench of this Court in Modi
Rubber Limited (supra), which has been followed by
another threeJudge Bench of this Court in Rita
Textiles Private Limited (supra).
41. The Circular of 2004 issued based on the
interpretation of the provisions made by one of the
Customs Officers, is of no avail as such Circular has
no force of law and cannot be said to be binding on
the Court. Similarly, the Circular issued by Central
Board of Excise and Customs in 2011, is of no avail
as it relates to service tax and has no force of law
and cannot be said to be binding concerning the
interpretation of the provisions by the courts. The
reason employed in SRD Nutrients Private Limited
(supra) that there was nil excise duty, as such,
additional duty cannot be charged, is also equally
unacceptable as additional duty can always be
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determined and merely exemption granted in
respect of a particular excise duty, cannot come in
the way of determination of yet another duty based
thereupon. The proposition urged that simply
because one kind of duty is exempted, other kinds of
duties automatically fall, cannot be accepted as
there is no difficulty in making the computation of
additional duties, which are payable under NCCD,
education cess, secondary and higher education
cess. Moreover, statutory notification must cover
specifically the duty exempted. When a particular
kind of duty is exempted, other types of duty or cess
imposed by different legislation for a different
purpose cannot be said to have been exempted.
8. Therefore, the learned Counsel for the petitioner submits
that, in the teeth of the decision of the Hon'ble Supreme Court in
the Unicorn Industries case as referred to above, now the plea
raised by the petitioner to seek the benefit of Circular No.2/2020
customs dated 10.01.2020, since has been rejected through the
impugned order by the respondent, such rejection is untenable, he
contended.
9. Learned Counsel for the petitioner would also submit that,
as per Notification No.24/2015 Customs dated 08.04.2015, the
whole of the customs duty leviable thereon, under the first
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schedule to the Customs Tariff Act, 1975 and the whole of the
additional duty leviable thereon, under Section 3 of the Customs
Tariff Act, 1975 are exempted, when goods are imported into India
against a duty credit scrip issued by the original authority under
the Merchandize Export from India Scheme ie.,MEIS in accordance
with paragraph 3.04 r/w. paragraph 3.05 of the Foreign Trade
Policy. The relevant portion of the Notification No.24/2015 reads
thus:
“Customs Duty (CVD)
In exercise of the powers conferred by sub-
section (1) of section 25 of the Customs Act, 1962
(52 of 1962), the Central Government, being
satisfied that it is necessary in the public interest
so to do, hereby exempts goods when imported
into India against a duty credit scrip issued by the
Regional Authority under the Merchandise Exports
from India Scheme in accordance with paragraph
3.04 read with paragraph 3.05 of the Foreign
Trade Policy (hereinafter referred to as the said
scrip) from,-
(a) the whole of the duty of customs leviable
thereon under the First Schedule to the Customs
Tariff Act, 1975 (51 of 1975) (hereinafter referred
to as said Customs Tariff Act); and
(b) the whole of the additional duty leviable
thereon under section 3 of the said Customs Tariff
Act.”
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10. Only in that context, eventhough the petitioner had paid
the entire duty to the extent of Rs.22,88,86,212/-, which includes
the education cess of Rs.66,66,582/- by using MEIS scrips, the
impugned order now has been passed stating that, the education
cess therein does not form part of the mode of payment of MEIS
scrip. Therefore, the same should have been paid only by way of
cash by the importer ie., the petitioner and that is the reason why,
the show cause notice was issued.
11. Learned Counsel would further submit that, however,
subsequently, the department of Customs issued a Circular in
Circular No.2/2020 dated 10.01.2020. Under the said circular,
following the Unicorn Industries judgment of the Hon'ble
Supreme Court as referred to above, they had come to the
conclusion that such kind of payment of education cess or any other
SWS, by using the scrip no longer would be permitted, however,
insofar as the past cases are concerned, in order to ensure ease of
doing business, such past cases should not be disturbed and the
payments made through debit in duty credit scrips may be
accepted as revenue and recoveries in cash not be insisted for
these cases. Clause 11 of the circular dated 10.01.2020, enables
such a benefit conferrable to the importers which reads thus:
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“11.With regard to the past cases of debits
of SWS already made in duty credit scrips, it
has been decided by the Board that for ensuring
ease of doing business, such past cases should
not be disturbed and the payments made
through debit in duty credit scrips may be
accepted as revenue duly collected and
recoveries in cash not be insisted for these
cases.”
12. This kind of exemption alone, now the petitioner has
sought for before the respondents, since it is a past case.
Therefore, whatever has been paid by using the scrip should be
accepted as if that the revenue duly collected and no recovery in
cash to be insisted in these cases. However, the said benefit has
been now denied to the petitioner through the impugned order, on
the main ground which has been quoted hereinabove that, that kind
of benefit can be extended only for those who paid the customs
duty and additional customs duty by way of scrips and not any
other payment like education cess or SWS payments, for which,
they quoted the judgment of the Hon'ble Supreme Court in
Unicorn Industries case and that is how the impugned order has
been passed.
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13. Therefore, learned Counsel for the petitioner would
submit that, in view of the aforesaid provisions stated in 2004 as
well as 2007 Finance Act, where the education cess and higher
secondary cess has been introduced respectively, and those higher
and secondary education cess since has been declared as part of
the duty, the present reason stated in the impugned order is not
justifiable, as it goes against the spirit of the aforesaid provisions of
the Finance Act. According to the learned Counsel for the
petitioner, the import of the judgment in Unicorn Industries case
has been misinterpreted and wrongly fit in in the present case.
Therefore, the learned Counsel for the petitioner seeks indulgence
of this Court against the impugned order.
14. Per contra, Mr.B.Vijay Karthikeyan, learned Standing
Counsel appearing for the respondent has relied upon two
judgments ie., 2006 (194) E.L.T. 11 (S.C.) in the case of Tata
Teleservices Ltd., Vs. Commissioner of Customs and 2019
(370) E.L.T. 3 (S.C.) in the case of Unicorn Industries Vs.
Union of India. By relying upon these judgments, learned
Standing Counsel has made submissions that, if at all any
notification has been issued, that could have been issued only by
the Central Government, under its powers. Therefore, the
Notification No.24/2015 dated 08.04.2015, cannot be overridden by
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any subsequent circular issued by the department of customs.
Therefore, Circular No.2/2020 dated 10.01.2020, cannot have any
overriding effect and this proposition is in consonance with the
decision taken in the Hon'le Supreme Court in the two cases cited
supra.
15. Learned Standing Counsel would also submit that, insofar
as the plea raised by the petitioner is concerned, he has not sought
for any exemption of paying any duty or education cess as the case
may be, as he had paid both the duty as well as education cess. His
only contention is that, he needs the benefit which has been
provided under Circular No.2/2020, to be extended to the
petitioner also. Insofar as the said benefit is concerned, though a
decision had been taken by the customs department under the said
circular not to reopen the past cases and in those cases, the duty
credit scrips paid may be accepted as a revenue duly collected and
the recovery not to be insisted in those cases has been provided for,
such a benefit can only be extended in cases of any payments made
for paying the customs duty or additional customs duty.
16. In this context, the pointed contention on the part of the
respondent as projected by the learned Standing Counsel is that,
neither the education cess nor the higher education cess can be
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construed as part and parcel of either the customs duty or the
additional customs duty. That is the reason why, since both are two
separate components and capable of being differentiated, the
customs department has come to a right conclusion that, if at all
any customs duty had been paid by the petitioner by using scrip
that can be accepted and insofar as in education cess or higher
education or secondary education cess has been paid, as in the
present case, such kind of payment cannot be treated as if revenue
collected duly in that regard and if at all any such benefit is to be
extended as per Paragraph No.11 of the Circular dated 10.01.2020,
the petitioner is not entitled for that kind of benefit, because, in
this case, the petitioner seeks such a benefit for payment of
education cess and secondary and higher education cess through
the scrips. Therefore, the learned Standing Counsel appearing for
the respondents would vehemently contend that, the reasons stated
in the impugned order, especially in the context of the law having
been declared by the Hon'ble Supreme Court in the Unicorn
Industries case, are justifiable and accordingly, the impugned
order does not require any interference.
17. I have considered the said rival submissions made by the
learned Counsel for the parties and have perused the materials
placed before this Court.
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18. Insofar as the factual matrix as has been projected by the
petitioner is concerned, there could be no much controversy, as the
petitioner had imported RBD Palmolein under 10 warehouse bills of
entry and 52 bills of entry, for which, whatever the duty imposed
against him had been paid, of course, by using the scrips issued
under MEIS. This is an acceptable method for debiting the duty by
using the credit scrips under MEIS. While paying such duty, using
the scrips, the petitioner had paid the entire duty, which includes
the education, secondary education or higher education cess to the
total amount of Rs.22,88,86,212/-, that was accepted and the
clearance of the goods had also been given by the Customs.
Subsequently, the Customs department has come forward to issue a
show cause notice on the ground that, while paying the duty by
using the scrips, the petitioner also paid the education cess to the
tune of Rs.66,66,582/-. That kind of payment for other heads other
than the duty or additional duty of customs cannot be paid through
MEIS scrips. Therefore, insofar as the said amount is concerned,
that was demanded with interest and also it was proposed to
impose the penalty under Section 117 of the Customs Act. This is
how the show cause notice was issued on 19.11.2019, which was
responded by the petitioner on 02.12.2019, where the petitioner by
citing Circular No.2/2020 dated 10.01.2020, has sought for the
benefit especially, in the context of clause 11 referred to above.
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19. When that was considered, the Customs department has
come to a conclusion that, if at all any duty or additional duty had
been paid using scrips that could be accepted as a payment of the
revenue and insofar as the other payments like the education cess
or higher education or secondary education cess are concerned, the
same cannot be treated as form part of the customs duty or
additional customs duty. Therefore, since it is a different
component, that kind of benefit under Clause 11 of Circular No.
2/2020, cannot be extended to the petitioner.
20. In aid of the said decision taken, the Customs department
has heavily relied upon the decision in Unicorn Industries case,
cited supra. The relevant portion of the Unicorn Industries case has
already been quoted above, where the issue was, the assessee
sought for exemption under Notification No.71/2003 of Central
Excise. While deciding the same, the Hon'ble Supreme Court has
made it clear that the notification dated 09.09.2003, issued in that
case made it clear that exemption was granted under Section 5A of
the 1944 Act, concerning additional duties under the Act of 1957
and the additional duties of excise under the Act of 1978. It was
further held in that judgment that, since there has been no
reference to the Finance Act, 2001 by which NCCD was imposed
and the Finance Acts of 2004 and 2007 were not in vogue.
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21. Therefore, the Hon'ble Supreme Court has negated the
plea raised therein in the said Unicorn Industries case, for the
specific reason that, since the Finance Act, 2004 and 2007 are post
Notification No.71/2003, Central Excise regime, therefore, that
kind of benefit unless and until is specifically included in the
notification, such kind of benefit cannot be expected and therefore,
it was negated.
22. Here in the case in hand, it is no doubt that, the
exemption Notification No.24/2015 is dated 08.04.2015 ie., well
after the Finance Act, 2004 and 2007. In the 2004 Finance Act,
Section 91 deals with education cess and Section 93 made it clear
that, the education cess levied under Section 91 in the case of
goods specified in the First Schedule to the Central Excise Tariff
Act, 1994, being goods manufactured or produced, shall be a duty
of excise. Therefore, insofar as the Central Excise is concerned,
the education cess imposed under Section 91 of the Finance Act,
2004 was to be treated as a duty of excise, in view of Section 93.
Similarly, a provision is available under Section 94 of the very same
Finance Act, 2004, which reads thus:
“94.Education Cess on imported
goods.- (1) The Education Cess levied under
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section 91, in the case of goods specified in the
First Schedule to the Customs Tariff Act, 1975,
being goods imported into India, shall be a duty
of customs (in this section referred to as the
Education Cess on imported goods), at the rate
of two per cent., calculated on the aggregated of
duties of customs which are levied and collected
by the Central Government in the Ministry of
Finance (Department of Revenue), under section
12 of the Customs Act, 1962 and ay sum
chargeable on such goods under any other law
for the time being in force, as an addition to, and
in the same manner as, a duty of customs, but
not including-
(a) the safeguard duty referred to in
section 8B and 8C of the Customs Tariff Act,
1975;
(b) the countervailing duty referred to in
section 9 of the Customs Tariff Act, 1975;
(c) the anti-dumping duty referred to in
section 9A of the Customs Tariff Act, 1975; and
(d) the Education Cess on imported goods.
(2) The Education Cess on imported goods
shall be in addition to any other duties of
customs chargeable on such goods, under the
Customs Act, 1962 or any other law for the time
being in force.
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W.P.(MD)No.11003 of 2020
(3) The provisions of the Customs Act,
1962 and the rules and regulations made
thereunder, including those relating to refunds
and exemptions from duties and imposition of
penalty shall, as far as may be, apply in relation
to the levy and collection of the Education Cess
on imported goods as they apply in relation to
the levy and collection of the duties of customs
on such goods under the Customs act, 1962 or
the rules or the regulations, as the case may
be.”
23. Like that, insofar as the secondary and higher education
cess is concerned, that has been brought in only under Finance Act,
2007, where the relevant provision is Section 126 & 129 which are
extracted hereunder:
“126. (1) Without prejudice to the
provisions of sub-section (12) of Section 2, there
shall be levied and collected, in accordance with
the provisions of this Chapter as surcharge for
purposes of the Union, a cess to be called the
Secondary and Higher Education Cess, to fulfil
the commitment of the Government to provide
and finance secondary and higher education.
(2) The Central Government may, after due
appropriation made by Parliament by law in this
behalf, utilise, such sums of money of the
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W.P.(MD)No.11003 of 2020
secondary and Higher Education Cess levied
under sub-section (12) of section 2 and this
Chapter for the purposes specified in sub-section
(1) as it may consider necessary.
129. (1) The Secondary and Higher
Education Cess levied under section 126, in the
case of goods specified in the First Schedule to
the Customs Tariff Act, 1975, being goods
imported into India, shall be a duty of customs (in
this section referred to as the Secondary and
Higher Education Cess on imported goods), at the
rate of one per cent., calculated on the aggregate
of duties of customs which are levied and
collected by the Central Government in the
Ministry of Finance (Department of Revenue),
under section 12 of the Customs Act, 1962 and
any sum chargeable on such goods under any
other law for the time being in force, as an
addition to, and in the same manner as, a duty of
customs, but not including-
(a) the additional duty referred to in sub-
section (5) of section 3 of the Customs Tariff Act,
1975;
(b) the safeguard duty referred to in
sections 8B and 8C of the Customs Tariff Act,
1975;
(c) the countervailing duty referred to in
section 9 of the Customs Tariff Act, 1975;
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W.P.(MD)No.11003 of 2020
(d) the anti-dumping duty referred to in
section 9A of the Customs Tariff Act, 1975; and
(e) the Education Cess chargeable under
section 94 of the Finance (No.2) Act, 2004 and
Secondary and Higher Education Cess on
imported goods.
(2) The Secondary and Higher Education
Cess on imported goods shall be in addition to
any other duties of customs chargeable on such
goods, under the Customs Act, 1962 or any other
law for the time being in force and the Education
Cess chargeable under section 94 of the Finance
(No.2) Act, 2004.
(3) The provisions of the Customs Act, 1962
and the rules and regulations made thereunder,
including those relating to refunds and
exemptions from duties and imposition of penalty
shall, as far as may be, apply in relation to the
levy and collection of the Secondary and Higher
Education Cess on imported goods as they apply
in relation to the levy and collection of the duties
of customs on such goods under the Customs Act,
1962 or the rules or the regulations made
thereunder, as the case may be.”
24. In Section 126 of the Finance Act, 2007, a cess to be
called the Secondary and Higher Education Cess, to fulfil the
commitment of the Government to provide and finance secondary
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W.P.(MD)No.11003 of 2020
and higher education shall be levied. Therefore, the levy of
secondary or higher education cess was first introduced in Finance
Act, 2007, by the aforesaid Section 126. In the very same Finance
Act, Section 129 makes it clear that the secondary and higher
education cess levied under Section 126, in the case of goods
specified in the First Schedule to the Customs Tariff Act, 1975,
being goods imported into India, shall be as duty of customs at the
rate of one percent calculated on the aggregated of duties of
customs. Exactly similar wordings, pari materia to Section 91 and
93 is available in Section 129 of Finance Act, 2007. Therefore, the
effect of these provisions of Finance Act, 2004 and 2007 is that, the
education cess at the rate of 2% and higher and secondary
education at the rate of 1% imposed under Finance Act, 2004 and
2007, respectively are to be treated as part of the duty of customs.
25. When that being the statutory declaration made by the
Act of Parliament ie., The Finance Act, 2004 and 2007, we cannot
have any different view to state that there were different
components. What is the duty to be imposed on the imported
goods first be calculated and accordingly, 2% of education cess and
1% of secondary and higher education cess shall be levied and
imposed. Hence, when the importer pay the duty, he shall also pay
the cess which become part and parcel of the duty of customs. That
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W.P.(MD)No.11003 of 2020
is the reason why the total amount of Rs.22,88,86,212/- were paid
by the petitioner as duty of customs as well as education cess
through the scrips of MEIS. Having accepted the same, though
subsequently, in view of the notifications, if the Customs
Department come forward to take a stand that the mode of
payment of the education cess even though being part of the
customs duty, shall not be on the same line by using the scrip, such
kind of payment can be insisted upon, provided only in future cases
and not in the cases where it has already been paid and where the
goods have been cleared. This was exactly been made in execution
by Circular No.2/2020 dated 10.01.2020.
26. When such a circular was issued by the Customs
Department and the same having been implemented in respect of
various people like the petitioner, the benefit of the said circular
cannot be denied to the petitioner on the alleged reason that, the
education cess or the higher and secondary education cess being a
different component cannot be treated as customs duty or
additional customs duty and therefore, the benefit conferred under
Clause 11 of the said circular cannot be made available to the
petitioner. The said view taken by the respondent / Customs
Department, in the considered opinion of this Court, in view of the
aforestated legal position, is untenable and unacceptable.
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W.P.(MD)No.11003 of 2020
27. The quoting of the Hon'ble Supreme Court judgment in
Unicorn Industries case is a wrong fitment of the citation, as the
issue decided in the said case, in fact the principle enunciated in
that case if it is culled out, certainly would support the case of the
petitioner and not the respondent. Therefore, this Court has no
hesitation to state that, the reasons stated in the impugned order
rejecting to give the benefit under Circular No.02/2020 is not
supported by any legal basis. Therefore, the said reasons are
unsustainable and therefore, based on such reason, since the
rejection has been made through the impugned order, it is also
equally unsustainable. Hence, it is liable to be interfered with.
28. In view of the aforesaid discussions, this Court is inclined
to pass the following orders:
“The impugned order is hereby
quashed. As a sequel, there shall be a
direction to the respondent to give the
benefit of Clause 11 of Circular No.
02/2020 dated 10.01.2020 to the
petitioner.”
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W.P.(MD)No.11003 of 2020
29. With the above directions, the Writ Petition stands
allowed. However, there shall be no order as to costs.
Consequently, the connected miscellaneous petition is closed.
06.08.2021
Index : Yes / No
Internet: Yes / No
MR
Note: In view of the present lock down owing to
COVID-19 pandemic, a web copy of the order
may be utilized for official purposes, but,
ensuring that the copy of the order that is
presented is the correct copy, shall be the
responsibility of the advocate/litigant concerned.
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W.P.(MD)No.11003 of 2020
To
The Commissioner of Customs (Preventive),
No.1, Williams Road,
Cantonment,
Tiruchirapalli – 620 001.
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W.P.(MD)No.11003 of 2020
R.SURESH KUMAR., J.
MR
ORDER MADE IN
W.P.(MD)No.11003 of 2020
06.08.2021
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