M/S. SRD NUTRIENTS PVT.LTD. vs. COMMISSIONER OF CENT.EXCISE, GUWAHATI

C.A. No.-002781-002790 - 2010Supreme Court2017 INSC 109210 November 2017Bench: HON'BLE MR. JUSTICE A.K. SIKRI HON'BLE MR. JUSTICE ASHOK BHUSHANAuthor: HON'BLE MR. JUSTICE A.K. SIKRI30 pages
For Petitioner: M. P. DEVANATHFor Respondent: B. KRISHNA PRASAD
AI SummaryAllowed

What were the facts?

The appeals concern the refund of Education Cess and Higher Education Cess paid by manufacturers in industrially backward North-Eastern States. These manufacturers were entitled to 100% excise duty exemption under various notifications. The methodology involved paying excise duty, utilizing CENVAT credit, and then claiming a refund of the balance paid in cash. However, when the Finance Act, 2004, introduced Education Cess and Higher Education Cess as surcharges on excise duty, these additional levies were collected along with excise duty but were not refunded when the excise duty was subsequently refunded. The assessee, M/s. SRD Nutrients Private Limited, a manufacturer of Malted Milk Food in Assam, is one such entity seeking the refund of these cesses.

What did the Supreme Court hold?

The Supreme Court allowed the appeals, holding that the Education Cess and Higher Education Cess paid along with excise duty were also liable to be refunded. The Court reasoned that these cesses, levied at 2% of the excise duty, partake the character of excise duty itself. This was supported by the Supreme Court's decision in Union of India v. Tata Engineering and Locomotive Co., which held that a cess levied on excise duty should be calculated and treated as if it were excise duty. The Court distinguished the Calcutta High Court's judgment in Biswanath Hosiery Mills Ltd. case, finding it not applicable as the cess in that case was levied under a separate and independent statutory scheme. The Court also reiterated the principle that when two views are possible, the one favouring the assessee should be adopted. The operative direction was that the appellants were entitled to the refund of Education Cess and Higher Education Cess.

What were the issues?

1. Whether Education Cess and Higher Education Cess, levied as surcharges on excise duty, are also liable to be refunded along with the central excise duty in terms of the exemption notifications, when the excise duty itself is exempted? (Question of law) Assessee's contention: The assessee argued that the Education Cess and Higher Education Cess are intrinsically linked to the excise duty and partake its character. They relied on the principle that when the principal duty is exempted, the surcharge or additional duty levied on it should also be exempted or refunded. They cited the Supreme Court judgment in Union of India v. Tata Engineering and Locomotive Co. to support the argument that cess levied on excise duty should be treated similarly to excise duty itself. Revenue's contention: The revenue's argument is not explicitly recorded in the provided text, but their stance would implicitly be that these cesses are separate levies and not covered by the exemption notifications for excise duty.

Which sections of the Income-tax Act were involved?

Section 5A

AI-generated summary — verify with the full judgment below

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURI ICTION CIVIL APPEAL NOS. 2781-2790 OF 2010 M/S. SRD NUTRIENTS PRIVATE LIMITED .....APPELLANT(S) VERSUS COMMISSIONER OF CENTRAL EXCISE GUWAHATI .....RESPONDENT(S) W I T H CIVIL APPEAL NO. 812 OF 2013 CIVIL APPEAL NOS. 1730-1731 OF 2016 CIVIL APPEAL NO. 5173 OF 2010 CIVIL APPEAL NO. 4611 OF 2010 CIVIL APPEAL NO.4596 OF 2010 CIVIL APPEAL NO. 2987 OF 2010 CIVIL APPEAL NO. 5175 OF 2010 CIVIL APPEAL NO. 2988 OF 2016 CIVIL APPEAL NOS. 3981-3983 OF 2013 CIVIL APPEAL NOS. 2651-2660 OF 2011 CIVIL APPEAL NO. 8322 OF 2010 CIVIL APPEAL NOS. 8323-8324 OF 2010 Civil Appeal Nos. 2781-2790 of 2010 & Ors. CIVIL APPEAL NOS. 5927-5929 OF 2010 CIVIL APPEAL NOS. 3735-3750 OF 2011 CIVIL APPEAL NOS. 5022-5023 OF 2014 CIVIL APPEAL NO. 4597 OF 2010 CIVIL APPEAL NO. 4598 OF 2010 CIVIL APPEAL NO. 4599 OF 2010 CIVIL APPEAL NO. 4600 OF 2010 CIVIL APPEAL NO. 4601 OF 2010 CIVIL APPEAL NO. 4602 OF 2010 CIVIL APPEAL NO. 4603 OF 2010 CIVIL APPEAL NO. 4604 OF 2010 CIVIL APPEAL NO. 4605 OF 2010 CIVIL APPEAL NO. 4606 OF 2010 CIVIL APPEAL NO. 4607 OF 2

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