2021-TIOL-2085-HC-MAD-CX
Indian Oil Corporation Ltd Vs CCE & GST
CX - SVLDRS, 2019 - Petitioner is engaged in the manufacture of lubricants that fall under Chapters 27, 34 and 38 of the First Schedule to the CETA, 1985 - They have challenged the order rejecting their application for settlement of disputes under the Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019 - Stand of the revenue is simplistic and hinges upon the fact that lubricants figure in the 4th schedule to the Act and such goods are expressly excluded from the benefit of the Scheme - They would urge a literal interpretation of the Scheme, as the clear and unambiguous language used renders the petitioner ineligible to its benefit - Revenue is of the view that reference to the clarification furnished by the OSD or any other related material is unnecessary when the provisions of the Scheme are crystal clear and militate against the relief sought.
Held :
+ Petitioner had, vide its mail sought a clarification and a confirmation that only those products that were still subject to the levy of central excise at the time of transition into GST would remain outside the purview of the scheme and that litigation in regard to all other goods would be covered by the Scheme. [para 7]
+ In response to the aforesaid mail, on 26.11.2019, the Officer on Special Duty (OSD) confirmed, referring to the 101st Amendment of the Constitution of India, that only Petroleum crude, high speed diesel, motor spirit, natural gas, aviation turbine fuel and tobacco and tobacco products still fall under the ambit of central excise and thus, only cases relating to the aforesaid commodities would fall outside the purview of the SVLDRS Scheme. [para 8]
+ The Division Bench of the Allahabad High Court considered an SVLDRS application filed by the same petitioner [ Indian Oil Corporation - 2020-TIOL-2122-HC-ALL-CX , the commodity in question was Superior Kerosene Oil (SKO)]. The application had come to be rejected on the identical premise as in the present matter and similar contentions as advanced came to be considered by the Court that held adverse to the petitioner therein. [para 12]
+ Bench has gone on a plain reading of Section 3 of the Central Excise Act, 1944, the charging Section, which states that central excise would be leviable on all excisable goods which are produced or manufactured in India at the rates set forth in the 4th schedule. Thus, irrespective of whether a positive number is stated alongside the commodity, the mere mention of that commodity in the schedule would disentitle the manufacturer of those goods to avail of the benefit of the SVLDRS Scheme. [para 13]
+ Even though the product in this case is marketable, it does not answer the question of 'excisable goods' as, practically there can be no levy of duty thereupon in the absence of a stipulated rate and applicable rate of duty. Thus, notwithstanding that the language of Section 125(h) of the SVLDRS Scheme uses the phrase 'with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944', the use of the word 'excisable' cannot be seen to be cosmetic, but must contain some purpose. Mere mention of the commodity without the rate of tax would serve no purpose as far as excisability is concerned, seen in the context of the judgement in Moti Laminates ( 2002-TIOL-24-SC-CX-LB ). [para 22]
+ In this case, the taxable events of 'manufacture' and 'removal' stand crystallised and the petitioner has remitted GST in regard to the transactions. However, the transaction becomes academic in context of Central Excise levy in the absence of a positive rate of duty. Thus, qua Central Excise, the taxable event is merely illusory and nothing more. [para 26]
+ It is nobody's case that lubricants are exempt from central excise duty. Undoubtedly, they figure as goods under Schedule 4. However, the rate of duty stipulated is '….' and, in my considered view, lubricants cannot be considered to be excisable goods, in such circumstances, for the purposes of the SVLDRS Scheme. The SVLDRS Scheme has been brought into to weed out pending litigations where possible and where the litigation falls within the limits set out under the Scheme. The interpretation of the clause under the Scheme must thus in line with this avowed object and any conflict that arise in interpretation must be resolved in favour of the assessee. [para 28]
+ Circular No. 1071/4/2019-CX 8 dated 27.08.2019 relied upon. [para 29]
+ Section 125(h) specifically uses the term 'excisable goods'. The Supreme Court in Moti Laminates ( 2002-TIOL-24-SC-CX-LB ) provides guidance on how the term 'excisable' should be understood and interpreted. The rate of duty mentioned alongside lubricants under the 4th schedule is '.......' and as rightly clarified by the Departmental Officer on Special Duty, it is only some of the products in the 4th schedule, such as Petroleum crude, high speed diesel, motor spirit, natural gas, aviation turbine fuel and tobacco and tobacco products, that are to be construed as 'excisable goods' to determine the exclusions under the SVLDRS Scheme. [para 30]
+ The interpretation of Section 125 of the Scheme has to be seen in this context only as otherwise, the object of the Scheme will not be achieved. [para 30]
- Writ Petition is allowed: MADRAS HIGH COURT |
