By TIOL News Service

NEW DELHI, SEPT 24, 2013: GOODS manufactured in Jammu and Kashmir are exempted under Notification No 56/2002 CE dated 14.11.2002. The exemption provided by way of refunding the duty paid other than from CENVAT credit account. The dispute is whether Education Cess and Secondary Education Cess are also to be treated as exempted.

The appellant argued that in cases of (i) Cyrus Surfactants Pvt. Ltd Vs. CCE - (2007-TIOL-1262-CESTAT-SRINAGAR) and (ii) Bharat Box Factory Ltd Vs. CCE - (2007-TIOL-2392-CESTAT-SRINAGAR), it was held that exemption is admissible to Education cess. However, in subsequent cases (Jindal Drugs - 2009-TIOL-2562-CESTAT-DEL) the Tribunal took an entirely different view, without referring the matter to the Larger Bench.

The Member (T) held that there is no need to refer the matter to the Larger Bench for the reasons recorded in the case of Jindal Drugs and the appeals need to be dismissed by following the ratio of Jindal Drugs.

However, the Member (J) took a contrary view and observed:

The two decisions of the Tribunal in the case of Cyrus Surfactants Pvt. Ltd and in the case of Bharat Box Factory Ltd. are the earlier decisions which do not stand followed in subsequent decision of Jindal Drugs Ltd. The question which arises is that when the Tribunal in the case of Jindal Drugs proposed to take a view different than the one taken in the earlier decisions, whether the matter should have been referred to the Larger Bench or not.

On going through the observation of the Supreme Court (in case of M/s Gammon India Ltd Vs. CCE (sic), Mumbai (2011-TIOL-60-SC-CUS)), I find that serious concern stands made by their Lordships about taking a different view than the one taken by the coordinate Bench. If the subsequent bench of the Tribunal was not in agreement with the views expressed in the earlier order, the matter should have been referred to larger bench for resolving the issue. As such I am of the view that the matter need to be referred to Larger Bench for consideration of the earlier decision of the tribunal and to resolve the issue relating to two contra declarations of law by two benches.

In view of the difference of opinion, the matter was referred to Third Member, who observed:

I find that decision in case of Jindal Drugs was pronounced on 12.8.2009. Ld. Advocate appearing for respondents in Jindal Drugs case relied on the decision of Tribunal in case of Bharat Box Factory Ltd. and Cyrus Surfactants Pvt. Ltd. but Tribunal has distinguished these decisions in para 25 of the order and on noting the decision of Apex Court in case of Modi Rubber Ltd. - (2002-TIOL-393-SC-CX) has held that exemption or refund is not admissible in respect of Education Cess and Higher Education Cess under the Notification. It was for the Bench in Jindal Drugs to consider whether matters needs to be referred to Larger Bench in view of earlier decisions of Tribunal in assessee's favour. But Bench did not do so presumably as it relied on decision of Supreme Court in case of Modi Rubber.

The Tribunal held that there is no need to refer the matter to Larger Bench. When a matter is to be referred to Larger Bench, matter is required to be put up before President for decision. When a Bench presided over by the President has taken a decision on one issue not to refer it to a Larger Bench, same issue in other appellant's cases is not required to be referred to Larger Bench.

Thus, by majority the Tribunal dismissed the appeals.

(See 2013-TIOL-1408-CESTAT-DEL)