By TIOL News Service

NAINITAL, NOV 19, 2014: THE petitioner is aggrieved with the SCN dated 26th August, 2011 issued by the CCE, LTU, Mumbai seeking denial of exemption from levy of National Calamity Contingent Duty (NCCD) under the notification 50/2003-CE.

It is mentioned in the SCN that NCCD is a duty of excise, but that it is not exempted under the implementing notification because it is not a duty specified in the I & II Schedule of the CETA, 1985, nor an Additional Duty of Excise, as specified in the implementing notification. It is also emphasized that the impugned notice is based upon the law laid down by Himachal Pradesh High Court in Indo Farm Tractors and Motors vs. Union of India - 2007-TIOL-724-HC-HP-CX to the effect that the absence of inclusion of NCCD under the subject notification would mean that NCCD was not exempt thereunder.

So far as the question of filing writ petition against the SCN is concerned the petitioner submits that the same is justified as it is manifest that the SCN proceeds on an apparent misconstruction of the statute, secondly, where the show cause notice reveals that the minds of the respondents are made up and showing cause in such circumstances would be a futile exercise and thirdly, where the notice itself is issued after undue delay the settled principle is that same is barred by limitation. Reliance is placed on the decisions in Calcutta Discount Company Ltd. v. Income Tax Officer, Companies District, I and another, 2002-TIOL-550-SC-IT-CB, Siemens Ltd. v. State of Maharashtra, 2006-TIOL-190-SC-CESS and Gammon India Ltd. vs. CCE, Goa 2002-TIOL-194-SC-CUS.

After considering the elaborate submissions made by both sides, the High Court inter alia observed -

++ The petitioner has challenged the SCN. The petitioner has further prayed for declaring that the petitioner is entitled to avail the exemption under Notification No.50/2003-CE in respect of the exemption contained therein from the levy of the duty of excise known as NCCD for a period of ten years calculated from the date of commencement of commercial production by the petitioner. In fact, the petitioner is seeking from this Court to grant a declaratory relief.

++ Petitioner's submission that showing cause before the respondent no.3 would be a futile exercise as he, being adjudicating authority, has already made up his mindis not acceptable as view taken in the show cause notice is always tentative not decisive, inasmuch as, final decision is always taken after hearing the party, against whom notice is issued. Similarly, another argument that filing appeal before the Tribunal would also be futile, has no legs to stand, as appellate authority is required to decide the case on its own merits. This Court is not dismissing the writ petition on the ground of alternative remedy, because petition was admitted earlier and was heard on merit. But it is made clear that alternative remedy, if available to a party under the law, can always be availed.

++ Main submission is on the concept of liberal interpretation. It is vehemently contended that implementing notification has to be interpreted liberally and general principle of strict interpretation of an exemption notification in taxation, is not applicable. In addition, in interpretation of an implementing notification, the industrial policy would prevail. This submission is not acceptable to this Court as exemption from paying NCCD cannot be read into the notification no.50 of 2003 by simply applying the principles of liberal interpretation. Notification is to be read in plain and simple manner. Further, this Court is in agreement with the submission of the respondents that it is not possible for the High Court to construe or read into exemption notification 50/2003-CE provision of Finance Act. The Supreme Court has also held that such notification has to be interpreted in the light of the words employed by it and not on any other basis. [CCE vs. Hari Chand Sri Gopal & others 2010-TIOL-95-SC-CX-CB refers]

++ The case of Surbhi Industries V. CCE 2006-TIOL-21-ARA-CX, covers the case in hand. It is held therein that to avail the benefits of an exemption notification a person has to comply strictly with the terms of the notification; Nothing can be added to the notification nor any part of it can be ignored in giving effect to it when the language is plain and unambiguous;the principle that a provision in a taxing statute granting incentives for promoting growth and development of industrial activity has to be construed liberally applies to give effect to the intention of the legislature or industrial policy; The rule does not extend to reading in the exemption notification the provisions of other notifications issued under other statutes.

++ The judgment of Himachal Pradesh High Court in Indo Farm Tractors and Motors vs. Union of India 2007-TIOL-724-HC-HP-CX has not been set-aside by the Supreme Court.

++ Exemption granted by a notification must be read limited to the duty of excise as mentioned in the notification, and by simple interpretation it cannot be extended to cover any other kind of excise duty. Moreover, the petitioner is getting and is availing benefit of exemption notification 50/2003-CE. The petitioner is neither aggrieved by any condition contained in the notification nor is there any challenge to the notification.

Holding that the Writ Petition lacks merit, the same was dismissed.

(See 2014-TIOL-1990-HC-UKHAND-CX)