Shree Chalthan Vibhag Khand Udyog Sahakari Mandli Ltd Vs Commissioner of CGST & Central Excise (CESTAT Ahmedabad)
The appellant, a sugar manufacturing cooperative located in Surat, manufactures V.P. Sugar classifiable under Chapter Heading 1701 of the Central Excise Tariff Act, 1985. During an inquiry by the jurisdictional Range Officer regarding payment of sugar cess on exported sugar, the appellant informed the department that between October 2016 and June 2017, it had cleared 62,500 quintals of V.P. Sugar to merchant exporters for export under CT-1 certificates without payment of central excise duty, including sugar cess.
Following an investigation, the department concluded that the appellant was liable to pay sugar cess at Rs.124 per quintal on the exported quantity. A show cause notice dated 12.02.2018 demanded Rs.77.50 lakh as sugar cess under Section 11A, along with interest under Section 11AA and penalty under Rule 25 of the Central Excise Rules, 2002. The Joint Commissioner confirmed the demand, interest, and imposed a penalty of Rs.7.75 lakh. The Commissioner (Appeals) upheld this order, leading to the present appeal.
The appellant argued that the appellate authority had ignored Notification No. S.O. 585(E) dated 30.07.1993 issued by the Ministry of Food, which exempted sugar exported out of India from the whole of the sugar cess. It contended that the reliance placed on Notification No. 42/2001-CE (N.T.) dated 26.06.2001 was misplaced because the CBIC Circular dated 20.03.2007 itself clarified that cess was payable only where it had not been exempted by a notification. The appellant also relied on the Karnataka High Court decision in Shree Renuka Sugars Ltd., which held that sugar cess is a kind of duty of excise, and submitted that it was therefore entitled to exemption on exports. It further contended that, since sugar cess itself was not payable, neither interest nor penalty could be sustained.
