Ghodawat Packers LLP Vs Union of India (Karnataka High Court)
Karnataka High Court held that National Calamity Contingent Duty (NCCD) is a surcharge and can be levied even in absence of levy of excise duty.
Facts-
The petitioners are assessees involved in manufacture and business of Tobacco. Aggrieved by the imposition of Excise Duty and National Calamity Contingent Duty (NCCD) on the tobacco products being manufactured and sold, the instant writ petitions are filed.
Conclusion-
The Finance Act, 2001 sought to levy National Calamity Contingent Duty (NCCD) on the goods as described in the Seventh Schedule. For better clarification, reference is made out in the Central Excise Act. Repealing of the Central Excise Act does not absolve the petitioners paying NCCD as determined under the Seventh Schedule.
Held that NCCD is a surcharge and a type of excise duty which can be levied independently of the excise duty as contemplated under the provisions of Fourth schedule to the Central Excise Act, 1944. Thus levy of NCCD in the absence of levy of excise duty cannot be considered as bad in law.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
1. The petitioners are assessees involved in manufacture and business of Tobacco. Aggrieved by the imposition of Excise Duty and National Calamity Contingent Duty (NCCD) on the tobacco products being manufactured and sold, the instant writ petitions are filed.
2. Prior to passing of the Central Good and Services Act, 2017 (hereinafter referred to as the ‘CGST Act, 2017’, for brevity), tobacco products were being taxed under the provisions of the Central Excise Act, 1944 read with Central Excise Tariff Act, 1985. With coming in to effect of CGST Act, 2017, by virtue of Section 174 of the said Act, the Central Excise Act, 1944, except in respect of goods included in entry 84 of the Union List of Seventh Schedule of the Constitution of India, has been repealed. Further, the Central Excise Tariff Act, 1985 also has been repealed.
3. Entry 84 of the Seventy Schedule of the Constitution of India deals with, apart from other things, duties of excise on tobacco and tobacco products. Thus, apart from levy of taxes under the provisions of CGST Act, 2017, excise duty can be levied on tobacco and tobacco products under the Central Excise Act, 1944.
4. Further, Section 136 of the Finance Act, 2001 contemplates levy of NCCD. Section 136 of Finance Act, 2001 reads as under:
Section 136 – National Calamity Contingent duty
(1) In the case of goods specified in the Seventh Schedule, being goods manufactured or produced, there shall be levied and collected for the purposes of the Union, by surcharge, a duty of excise, to be called the National Calamity Contingent duty (hereinafter referred to as the National Calamity duty), at the rates specified in the said Schedule.
(2) The National Calamity duty chargeable on the goods specified in the Seventh Schedule shall be in addition to any other duties of excise chargeable on such goods under the Central Excise Act, 1944 or any other law for the time being in force.
(3) The provisions of the Central Excise Act, 1944 and the rules made thereunder, including those relating to refunds and exemptions from duties and imposition of penalty, shall, as far as may be, apply in relation to the levy and collection of the National Calamity duty leviable under this section in respect of the goods specified in the Seventh Schedule as they apply in relation to the levy and collection of the duties of excise on such goods under that Act or those rules, as the case may be.
Thus, NCCD is levied as a duty by way of surcharge.
5. Tobacco and tobacco products are being taxed under the provisions of CGST Act, 2017, since its inception in 2017. By notification No.11/2017 dated 30.06.2017, exemption from levy of excise duty was granted to tobacco and tobacco products. However, NCCD was continued to be levied on tobacco and tobacco products under Section 136 of the Finance Act, 2001. Thereafter, by notification bearing No.3/2019 dated 06.07.2019, excise duty has been sought to be levied on various tobacco and tobacco products and 0.5% excise duty is being levied on the following products:
