Automobile cesses are a type of excise duty for which also rebate available under Rule 18

Brief of the case:

The Hon’ble Karnataka High Court in the case of M/s TVS Motors Co. Ltd. held that the automobile cess leviable under the automobile cesses rules are governed by the provisions of central excise act and rules made under the act and are in the nature of excise duty and thus, allowable as rebate under Rule 18 of Central Excise Rules,2002.

Facts of the case:

• The petitioner (TVS Motors) is engaged in the manufacture of motor cycles/two wheelers of different types falling under Chapter – 87 of the First Schedule to the Central Excise Tariff Act, 1985.The petitioners cleared the two wheelers for export to various countries and claim rebate of central excise duty paid by petitioners under Rule 18 of Central Excise Rules, 2002.
• After orders being passed by the original authority for different periods it has resulted in appeals being filed and ultimately the revisional authority (Ministry of Finance) denied the rebate of Automobile Cess, Secondary and Higher Education Cess on Automobile Cess by the revisional authority. Against such order, the petitioner filed writ petition before the High Court.

 Contention of the Assessee:

• It was submitted by the learned counsel for the petitioner that Automobile Cess, Education Cess on Automobile Cess, Secondary and Higher Education Cess on Automobile Cess being one of the duties of excise being paid on the goods exported, rebate of Cess cannot be rejected on the ground that it does not find a mention in Explanation- I to Notification No.19/04-CE (NT) dated 6.9.2004. It is because the Automobile cess rules find it reference to Central Excise Act and the rules made thereunder , and therefore, such cess is also a type of central excise duty and all the provisions as applicable to levy, collection and refund to excise duty shall be applicable to automobile cess also.
• Assessee relied on the following judgments in support of his submissions:

i)Banaswara Syntex Ltd. Vs Union of India), 2007 (216) ELT 16 (Raj.)

ii)Commissioner of C.Ex., Cus. And ST. Belgaum Vs Shree Renuka Sugars Ltd.(Kar)

Contention of the Revenue:

• The learned counsel for the revenue contended that duties of excise collected under the Central Excise Act can only be rebated in respect of goods exported and Automobile Cess, Education Cess and SHE Cess is not specified as duty in Explanation-I of Notification No.19/04-CE(NT) and as such rebate of such Cess paid could not be admissible.
• He relied on the following judgments in support of his submissions:

(i) Union of India and others Vs Modi Rubber Limited and others, 1986(25) ELT 849

(ii) Collector of C.Ex. Vs Mahindra and Mahindra Ltd., 1991(53) ELT 408 (Tribunal)

 Issue before the High Court:

Whether the automobile cesses charged under the automobile cess rules would be available as rebate under Rule 18 of the Central Excise Rules, 2002?

 Held by Hon’ble High Court:

• Automobile Cess, Education Cess on Automobile Cess and Secondary and Higher Education Cess on Automobile Cess are being levied under section 9 of Industries (Development and Regulation) Act, 1951 read with Rule 3 of Automobile Cess Rules, 1984. Rule 3 of Automobile Cess Rules, 1984 very clearly provides that provisions of Central Excise Act, 1944 and the Rules made thereunder including those relating to refund of duty would apply to levy and collection of Automobile cess.
• The rebate to the extent of automobile cess , education cess and SHEC leviable on it were denied on the ground that as per Explanation-I to the Notification 19/2004 it is only the duties of excise specified in clause (a) to (i) of exemption notification is allowable and can be rebated and “Automobile Cess”, Education Cess and SHE Cess are not specified as duty under Explanation-I to notification.
• The automobile cess is leviable under the charge created by Sec 9 of the Industries (Development and Regulation), Act, 1951.Further, in exercise of powers conferred under Sec 30 of the Industries (Development & Regulation) Act, 1951 Central Government has framed Automobile Cess Rules, 1984.
• Rule 3 of such rules provide that the provisions of Central Excise Act and Rules made thereunder has would be applicable so far as they apply in relation to the levy and collection of duty of excise on manufacture of automobiles under the Act and the Rules.
• Rule 18 of Central Excise Rules,2002 has used expression “duty’’ which includes all the duties levied and collected under the central excise act or/and rules made thereunder. Thus, the ‘duty’ here would also include the Cess defined under Rule 2(c) of Automobile Cess Rules, 1984.
• As such, the Automobile Cess, Education Cess on Automobile Cess and SHE Cess on Automobile Cess though not expressly specified under notification dated 06.09.2004 would encompass within its sweep to include these Cess within the definition of phrase ‘duty’.
• High Court also placed reliance on the decision of Hon’ble Rajasthan HC in the case of Banswara Syntex Ltd. vs. Union of India (2007) 216 ELT 16 (Raj.) wherein the court held that Education Cess levied on excisable goods would bear the same character as excise duty.
• Applying the ratio of above judgment, automobile cess is also leviable in the manner as excise duty is thus, it is one type of excise duty and therefore, would be entitled to rebate benefit of Notification No. 19/2004 issued under Rule 19.
• Considering the above observations, the petitioners are entitled to claim rebate in respect of automobile cess too. In result writ petition was allowed.