Case Law Details
Sova Solar Ltd. Vs CCE & ST (CESTAT Kolkata)
It is pertinent to consider whether CBEC can enlarge or modify the scope of an exemption notification which is in the form of a subordinate legislation through a letter or circular. Taxing statutes have to be strictly construed and the power of taxation lies with the Parliament. The power to issue exemption notifications rests with the Central Government. Every exemption notification which is issued is placed before the Parliament and is subjected to scrutiny by a Committee of sub-ordinate legislation of each House which at times modify the notifications on their instructions. Therefore, as far as the exemption notifications issued by the Government are concerned, they are clearly in the nature of sub-ordinate legislations. We do not think that a letter issued by the CBEC can enlarge the scope of the exemption notifications thereby truncating the scope of taxation levied by the Parliament. Even if it is presumed that CBEC had such power, these letters are not subject to scrutiny and review by the Parliament.
FULL TEXT OF THE CESTAT JUDGEMENT
1. This appeal is filed by the appellant challenging the impugned Order-in-Original No. 80-83/COMMR/DGP/2016 dt. 26.02.2016.
2. Heard both sides and perused the records. The appellant is a 100% Export Oriented Unit (EOU) registered with the department. EOUs are units which are primarily setup to manufacture of goods for export and are given special concessions by the Government. The capital goods, raw materials, etc., which are procured by them are exempted from payment of customs duties (in case of imports) and Central Excise duty (in case of domestic procurement). They are required to export their final products. They are also permitted to sell some portion of their final products within the country (Domestic Tariff Area) subject to conditions as specified from time to time. As EOUs are practically duty-free, they are also treated as if they are outside India. Therefore, in respect of any goods which are cleared by the EOU for sale within India, excise duty is collected at a rate equivalent to Customs duty leviable on identical goods imported into India in terms of the proviso to section 3 of Central Excise Act, 1944.
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