Commissioner Of CGST And Cx, Kolkata South Commissionerate vs. M/S. Diamond Beverages PVT. LTD.
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The Commissioner of CGST and CX, Kolkata South Commissionerate (the revenue) filed an appeal before the High Court challenging an order passed by the Customs, Central Excise and Service Tax Appellate Tribunal (Tribunal). The Tribunal had partly set aside an order-in-appeal dated October 20, 2022, passed by the Commissioner, CGST & CX, Appeals – I, Kolkata. The Commissioner's order had denied the assessee, M/s. Diamond Beverages Pvt. Ltd., a refund of Cenvat credit on sugar cess. The Tribunal's decision was based on its earlier order dated August 7, 2019, which had allowed the refund claim, although the revenue had appealed that order. The High Court had also previously dismissed an appeal filed by the revenue against the Tribunal's order dated August 7, 2019.
Held
The Court held that the revenue's appeal was dismissed and the substantial question of law was answered against the revenue. The Court reasoned that Section 3 of the Act clearly provides for the levy and collection of sugar cess as a duty of excise on all sugar produced by any sugar factory in India, for the purpose of the Sugar Development Fund Act, 1982. Since it is a tax on production, it is correctly described as a duty of excise. In light of this legal position, the Court found the view taken by the learned Tribunal to be perfectly right. The Tribunal had partly set aside the Commissioner's order and granted consequential relief, namely, the refund claim by the assessee. The ratio decidendi is that sugar cess, being a duty of excise levied at the stage of production, is eligible for Cenvat credit under Rule 3 of the Cenvat Credit Rules, 2004. The operative direction was the dismissal of the revenue's appeal.
Key Issues
1. Whether the respondent (assessee) is entitled to avail Cenvat Credit on Sugar Cess under Rule 3 of the Cenvat Credit Rules, 2004? The petitioner (revenue) argued that the Tribunal's view was correct in allowing the refund of Cenvat credit on sugar cess. The revenue contended that Section 3 of the relevant Act provides for the levy and collection of sugar cess as a duty of excise on sugar produced in India, and thus, it is a tax on production. The revenue relied on the High Court's previous judgment in CEXA/9/2020, which had dismissed the revenue's appeal against the Tribunal's order allowing the refund claim. The respondent (assessee) argued that they are entitled to the refund. The judgment does not explicitly detail the arguments made by the respondent, but it implies their entitlement based on the Tribunal's and High Court's prior decisions.
Sections Cited
Rule 3, Section 3
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Cause title — parties, addresses and appearances
order passed by the commissioner and granted consequential relief, namely, the refund claim by the assessee. For the above reasons, the appeal filed by the revenue is dismissed and the substantial questions of law are answered against the revenue.” In light of the above legal position, the assessee is entitled to succeed and the revenue has to necessarily fail. For the above reasons, the appeal filed by the revenue is dismissed and the substantial question of law suggested is answered against the revenue.
(T.S SIVAGNANAM)
CHIEF JUSTICE
(CHAITALI CHATTERJEE (DAS), J.)
S.Das/ AR[CR]
4
Reproduced from the public record of the Calcutta High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.