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29 March 2019

NCCD exemption available to units exempted from Excise duty


29th March

Supreme Court of India has held that manufacturing units in special categories states which were exempt from Central Excise duty would also be exempt from National Calamity Contingent Duty (NCCD), since NCCD is of the nature of an excise duty. 

The court in the case of Bajaj Auto Ltd. v. UOI held that same view on this exemption will apply as taken for Education Cess and Secondary & Higher Education Cess by the Court in the case of SRD Nutrients (P) Ltd., even if NCCD is levied on the product and not on the excise duty payable.

The Revenue department had sought to distinguish the judgement in the case of SRD Nutrients while arguing that there is a difference in the nature of incidence, as NCCD was to be calculated on the value of the product and not on the value of the excise duty payable, as in case of Education cesses.

The Apex Court in this regard was of the view that exemption notifications, like the one in question must be read in a manner that give them a liberal interpretation, provided that no violence is done to the language employed. It was held that once the excise duty is exempted, NCCD, levied as an excise duty cannot partake a different character and, thus, would be entitled to the benefit of the exemption notification.

It observed that NCCD, at the time of collection, takes the character of a duty on the product and is also subject to the provisions relating to excise duty, applicable to it in the manner of collection as well as the obligation of the taxpayer to discharge the duty.