The Dharwad Bench of High Court of Karnataka has upheld the levy of 0.5 per cent National Calamity Contingent Duty (NCCD) on tobacco products that are manufactured and sold.
Justice M I Arun observed this while dismissing a batch of petitions filed by firms into the business of tobacco.
The court held that the NCCD was 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 and hence the same cannot be termed as bad in law.
The petitioners approached the court challenging imposition of the excise duty and the NCCD on the tobacco products.
The petitioners contended that the purpose of GST is to consolidate and levy indirect taxes insofar as it relates to the goods and services. They said since the tobacco and its products were subjected to the GST, there should not have been imposition of the excise duty or the NCCD.
The counsel for the Ministry of Finance and Commissioner of Central Tax and Central Excise justified the levy of GST, excise duty and the NCCD separately on the tobacco and its products.
“The Finance Act, 2001 sought to levy 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,” the court said.
The court also said that section 136 of the Finance Act, 2001 contemplates levying and collecting the NCCD, which is considered as a surcharge, a duty of excise.