In Brief
Bajaj Auto Limited, a two-wheeler manufacturer exempted from central excise duty under a special incentive notification for Uttarakhand, challenged demands for National Calamity Contingent Duty (NCCD), Education Cess, and Secondary & Higher Education Cess. The Supreme Court held that once excise duty is exempted, all levies that constitute or surcharge on excise duty are also exempted. Although NCCD is levied on the product (not the value of excise duty), it retains the character of excise duty and must follow exemptions granted to excise duty. Exemption notifications are to be interpreted liberally once applicability is established. The Court allowed the appeal, quashing the demand notice and holding Bajaj not liable for any of the three cesses.
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