Leviability of cess on tractors under Tractor Cess Rules, 1992-reg.
Circular No. 916/06/2010-CX
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Excise & Customs)
New Delhi, dated the 4th March, 2010.
All Director Generals,
All Chief Commissioners of Central Excise (including LTU),
All Chief Commissioners of Customs & Central Excise,
All Chief Commissioners of Customs.
Subject: Leviability of cess on tractors under Tractor Cess Rules, 1992-reg.
It has been brought to the notice of the Board that Hon’ble High Court of Himachal Pradesh in the case of Indo Farm Tractors & Motors Ltd. V/s UOI [2008(222) ELT184 (HP)], has held that Automobile Cess Rules are not applicable for imposition of cess on tractors. The said judgement was upheld by the Hon’ble Supreme Court in CWP No. 895/2005. Subsequent to the said judgement, some of the manufacturers have stopped paying cess on the tractors manufactured by them.
2. A reference was made to the Ministry of Heavy Industry & Public Enterprises, the administrative ministry responsible for Automobile cess, to take suitable action consequent to the Court judgement. The Ministry of Heavy Industry & Public Enterprises has informed that cess on tractors is leviable under the Tractor Cess Rules, 1992 and related notifications issued by the adminstrative ministry. However, existence of these rules were not brought to the notice of the Hon’ble Courts and the Hon’ble Court has passed the order without having any occasion to consider these rules. In view of the said situation, the opinion of the Law Ministry was sought. Law Ministry has clarified that since the decision of the Hon’ble High Court was not rendered in the context of Tractor Cess Rules, 1992, therefore, it is legally correct to collect the tractor cess as per the law. Further, the Hon’ble High Court has also held that the cess on tractors can be recovered if the rules are framed by the Government. As the rules are already in existence, there is no bar on collection of cess. In this connection, it is mentioned that Ministry of Heavy Industry & Public Enterprises has clarified that the Tractor Cess rules, 1992 were notified vide Notification No. S.O. 55(E) dated 19.01.1993 and these are still in existence. Further, cess at the rate of 1/8% ad valorem was levied vide Notification No. 662(E) dated 06.09.1985. Copies of the rules and the notifications are enclosed.
3. In view of above mentioned legal position, it is clarified that tractors are chargeable to tractor cess in terms of the Tractor Cess Rules, 1992 read with the IDRA Act, 1951. Necessary steps to collect the cess may be taken.
4. Trade & Industry as well as field formations may be suitably informed.
5. Receipt of this circular may kindly be acknowledged.
6. Hindi version will follow.
(Amish Kumar Gupta)