2008 (7) TMI 1016 - AT - Central Excise

Education Cess on paper cess - Held that - paper cess is nothing but a duty of excise and levied as well as collected only in the name of cess for the purpose of development of industries under Industries (Development and Regulation) Act, 1951 on paper and paper boards - Once it is established that paper cess being paid by the paper industries is an excise duty in the eyes of law, it must be included with the other excise duty (B.E.D., S.E.D., Cess etc.) while calculating the correct amount of education cess @ 2% as prescribed, under Central Excise Law - appeal allowed - decided in favor of Revenue.

Summary

Issues:
Revenue's appeal against Commissioner (Appeals) orders allowing M/s. Shah Paper Mills and M/s. Kwality Paper Mills to not pay Education Cess on paper cess.

Analysis:
The main issue in this case revolves around the question of whether paper cess should be considered as excise duty for the purpose of calculating Education Cess. The Revenue contended that the Commissioner (Appeals) erred in holding that paper cess is not excise duty, thus Education Cess cannot be charged on it. The Revenue relied on a Board's Circular stating that Education Cess is calculated on aggregate excise/customs duties collected by the Department of Revenue. However, the respondent argued that the orders of the Commissioner (Appeals) were correct, citing the same Board's Circular and emphasizing the words "levied and collected" by the Department of Revenue.

The Tribunal analyzed the arguments presented by both sides and referred to legislative provisions and circulars. The Tribunal highlighted the provision of Clause 83 of the Finance (No. 2) Bill, 2004, which specified the calculation of Education Cess on excisable goods. Additionally, Circular No. 19/90-CX.8 clarified that paper cess is levied and collected as a duty of excise for the development of industries under the Industries (Development and Regulation) Act, 1951. The Tribunal concluded that paper cess is indeed a duty of excise, collected as a cess for industrial development purposes, and should be included in calculating Education Cess.

In light of the clear legal provisions and circulars, the Tribunal ruled in favor of the Revenue, allowing their appeals against the Commissioner (Appeals) orders. The judgment established that paper cess is a duty of excise levied and collected as cess, confirming that it should be considered for Education Cess calculation purposes.