2012 (1) TMI 177 - HC - Central Excise

Summary

Issues:
The issues involved in this case are:
1. Whether education cess is payable by 100% EOU on DTA clearances under the Proviso to Section 3(1) of the Central Excise Act, 1944.
2. Whether education cess is leviable under Section 93(1) of the Finance Act, 2004, upon 100% EOU in clearances in DTA.
3. Whether the deemed fiction has to be carried out for the legislative intent logically stretching it to the unrealistic end.

Issue 1:
The dispute revolves around the education cess payable on basic customs duty plus education cess and countervailing duty inclusive of education cess, which the respondent assessee has already paid on its clearance of goods from the export-oriented unit to the domestic operation area. The High Court held that the appeal would not be maintainable before it due to the exclusion clause contained in Section 35G of the Central Excise Act. The exclusion clause in Section 35G is expansive and excludes all appeals arising out of orders of the Tribunal relating to the determination of any question having a relation to the rate of duty of excise. The Tribunal's decision in favor of the manufacturers, stating that education cess was not required to be paid again, falls under the expression "the order determining a question having relation to the rate of duty of excise." The decision directly impacts the rate at which manufacturers should pay excise duty on their clearances in the DTA from EOU Units.

Issue 2:
The High Court emphasized that the exclusion clause in Section 35G of the Central Excise Act is broad and encompasses any order concerning the determination of a question related to the rate of duty of excise. The Tribunal's ruling in favor of the manufacturers, rejecting the Revenue's claim that education cess needed to be paid again, was considered to be within the scope of the exclusion clause. The decision directly affects the computation of excise duty and whether education cess should be included in the calculation. The High Court concluded that the respondents' preliminary objection was valid, and the Tax Appeal was dismissed as not maintainable before the Court.

Issue 3:
The High Court highlighted that the exclusion clause in Section 35G of the Central Excise Act is extensive and covers orders related to any question having a relation to the rate of duty of excise. The Tribunal's decision favoring the manufacturers and rejecting the Revenue's contention that education cess should be paid again was deemed to fall under the exclusion clause. The decision impacts the rate at which manufacturers are required to pay excise duty on their clearances in the DTA from EOU Units. The High Court upheld the respondents' preliminary objection and dismissed the Tax Appeal as not maintainable before the Court.