2010 (8) TMI 261 - AT - Central Excise

Demand education cess and higher education cess which was paid by the assessees and the refund of which is disputed by the Department on the ground that the amount of education cess and higher education cess was not forming part of the excise duty liability which it was paid by the assessees in terms of the Notification No. 34/2001-C.E - excise duty under the Notification No. 38/2007-C.E. the Board had clarified that the excise duty payable under the Notification No. 38/2007-CE would include all duties of excise leviable and the same would include BED AED NCCD Education Cess etc - orders are not sustainable and set aside

Summary

Issues:
Refund claim of education cess and higher education cess under Notification No. 34/2001-C.E. dated 28th June, 2001.

Analysis:
The judgment dealt with the issue of refund claims related to education cess and higher education cess paid by the assessees under Notification No. 34/2001-C.E. The Department disputed the refund, arguing that the said cess did not form part of the excise duty liability under the notification. Previous decisions in similar matters had held that education cess and higher education cess were not included in the duty calculated and paid under the said notification. The Appellate Tribunal considered the arguments raised by both parties and referred to relevant legal provisions and circulars.

The Appellate Tribunal noted the contention of the assessees' advocate regarding Notification No. 38/2007-C.E. dated 19th December 2007, which clarified that excise duty payable under a similar notification included various leviable duties, including education cess. The advocate argued that there was no justification to exclude education cess and higher education cess from the duty under Notification No. 34/2001-C.E. The Tribunal analyzed the provisions of both notifications and the arguments put forth by the assessees.

The Tribunal extensively discussed the term 'excise duty' as used in the notifications and the scope of its inclusion. It was observed that education cess and higher education cess, introduced under the Finance Act, were not considered part of excise duty as per statutory provisions. The Tribunal highlighted that the circular by the Board did not address this specific aspect and that merely including education cess in excise duty in a circular did not bind the Tribunal to accept it as such under the notification.

The Tribunal rejected the argument that if the lawmakers intended to exclude the said cess from excise duty, they should have explicitly stated so during the notification amendment. It was clarified that once the law clearly defined excise duty, there was no need for further specification in notifications. The Tribunal relied on previous decisions in similar matters to conclude that the refund claims for education cess and higher education cess were not sustainable, setting aside the impugned orders and confirming the adjudicating authority's orders.

Regarding cross-objections, the Tribunal explained that the liability under the notification related only to excise duty under the Act and not other statutes. The grounds raised in the cross-objections were deemed unsubstantial and were rejected. Ultimately, the appeals were allowed, the impugned orders were set aside, and the cross-objections failed, leading to the order being confirmed accordingly.