2010 (3) TMI 718 - HC - Central Excise

Education Cess upon the Sugar Cess - sugar cess levied and collected cannot be equated with duty of central excise and therefore cannot be treated to be part and parcel of the amount on which education cess to be calculated - in absence of any substantial question of law the appeal dismissed

Summary

Issues:
1. Whether Education Cess is leviable upon Sugar Cess?
2. Whether Sugar Cess is considered as duty of excise for Education Cess calculation?
3. Interpretation of the term 'levy' in the context of Sugar Cess Act, 1982.
4. Whether Sugar Cess should be included in the aggregate for calculating Education Cess.

Analysis:
1. The appellant challenged the Tribunal's order stating that Education Cess should be levied on the Sugar Cess collected under the Sugar Cess Act, 1982. The appellant argued that the Tribunal erred in not considering Sugar Cess as part of the duties of excise for Education Cess calculation. The Tribunal relied on a notification by the Ministry of Consumer Affairs and a circular by the Ministry of Finance, which clarified that only duties levied by the Department of Revenue should be considered for Education Cess calculation. The Tribunal's decision was based on the understanding that the Sugar Cess, though collected as a duty of excise, is not levied by the Ministry of Finance, hence not to be included in Education Cess calculation.

2. The Tribunal's reasoning was deemed correct as per the provisions of the Sugar Cess Act, 1982. The Act specifically imposes a cess for the Sugar Development Fund, distinct from central excise duty. The Act outlines the levy and collection of the cess separately from the Central Excise Act, indicating that Sugar Cess does not assume the characteristics of central excise duty for Education Cess calculation. The legislative intent was clear in treating Sugar Cess as a separate entity, not to be considered for Education Cess computation.

3. Section 4 of the Sugar Cess Act further supports the distinction between the cess and central excise duty by crediting the proceeds of the Sugar Cess to the Consolidated Fund of India. This provision, along with the provisions of the Sugar Development Fund Act, 1982, emphasizes that Sugar Cess is meant for a specific fund and does not equate to central excise duty. The legislative scheme of both Acts, read together, confirms that Sugar Cess is not to be included in the calculation of Education Cess.

4. The Court concluded that there was no substantial question of law to warrant interference in the Tribunal's order. The appeal was dismissed based on the understanding that Sugar Cess, collected under a specific Act for a designated fund, should not be considered as part of the aggregate for Education Cess calculation. The judgment upheld the distinction between Sugar Cess and central excise duty, ensuring compliance with the legislative framework governing these levies.