2012 (8) TMI 833 - AT - Central Excise

CENVAT Credit - whether the assessee could take CENVAT credit of sugar cess paid under the Sugar Cess Act 1982 - Held that - Sugar Cess did not assume the character of central excise duty to warrant levy of education cess thereon. This decision of the Hon ble Gujarat High Court was rendered on 11/3/2010 i.e. more than two years ago. The department s appeal against the Tribunal s decision in the case of Shri Renuka Sugars Ltd. 2007 (8) TMI 147 - CESTAT BANGALORE had been filed in the Hon ble High Court of Karnataka on 19/2/2008 i.e. more than four years ago. Apparently the department s stay application is pending before the Hon ble High Court of Karnataka for over four years but it did not occur to the department that the above decision of the Hon ble Gujarat High Court supported their case pending with the Hon ble Karnataka High Court. In these circumstances I do not think that anything has affected the operation of the Tribunal s order in Shri Renuka Sugars case - Decided in favour of assessee.

Summary

Issues:
1. Whether the appellant can take CENVAT credit of sugar cess paid under the Sugar Cess Act 1982.
2. Whether the decision of the Gujarat High Court regarding sugar cess and education cess is applicable in the present case.

Analysis:

Issue 1:
The Tribunal referred to a previous case involving Shree Renuka Sugars Ltd. where the Division Bench had allowed the assessee to take CENVAT credit of sugar cess paid under the Sugar Cess Act 1982. The Division Bench considered sugar cess as a duty of excise in accordance with Section 3(4) of the Sugar Cess Act. Despite the department appealing against this decision, no stay was obtained from the High Court. Therefore, the Tribunal held that the ratio of the previous decision should be followed in the present case, allowing the appellant to avail the credit.

Issue 2:
The learned Superintendent (A.R.) cited a decision of the Gujarat High Court in Commissioner Vs. Sahakari Khand Udyog Mandli Ltd., which stated that sugar cess did not qualify as central excise duty for the levy of education cess. This decision was made more than two years before the current case. The department's appeal against the Shree Renuka Sugars Ltd. case had been pending for over four years in the High Court of Karnataka. Despite the relevance of the Gujarat High Court decision to their case, the department did not act on it. The Tribunal concluded that the operation of the Shree Renuka Sugars case was unaffected by these circumstances and set aside the impugned order, allowing the appeal.

In conclusion, the Tribunal allowed the appellant to take CENVAT credit of sugar cess paid under the Sugar Cess Act 1982 based on the precedent set in the Shree Renuka Sugars case. The Tribunal disregarded the Gujarat High Court decision regarding the levy of education cess on sugar cess, as it did not impact the applicability of the previous ruling.