2015 (12) TMI 733 - AT - Central Excise

Demand of education cess - whether the Education Cess is payable on Paper Cess for clearance of Paper and Paper Board - Held that - CBEC vide Circular F.No.345/2/2004-TRU (Pt.), dt.10.08.2004, clarified that as the Education Cess is calculated on the aggregate duties of Excise/Customs (excluding certain duties of Customs like anti-dumping duty, safe guard etc) levied and collected by the Department of Revenue, only such duties, which are (a) levied and collected as duties of Excise/Customs and (b) are both levied and collected by the Department of Revenue should be taken into account for calculating Education Cess. - It is clear from the Board Circular F.No.262/2/2008-CX.8, dt.07.01.2014 that a cess levied under an Act, which is administered by Ministry of Finance (Department of Revenue) but only collected by Department of Revenue under the provisions of that Act, cannot be treated as a duty, which is both levied and collected by Department of Revenue. The Board further clarified that the Education Cess is not to be calculated on cesses which are levied under Acts administered by the Department/Ministries other than the Ministry of Finance (Department of Revenue) but are only collected by the Department of Revenue in terms of those Acts. Thus, it is clear that the amount collected by the Ministry of Finance (Department of Revenue), levied by the other Ministry cannot be treated as duty. There is no dispute that the Paper Cess levied by other than the Ministry of Finance (Department of Revenue), and therefore, demand of Education Cess on Paper Cess cannot be sustained. - Decided against Revenue.

Summary

Issues:
Whether Education Cess is payable on Paper Cess for clearance of Paper and Paper Board.

Analysis:
The appeal was filed by the Revenue against the order of Commissioner (Appeals) where the appeal of the Revenue was dismissed, and the order of the Adjudicating authority was upheld. The issue in question was whether Education Cess is payable on Paper Cess for clearance of Paper and Paper Board. Both the authorities below confirmed that the Education Cess is levied by the Ministry of Industries by the Government of India under the Industrial Development and Regulation Act, 1961.

The Finance (No.2) Bill, 2004, specifically mentioned that Education Cess on excisable goods shall be a duty of Excise, calculated on the aggregate of all duties of Excise, excluding Education Cess on excisable goods, levied and collected by the Central Government. The Revenue argued that Paper Cess is payable on excisable goods, making Education Cess applicable on Paper Cess. They referenced previous Tribunal decisions to support their stance.

However, the Respondent's Advocate pointed to a Division Bench decision that favored the Assessee and highlighted a Board Circular. The Circular clarified that Education Cess should only be calculated on duties levied and collected by the Department of Revenue, excluding duties levied by other ministries but collected by the Department of Revenue. The Tribunal's decision in a similar case emphasized that for a Cess to be included, it must be both levied and collected by the Department of Revenue, which was not the case with Paper Cess.

The Tribunal, after considering the arguments and the Circular, concluded that the Paper Cess, being levied by a ministry other than the Ministry of Finance (Department of Revenue), cannot be subjected to Education Cess. Therefore, the demand for Education Cess on Paper Cess was deemed unsustainable, and the order of the Commissioner (Appeals) was upheld. As a result, the appeal filed by the Revenue was rejected.