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2007 (9) TMI 82 - AT - Central ExciseEducation cess on tea cess As per circular 345/04 education cess is calculated on duty levied and collected by Dept. of Revenue only Since Tea cess levied by Govt. in Ministry of Commerce not by Central Govt. in Ministry of Finance - Demand of education cess and interest set aside
Issues:
Appeal against demand of Education Cess on Tea Cess and interest thereon. Analysis: The appeals were related to the demand of Education Cess on Tea Cess and interest. The issue revolved around the interpretation of Section 93 of the Finance Act, 2004, which specifies the Education Cess levied on goods under the Central Excise Tariff Act, 1985. The original authority had demanded Education Cess on Tea Cess, considering it a levy by the Central Government in the Ministry of Finance. However, it was argued that Tea Cess was actually a levy by the Central Government in the Ministry of Commerce, as established by a Notification issued by the Ministry of Commerce. The Circular of the Board dated 10-8-04 clarified that Education Cess should be calculated only on duties levied and collected by the Department of Revenue. Since Tea Cess was not levied by the Ministry of Finance but by the Ministry of Commerce, it did not fulfill the requirements for Education Cess levy as per Section 93 of the Finance Act, 2004. The Tribunal noted that the lower authorities had proceeded on an erroneous premise by considering Tea Cess as a levy by the Central Government in the Ministry of Finance. They overlooked the clarification in the Board Circular that Education Cess should be calculated only on duties levied and collected by the Department of Revenue. The Tea Cess, leviable under the Tea Act, was established to be a levy by the Central Government in the Ministry of Commerce. As per the Circular and Section 93 of the Finance Act, 2004, only duties levied and collected by the Department of Revenue in the Ministry of Finance were eligible for Education Cess. Since the Tea Cess did not meet this criterion, the demand for Education Cess on Tea Cess was deemed invalid. Consequently, the Tribunal set aside the impugned orders and allowed the appeals, ruling in favor of the appellant. The decision was made after considering the submissions from both sides and clarifying the correct interpretation of the relevant legal provisions and Circulars.
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