2007 (11) TMI 35 - AT - Central Excise

Education Cess on Automobile Cess Education Cess is levied on the aggregate of all duties of excise which are levied and collected by Central Govt. in the Ministry of Finance But Automobile Cess is levied and collected only by officers of Revenue so no education cess is liable to be demanded

Summary

Issues involved:
1. Applicability of education cess on automobile cess paid by the appellants.
2. Interpretation of Circular No. 345/2/2004- TRU (Pt.) dated 10-8-2004 by the Central Board of Excise and Customs.
3. Examination of relevant provisions of the Industries (Development and Regulation) Act and the Rules framed thereunder.
4. Clarification on the definition of 'cess' under Rule 2 of the Automobile Cess Rules, 1984.
5. Determination of whether education cess under Section 93 of the Finance Act, 2004 is applicable on automobile cess.

Analysis:

1. The appellants, involved in tractor manufacturing, had paid automobile cess under the Industries (Development and Regulation) Act, 1951, from August 2004 to December 2005. A show cause notice was issued by the department demanding education cess as a percentage of the automobile cess paid. The appellants contested this demand, arguing that no education cess was applicable on the amount of cess levied by the Central Govt. The objection was overruled by the adjudicating authority and the first appellate authority, leading to the present appeal.

2. The Tribunal examined Circular No. 345/2/2004- TRU (Pt.) dated 10-8-2004 issued by the Central Board of Excise and Customs. The circular clarified that education cess under Section 93 of the Finance Act, 2004 should only be levied on duties collected by the Department of Revenue. This clarification was deemed binding on the Revenue, highlighting the specific criteria for the imposition of education cess.

3. In the analysis of the relevant provisions of the Industries (Development and Regulation) Act and the Rules, the Tribunal emphasized Rule 2 of the Automobile Cess Rules, 1984. This rule defined 'cess' as the amount levied and collected under specific notifications, indicating the scope and applicability of the term within the regulatory framework.

4. The Tribunal further delved into the interpretation of Rule 3 of the Automobile Cess Rules, which incorporated provisions from the Central Excise Act and Rules. It was noted that the lower authorities had misconstrued this rule, leading to a misunderstanding regarding the collection and levy of duties under different statutes by various ministries.

5. Ultimately, the Tribunal concluded that education cess under Section 93 of the Finance Act, 2004 was not applicable to automobile cess collected by the Central Govt. in the Ministry of Finance (Department of Revenue). As a result, the impugned order was set aside, and the appeal by the appellants was allowed, providing clarity on the non-applicability of education cess on automobile cess payments.