2023 (4) TMI 1317 - AT - Central Excise

Disallowance of Credit of Education Cess and Secondary and Higher Education Cess - denial of credit on the ground that the goods were supplied to them by 100% EOU M/s Viraj Profiles Ltd. and as per Rule 3(7)(a) of Cenvat Credit Rules, 2004, the assessee receiving goods from 100% EOU can avail credit of Basic Excise Duty only as per the formula prescribed there under. HELD THAT - The issue is no more res integra and is squarely covered by several decisions of this Tribunal. In the case of EMCURE PHARMACEUTICALS LTD. VERSUS COMMISSINOR OF C. EX., PUNE 2008 (1) TMI 147 - CESTAT, MUMBAI where it was held that Rule 3(7)(b) also opens with the non-obstante clause. Therefore, if the interpretation canvassed by the Revenue is accepted as correct, there would have been no question of utilisation of education cess for payment of education cess if the taking of the credit itself, according to the Revenue, is barred by Rule 3(7)(a), and the provisions of Rule 3(7)(b) would, therefore, be rendered redundant. The facts of the present case are similar to the facts considered in the aforesaid decision of the Tribunal and therefore, the contention that Education Cess is a surcharge which relates in enhancement of the tax, is agreed upon. Further the objective was not to levy excise duty on goods cleared by EOU. The question of adding Education Cess under Section 93 of the Finance Act,1944 after determination of the aggregate of customs duty does not arise. The impugned order is set aside and the appeal filed by the Appellant is allowed.

Summary

Issues:
The issue involved in this case is the disallowance of credit of Education Cess and Secondary and Higher Education Cess availed by the appellant, who are manufacturers of stainless steel bright bars, due to the goods being supplied by a 100% EOU, M/s Viraj Profiles Ltd.

Summary:

Issue 1: Disallowance of Credit of Education Cess and Secondary and Higher Education Cess

The appellant's credit of Education Cess and Secondary and Higher Education Cess amounting to Rs.29,81,602/- was disallowed by the Authorities below, citing Rule 3(7)(a) of Cenvat Credit Rules, 2004, which restricts credit to Basic Excise Duty only for inputs supplied by a 100% EOU. The Tribunal referred to previous decisions and held that the objective was not to levy excise duty on goods cleared by EOU, and Education Cess is admissible as it is a surcharge enhancing tax, not covered by Rule 3(7)(a). The impugned order disallowing the credit was set aside, and the appeal was allowed.

Decision:
The Tribunal found that Education Cess credit is admissible to the appellants, similar to previous decisions, and set aside the impugned order, allowing the appeal with consequential relief.

(Order pronounced in the open court on 03. 04. 2024)