2008 (8) TMI 98 - AT - Central Excise

Whether while paying education cess, sugar cess is required to be taken into consideration or not - In terms of clarification issued by the Board vide its letter M.F. (D.R.) Letter F. No. 345/2/2004-TRU(Pt.) and various Tribunals decision, it has to be held that sugar cess is not a duty of excise, though collected by Department of Revenue, and as such is not to be taken into account while calculating the education cess

Summary

Issues involved: Whether sugar cess should be considered while paying education cess.

Analysis:
1. The main issue in this appeal was whether the sugar cess should be taken into consideration while paying education cess. The Tribunal examined the provisions of the Sugar Cess Act, 1982 and the Sugar Development Fund Act, 1982, which empower the Central Government to fix the rate of sugar cess. A notification was issued levying a duty of excise on sugar. The question was whether this sugar cess should be considered as excise duty for the purpose of calculating education cess, which is leviable at 2% of all excise dues.

2. The Tribunal referred to a circular issued by the Ministry of Finance clarifying that education cess should be calculated on the aggregate excise/customs dues collected by the Department of Revenue. It cited a previous case where it was held that for education cess to apply, the duty must be levied and recoverable by the Central Government in the Ministry of Finance. In this case, since the sugar cess was levied by the Ministry of Consumer Affairs, Food & Public Distribution, it was not considered a duty of excise for the purpose of education cess calculation.

3. The Tribunal also cited another case where it was reiterated that a duty not levied by the Central Government in the Ministry of Finance cannot be considered for education cess calculation. Applying the same reasoning, the Tribunal concluded that the sugar cess, although collected by the Department of Revenue, was not levied by the Ministry of Finance. Therefore, it should not be taken into account while calculating education cess.

4. The Tribunal distinguished a decision of the Himachal Pradesh High Court, stating that the issue in that case was different as it dealt with the applicability of education cess on goods exempted from excise duty. The question of quantifying education cess by considering other cesses imposed by different Ministries was not the subject of that case. Ultimately, the Tribunal ruled in favor of the appellant, allowing the appeal and granting consequential relief.

5. In conclusion, the Tribunal held that the sugar cess should not be considered for calculating education cess, as it was not levied by the Ministry of Finance. The decision was pronounced on 26-8-2008.