2008 (7) TMI 244 - AT - Central Excise

Department is challenging the order of the Commissioner (Appeals) who has held that Education Cess can be paid by utilizing the Cenvat credit of BED contention of the department is that Education Cess is not excise duty and therefore, the BED cannot be used for payment of Education Cess - Held that the credit of Basic Excise duty can be utilized for payment of any duty of excise - appeal filed by the Revenue is rejected.

Summary

Issues:
Challenge to the order of the Commissioner (Appeals) regarding the utilization of Cenvat credit for payment of Education Cess.

Analysis:
The Appellate Tribunal upheld the decision of the Commissioner (Appeals) regarding the utilization of Cenvat credit for payment of Education Cess. The main contention raised by the department was that Education Cess is not excise duty, and therefore, the Basic Excise Duty (BED) credit cannot be used for paying Education Cess. The Tribunal considered the arguments presented by the Revenue and found that the Commissioner (Appeals) had thoroughly addressed the issue. The Tribunal agreed with the conclusion reached by the Commissioner (Appeals) and cited relevant legal provisions to support the decision.

The Tribunal referred to Rule 3(4) of the Cenvat Credit Rules, 2004, which allows the utilization of Cenvat credit for payment of any duty of excise on a final product. It also highlighted Section 93 of the Finance Act, 2004, which categorizes Education Cess as a duty of excise. The Tribunal cited a previous judgment by the Hon'ble Tribunal in the case of Mahindra & Mahindra Ltd. v. CCE, Mumbai, which established that Education Cess imposed on the manufacture and production of goods is akin to excise duty. Based on these legal provisions and precedents, the Tribunal concluded that Education Cess is indeed a duty of excise, allowing for the utilization of Cenvat credit for its payment.

Moreover, the Tribunal addressed the restriction under Rule 3(7) of the Cenvat Credit Rules, 2004, which limits the utilization of credit for specific duties like Education Cess. However, the Tribunal clarified that this restriction does not apply to duties not explicitly listed under Rule 3(7), such as Basic Excise Duty. Therefore, in the absence of any specific restriction, the Tribunal held that the credit of Basic Excise Duty can be utilized for the payment of any duty of excise, including Education Cess. As a result, the appeal filed by the Revenue challenging the order of the Commissioner (Appeals) was rejected by the Tribunal.

In conclusion, the Appellate Tribunal affirmed the decision of the Commissioner (Appeals) regarding the utilization of Cenvat credit for the payment of Education Cess, emphasizing the classification of Education Cess as a duty of excise and the absence of restrictions on the utilization of Basic Excise Duty credit for such payments.