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2018 (2) TMI 476 - AT - Central ExciseCENVAT credit availed on the Education Cess and Secondary & Higher Education Cess - N/N. 13/2012-Cus and 14/2012-Cus both dated 17.03.2012 - whether the assesse are entitled to cenvat credit of Education Cess and Secondary Higher Education Cess paid on imported goods post March 2012? - Held that - Education Cess on excisable goods leviable under Section 91 read with Section 93 of the Finance Act, 2004; the Secondary and Higher Education Cess on excisable goods leviable u/s 136 read with Section 138 of Finance Act, 2007, are eligible to credit. Under Clause (vii) additional duty of customs leviable u/s 3 of the Customs Tariff Act equivalent to duty of excise specified under Clause (i),(ii),(iii),(iv),(v),(vi),&(via) is eligible to credit. Education Cess and Secondary Higher Education Cess paid under Section 94 of the Finance Act 2004 and Section 139 of the Finance Act, 2007, on the aggregate duty of customs levied under Sec.12 the Customs Act, 1962 can never be held to be admissible to credit which continued to be levied before and after 17.3.2012. Penalty - Held that - issue involved in the present appeals relates to pure question of interpretation of law and the demand notices were issued for normal period of limitation, therefore, imposition of penalty on the assesses is unwarranted - penalty set aside. Appeal allowed in part.
Issues Involved:
1. Admissibility of Cenvat credit on Education Cess and Secondary & Higher Education Cess paid on imported goods post-March 2012. 2. Interpretation of Rule 3(1) of Cenvat Credit Rules, 2004. 3. The impact of Notification Nos. 13/2012-Cus and 14/2012-Cus on the admissibility of Cenvat credit. 4. Imposition of penalties on the assesses. Issue-wise Detailed Analysis: 1. Admissibility of Cenvat Credit on Education Cess and Secondary & Higher Education Cess: The core issue is whether the assessees are entitled to Cenvat credit on Education Cess and Secondary & Higher Education Cess paid on imported goods after the issuance of Notification Nos. 13/2012-Cus and 14/2012-Cus on 17.03.2012. The assessees argued that Cenvat credit should be allowed under Rule 3(1) of the Cenvat Credit Rules, 2004, irrespective of the exemption notifications issued under the Customs Act. The Revenue contended that after the notifications, the cesses became exempted and thus, Cenvat credit was not admissible. 2. Interpretation of Rule 3(1) of Cenvat Credit Rules, 2004: Rule 3(1) of the Cenvat Credit Rules, 2004, allows manufacturers or producers of final products to take credit of various duties and cesses, including Education Cess and Secondary & Higher Education Cess on excisable goods and additional duty of customs equivalent to excise duty. The Tribunal noted that prior to 17.03.2012, Education Cess and Secondary & Higher Education Cess were collected twice on imported goods, but credit was only allowed on the additional duty of customs (CVD) equivalent to excise duty on like goods manufactured in India. 3. Impact of Notification Nos. 13/2012-Cus and 14/2012-Cus: The Tribunal observed that these notifications exempted Education Cess and Secondary & Higher Education Cess on the additional duty of customs (CVD). The assessees argued that these notifications, issued under Section 25 of the Customs Act, did not affect the admissibility of credit under the Cenvat Credit Rules. However, the Tribunal concluded that after the notifications, the equivalent duty under clauses (vi) & (via) of Rule 3(1) of the Cenvat Credit Rules became exempted, and thus, no credit could be extended on the same. 4. Imposition of Penalties: The Tribunal found that the issue involved a pure question of interpretation of law and that the demand notices were issued for the normal period of limitation. Therefore, the imposition of penalties on the assesses was deemed unwarranted and was set aside. Conclusion: The appeals filed by the assessees were partly allowed to the extent of setting aside the penalties imposed. The appeal filed by the Revenue was allowed to the extent of confirming the denial of Cenvat credit with interest. The Tribunal emphasized that Education Cess and Secondary & Higher Education Cess paid on the aggregate duty of customs could not be held admissible to credit, whether before or after 17.03.2012. The decision was pronounced in open court on 31.01.2018.
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