2018 (5) TMI 1348 - AT - Central Excise

Refund of education cess/ higher education cess - N/N. 56/2002-CE dated 14.11.2002 - Whether the appellant can utilise basic excise duty for payment of education cess/higher education cess or not? - Held that - Hon ble High Court of Gauhati in the case of Union of India Vs. Kamakhya Cosmetics & Pharmaceutical Pvt. Ltd. 2012 (7) TMI 902 - GAUHATI HIGH COURT has held that basic excise duty can be utilised for payment of education cess/ higher education cess - decided in favor of appellant. Whether the appellant is entitled to claim refund of education cess/higher education cess paid in cash? - Held that - Hon ble Apex Court in the case of SRD Nutrients Pvt. Ltd. vs CCE, Guwahati, 2017 (11) TMI 655 - SUPREME COURT OF INDIA , has held that the education cess/higher education cess arises on account of payment of duty, therefore, the refund claim is admissible of education cess/ higher education cess in terms of Notification No. 56/2002-CE dated 14.11.2002 - decided in favor of appellant. Whether the interest for the intervening period can be demanded/adjusted or recovered from the appellant without issuance of the SCN? - Held that - for demand of interest a SCN is required to be issued and the same has not been issued to the appellant - the interest cannot be recovered from the appellant without issuance of the SCN - decided in favor of appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
I. Whether the appellant can utilize basic excise duty for payment of education cess/higher education cess.
II. Whether the appellant is entitled to claim a refund of education cess/higher education cess paid in cash.
III. Whether interest for the intervening period can be demanded/adjusted or recovered without the issuance of a show cause notice.

Issue No. I:
The Tribunal referred to a previous judgment by the Hon’ble High Court of Gauhati, which established that basic excise duty can be used for paying education cess/higher education cess. Citing this precedent, the Tribunal ruled in favor of the appellant on this issue.

Issue No. II:
In this matter, the Tribunal considered a decision by the Hon’ble Apex Court in the case of SRD Nutrients Pvt. Ltd. vs CCE, Guwahati, which concluded that education cess/higher education cess refund claims are admissible as these arise from duty payments. Relying on this legal position, the Tribunal sided with the appellant on this issue as well.

Issue No. III:
Regarding the demand or adjustment of interest without a show cause notice, the Tribunal emphasized the necessity of issuing a show cause notice for such actions. Citing a previous case involving Punjab National Bank, the Tribunal highlighted that interest recovery requires a show cause notice. Additionally, the Tribunal noted that in cases of short payment of duty due to goods cleared to a sister unit, where the appellant is entitled to a refund, it creates a revenue-neutral situation, making interest adjustment unnecessary. Consequently, the Tribunal ruled in favor of the appellant on this issue too.

In conclusion, as all issues were resolved in favor of the appellant based on legal precedents and interpretations, the Tribunal set aside the impugned orders and allowed the appeals with consequential relief.