2018 (7) TMI 158 - AT - Central Excise

Utilization of CENVAT Credit - whether CENVAT credit availed on the Basic Excise Duty can be utilized for payment of education cess and secondary higher education cess? - Held that - Rule 3(4) clearly lays down the CENVAT Credit availed under Rule 3(1) by a manufacturer / service provider can be utilized for payment of any of duty of excise on any final product. Reliance placed in the case of UNION OF INDIA VERSUS KAMAKHYA COSMETICS & PHARMACEUTICAL PVT. LTD. 2012 (7) TMI 902 - GAUHATI HIGH COURT where it was held that there was no bar to utilize CENVAT Credit of Basic Excise Duty for payment of education Cess. Demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether CENVAT credit availed on Basic Excise Duty can be used for education cess and secondary higher education cess.

Analysis:
The case involved a dispute regarding the utilization of CENVAT credit on Basic Excise Duty for payment of education cess and secondary higher education cess. The appellants, engaged in manufacturing various products, had used a portion of their CENVAT credit towards these cess payments. The Department contended that such utilization was not permissible. Show cause notices were issued, and the original authority confirmed the demand, interest, and penalties. The appellants challenged this before the Tribunal.

The appellant's counsel argued that education cess and secondary higher education cess are considered duties of excise, as mandated by specific sections of the Finance Acts. They highlighted Rule 3 of the CENVAT Credit Rules, 2004, which allows the utilization of CENVAT credit for payment of any duty of excise on final products. Citing various High Court judgments, the counsel asserted that utilizing CENVAT credit for these cess payments was within the legal framework.

The department reiterated its findings from the impugned order during the hearing. After considering both sides, the Tribunal examined the relevant provisions, including Section 93 and Section 138 of the Finance Acts. The Tribunal agreed with the appellant's argument that Rule 3(4) permits the use of CENVAT credit for any duty of excise on final products. Relying on previous decisions like Madura Industries Textiles, Kamakhya Cosmetics and Pharmaceuticals Pvt. Ltd., Dharampal Satyapal Ltd., and Prag Boismi Synthetics Ltd., the Tribunal concluded that the demand was unsustainable.

In line with the precedents and legal provisions, the Tribunal set aside the impugned order, allowing the appeals with any consequential relief. Additionally, the Tribunal granted the appellant's miscellaneous applications for a change of cause title. The operative portion of the order was pronounced in open court, providing relief to the appellants based on the interpretation of relevant laws and precedents.