2018 (12) TMI 492 - AT - Central Excise

Utilization of Cenvat Credit of basic excise duty for payment of Education Cess and Secondary & Higher Education Cess - Held that - This issue has been time and again considered by this Tribunal, various High Courts and Supreme Courts and held that Cenvat Credit can be utilized for payment of Education Cess and Secondary & Higher Education Cess for the reason that there is no bar in Rule 3 of Cenvat Credit Rules, 2004 for such utilization. The Education Cess and Secondary and Higher Education Cess were nothing but duty of excise. The terms Cenvat Credit provided under Rule 3 is includes the amongst others, basic excise duty. In terms of the said Rule the said Cenvat Credit can be utilized for payment of any duty of excise - appellant is clearly entitled for utilization of Cenvat Credit of basic excise duty for payment of Education Cess / Secondary and Higher Education Cess - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Whether the appellant is entitled to utilize Cenvat Credit of basic excise duty for payment of Education Cess and Secondary & Higher Education Cess.

Analysis:

Issue 1: Utilization of Cenvat Credit for payment of Education Cess and Secondary & Higher Education Cess
The appellant contended that previous judgments have settled the issue that Cenvat Credit can be used for payment of Education Cess and Secondary & Higher Education Cess. The appellant also cited a previous favorable decision by the Tribunal in their own case. The Revenue reiterated the findings of the impugned order.

Analysis: The Tribunal examined whether the appellant can utilize Cenvat Credit of basic excise duty for the payment of Education Cess and Secondary & Higher Education Cess. The Tribunal noted that previous judgments from various courts have consistently held that there is no bar in the Cenvat Credit Rules, 2004 for such utilization. The Education Cess and Secondary & Higher Education Cess are considered duties of excise and fall within the ambit of Cenvat Credit rules. The Tribunal referred to the Supreme Court's decision in SRD Nutrients Pvt. Ltd case, which established that Education Cess and Secondary & Higher Education Cess are indeed duties of excise. The Tribunal also mentioned the decisions of the Guwahati High Court supporting this position. Based on the settled legal position, the Tribunal concluded that the appellant is entitled to utilize Cenvat Credit for the payment of Education Cess and Secondary & Higher Education Cess.

Outcome: The Tribunal found in favor of the appellant, allowing the utilization of Cenvat Credit for the payment of Education Cess and Secondary & Higher Education Cess. The demand was deemed unsustainable, leading to the dismissal of the Revenue's appeal for imposing a penalty. Consequently, the assessee's appeal was allowed, and the Revenue's appeal was dismissed.