2007 (12) TMI 123 - AT - Central Excise

Extra Neutral Alcohol (E.N.A) & Denatured Spirit asessee reversed 8% of sale value of rectified spirit for non maintenance of separate account of impugned products as per sec. 83, F.A. education Cess is leviable only on excisable goods. As far as rectified spirit is concerned, the same is not liable to Excise Duty as the product comes under the State Excise. Since the impugned goods are not excisable, there is no question of payment of any Education Cess on the 8% amount

Summary

Issues: Liability of Education Cess on non-excisable goods under Cenvat Credit Rules

In this case, the appellants manufacture Extra Neutral Alcohol (E.N.A) and Denatured Spirit using duty paid Molasses for which they take Cenvat credit. The issue at hand is whether the appellants are liable to pay Education Cess on non-excisable goods like rectified spirit under the Cenvat Credit Rules. The Revenue contended that besides the 8% reversal, the appellants should also discharge the Education Cess liability. The Commissioner (Appeals) upheld this view, leading to the appeal.

The learned Advocate for the appellants argued that Education Cess is only leviable on excisable goods as per Section 83 of the Finance Act, 2004. Since rectified spirit falls under State Excise and is not subject to Central Excise Duty, there should be no obligation to pay Education Cess on the 8% amount related to non-excisable goods. The Tribunal, after careful consideration, agreed with the Advocate's stance. The Tribunal noted that Education Cess is not applicable to products not liable for Central Excise duty. The Tribunal found that the Commissioner had not addressed this crucial point in the findings, leading to the decision to allow the appeal with consequential relief.