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2022 (9) TMI 215 - AT - Central ExciseValuation - inclusion of paper cess in the calculation of Education Cess and Secondary and Higher Education Cess - Department took a stand that Education Cess is levied on the excise duty and Cess on paper is also a duty of excise, therefore, it should be included - applicability of Board Circular No.978/2/20214-CX (F.No.262/2/2008-CX.8) dated 07.01.2014 - HELD THAT - In the present case even though the Cess on Paper is a duty of excise, it is not levied by the Department of Revenue, Ministry of Finance. It is levied under a different enactment namely Industries (Development Regulation) Act, 1951, though it is collected by the Department of Revenue. Paper Cess is not levied by the Department of Revenue, it is levied by the Industrial Development, Ministry of Commerce and Industry. No doubt it is collected by the Department of Revenue, but not levied by it. Hence Paper Cess is not includible. It is noted that the lower authorities were proceeding on an erroneous premise when they considered the Paper Cess as a levy by the Central Government in the Ministry of Finance, Department of Revenue. They obviously lost sight of the Circular No. 978/2/2014-CX, dated 7-1-2014 where it has been clarified that the Education Cess and the Secondary and Higher Education Cess are not to be calculated on cesses which are levied under Acts administered by Department/Ministries other than Ministry of Finance (Department of Revenue), but rather only collected by the Department of Revenue in terms of those Acts. Hon ble Gujarat High Court in the case of Joshi Technologies International v. Union of India 2016 (6) TMI 773 - GUJARAT HIGH COURT is squarely applicable to the facts of the present case, where it was held that Crude Oil Cess is not in the nature of excise duty and consequently, the Education Cess and Secondary and Higher Secondary Education Cess computed thereon, also does not bear the character of a duty of excise, but is merely an amount paid under a mistake of law. As a necessary corollary, it follows that the provisions of the Central Excise Act, 1944 would not be applicable for refund of such amount paid by mistake. Moreover, since there was no liability to pay Education Cess and Secondary and Higher Secondary Education Cess, the provisions of the Central Excise Act as incorporated in the OIC Act would also not apply to the amount paid by mistake. T he Hon ble High Court after considering the decision of the Hon ble Supreme Court in the case of Mafatlal Industries Ltd. 1996 (12) TMI 50 - SUPREME COURT , allowed the refund claims in an identical situation. Accordingly, in view of the judgement passed by the Hon ble Gujarat High Court, since Cess on Paper is not a duty of excise, the provisions of Section 11B of the Central Excise Act would not apply. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether Education Cess and Secondary & Higher Education Cess should be calculated on Paper Cess. 2. Applicability of Section 11B of the Central Excise Act, 1944 to the refund claim. 3. Retrospective effect of the CBEC Circular dated 07.01.2014. 4. Applicability of the principle of unjust enrichment. 5. Authority of the Commissioner(Appeals) to remand the matter. Issue-wise Detailed Analysis: 1. Calculation of Education Cess and Secondary & Higher Education Cess on Paper Cess: The primary issue in this appeal was whether the Paper Cess should be included in the calculation of Education Cess and Secondary & Higher Education Cess. The Department argued that since Education Cess is levied on excise duty and Paper Cess is also a duty of excise, it should be included. However, the Board Circular No. 978/2/2014-CX dated 07.01.2014 clarified that Education Cess and Secondary & Higher Education Cess are not to be calculated on cesses levied under Acts administered by departments other than the Ministry of Finance (Department of Revenue). The Tribunal noted that the Paper Cess is levied under the Industries (Development & Regulation) Act, 1951 by the Ministry of Commerce and Industry, not by the Ministry of Finance. Thus, Paper Cess should not be included in the calculation of Education Cess and Secondary & Higher Education Cess. 2. Applicability of Section 11B of the Central Excise Act, 1944: The Adjudicating Authority rejected the refund claim by applying Section 11B of the Central Excise Act, 1944. The Tribunal, however, found that since Cess on Paper is not a duty of excise, the provisions of Section 11B would not apply. This conclusion was supported by the decision of the Hon'ble Gujarat High Court in the case of Joshi Technologies International v. Union of India, where it was held that the amount paid by mistake does not take the character of a duty of excise, and hence, Section 11B does not apply. 3. Retrospective Effect of the CBEC Circular dated 07.01.2014: The Appellant argued that the CBEC Circular dated 07.01.2014, which clarified that Education Cess and Secondary & Higher Education Cess should not be calculated on other cesses, is clarificatory in nature and has retrospective effect. The Tribunal agreed with this view, noting that the Circular reiterated the position clarified in an earlier Circular dated 10.08.2004. 4. Principle of Unjust Enrichment: The Department contended that the refund claim was hit by the principle of unjust enrichment. However, the Tribunal, referring to the decision of the Hon'ble Gujarat High Court in Joshi Technologies International, found that the Appellant had not passed on the incidence of the Education Cess and Secondary & Higher Education Cess to any other person. Therefore, the principle of unjust enrichment did not apply. 5. Authority of the Commissioner(Appeals) to Remand the Matter: The Appellant argued that the Commissioner(Appeals) erred in remanding the matter as per the decisions of the Apex Court in the case of MIL India. The Tribunal noted that the Commissioner(Appeals) had bifurcated the refund claim, upholding the rejection of Rs.19,582/- and remanding the balance claim of Rs.14,986/-. The Tribunal found that the Commissioner(Appeals) had not considered the decisions rendered by the Tribunal in this regard and thus, the remand was not justified. Conclusion: The Tribunal allowed the appeal filed by the Appellant, holding that Paper Cess should not be included in the calculation of Education Cess and Secondary & Higher Education Cess. It also concluded that Section 11B of the Central Excise Act does not apply to the refund claim, and the principle of unjust enrichment is not applicable. The Tribunal set aside the order of the Commissioner(Appeals) and allowed the refund claim with consequential relief.
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