2007 (7) TMI 308 - HC - Central Excise

Claim to rebate on surcharge on Excise Duty denied - Held that - The Notification dated 6/9/2004 had included the definition of Excise Duty only if consonance with the meaning of Excise Duty as was existing on the date Notification was issued, even if Explanation would not have been there the term Duty of Excise in ordinary circumstance would have included the surcharge levied as Education Cess in terms of Section 93 of the Act of 2004. In view thereof, no hesitation to hold that impugned orders of Central Government as revisional authority and appellate order of Commissioner (Appeals) are patently erroneous and deserve to be quashed. Accordingly, writ petition is allowed, impugned orders are set aside to the extent the petitioner has been denied the claim to rebate on surcharge on Excise Duty appropriated by Union of India as Education Cess for funding Universalised quality basic education programme but was paid by the petitioner only as Duty of Excise w.e.f. 9-7-2004 to 5-9-2004. There is no contention about eligibility to rebate w.e.f. 6-9-2004.

Summary

Issues involved:
Challenge to withdrawal of claim to rebate on exports of goods due to education cess payable under the Finance Act, 1994.

Analysis:
1. The petitioner, engaged in manufacturing goods, filed a refund claim for rebate on Excise Duty paid, including education cess, on exports of fabrics. The claim was initially sanctioned by the Deputy Commissioner.
2. An appeal was made to the Commissioner (Appeals) against the order-in-original, where the claim was disallowed, stating that education cess paid on exports was not eligible for rebate.
3. The revisional authority, referring to a specific notification, held that rebate on education cess was not available before the notification date, even though rebate on Excise Duties was available prior to that.
4. The petitioner argued that education cess should be considered part of excise duties automatically, without the need for a separate notification, as per the Finance Act, 1994.
5. The respondents contended that rebate is dependent on notifications issued by the government, and since no prior notification provided for rebate on education cess, it was not available.
6. Sections 91, 92, and 93 of the Finance Act, 1994 were analyzed, specifying the levy and collection of education cess on excisable goods.
7. The court noted that education cess was to be collected as a duty of excise, in addition to other excise duties, and the provisions of the Central Excise Act applied to its levy and collection.
8. The court highlighted that the levy of education cess was intended to fund government projects for universal quality education, collected as a surcharge on various taxes.
9. The court concluded that the orders disallowing rebate on education cess were erroneous, as education cess should be considered part of excise duty, and existing notifications covered its rebate.
10. The impugned orders were quashed, allowing the petitioner's claim for rebate on education cess paid as duty of excise during a specific period, as it was part of the excise duty itself.