2024 (6) TMI 1173 - AT - Central Excise

100% EOU - demand of Education cess and Secondary and Higher Education Cess on the countervailing duty and basic customs duty without paying the same on the excise duty - period involved in the present dispute is from November 2011 to May 2012 - HELD THAT - Having considered the decision of larger bench of the Tribunal in the case of KUMAR ARCH TECH PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II 2013 (4) TMI 482 - CESTAT NEW DELHI - LB has held that the demand confirmed in the against the taxpayer therein was not called for and accordingly set aside the demand therein. The impugned order set aside - appeal allowed.

Summary

Issues:
- Whether Revenue authorities are justified in demanding Education cess and SHE cess even on the excise duty determined as payable?

Analysis:
The case involved a taxpayer, a 100% export-oriented unit, who had paid Education cess and Secondary and Higher Education Cess on countervailing duty and basic customs duty but not on the excise duty determined as payable. The Revenue contended that education and secondary and higher education cess should be calculated and paid on central excise duty as per the Central Excise Act, 1944 and CENVAT Credit Rules, 2002. A show cause notice was issued proposing to demand the differential duty with interest and impose penalties. The original authority confirmed the demands, leading to the taxpayer filing an appeal.

During the appeal, the only issue to be decided was whether the Revenue authorities were justified in demanding Education cess and SHE cess on the excise duty determined as payable. The appellant cited a previous case where a similar demand was set aside by a bench. The Chennai Bench referred to a decision by a larger bench in another case, which clarified that education cess and S&H cess should not be charged on DTA clearances made by 100% EOU if such cess was already added while calculating aggregate duties of customs payable. The Tribunal highlighted that education cess and S&H cess are surcharges on existing levies and should not be charged on top of each other. The Tribunal concluded that the demands were not justified based on legal principles and set aside the impugned order, allowing the appeal with consequential relief.

In light of the legal reasoning provided by the Tribunal and the precedent set by previous cases, the Chennai Bench upheld the decision to set aside the demands for Education cess and SHE cess on the excise duty determined as payable. The judgment emphasized the legislative intent behind the imposition of these cess and surcharges, ensuring that they are not charged multiple times on the same tax base. The appeal was allowed, and the impugned order was set aside, providing consequential benefits as per law.