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2024 (11) TMI 51 - AT - Central ExciseLevy of education cess and secondary and higher education cess on automobile cess - HELD THAT - It is an admitted position that the automobile cess is not levied under the Finance Act and the same is levied under Section 9(1) of the Industries (Development Regulation) Act, 1951 read with Rule 2 (c) of the Automobile Cess Rules, 1984 whereas the education cess and secondary and higher education cess are levied by the Ministry of Finance. Further, we find that this has been clarified vide Circular No. 978/2/2014-CX dated 07.01.2014 wherein, it has been clarified that education cess shall be levied only on such duties of excise/customs which are both levied as well as collected by the Department of Revenue. This issue has been considered by the Tribunal in the case of TAFE LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MADURAI 2007 (11) TMI 35 - CESTAT, CHENNAI , wherein it has been held ' Education cess under Section 93 of the Finance Act, 2004 is one levied as a duty of excise at the prescribed rate, on the aggregate of all duties of excise which are levied and collected by the Central Govt in the Ministry of Finance (Department of Revenue) under the provisions of the Central Excise Act or under any other law for the time being in force. Automobile cess was not levied by the Central Govt. in the Ministry of Finance (Department of Revenue), though collected by officers of that department. Hence no Education cess is liable to be demanded as a percentage of automobile cess.' Thus, the impugned order is not sustainable in law and therefore the same is set aside.
Issues:
Interpretation of whether education cess and secondary and higher education cess can be levied on automobile cess. Analysis: The judgment involves two appeals challenging an order confirming the demand of cess along with interest but setting aside the penalty imposed under Rule 25 of the Central Excise Rules, 2002. The appeals were taken up together as the issues were common. The appellant, engaged in manufacturing light commercial vehicles, cleared goods without paying education cess and secondary and higher education cess on the automobile cess paid. The department issued show cause notices for recovery, leading to the confirmation of the demand of cess, interest, and penalty by the Original authority. The appellate authority upheld the demand of cess and interest but set aside the penalty, leading to the present appeal. The appellant argued that education cess and SHE cess are not levied on automobile cess as they are collected by the Department of Heavy Industries, not the Ministry of Finance. They relied on circulars clarifying that education cess is only levied on duties collected by the Department of Revenue. The appellant cited various judgments supporting their position that automobile cess should not be subject to education cess. The appellant also argued that the appellate authority erred in relying on a judgment that was later reversed by the Bombay High Court. The respondent reiterated the findings of the impugned order. The Tribunal considered whether education cess and secondary and higher education cess could be levied on automobile cess. It was noted that automobile cess is not levied under the Finance Act but under the Industries (Development Regulation) Act, unlike education cess and SHE cess which are levied by the Ministry of Finance. Circulars clarified that education cess is only applicable to duties collected by the Department of Revenue. The Tribunal referred to a previous case involving Tafe Ltd. where it was held that education cess is not liable on automobile cess. The Tribunal also noted that the impugned order relied on a judgment that was later reversed by the Bombay High Court. In conclusion, the Tribunal found that the impugned order was not sustainable in law. It set aside both impugned orders, allowing the appeals of the appellant with any consequential relief as per law.
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