2024 (11) TMI 544 - AT - Central Excise

Refund of the Cenvat duty paid through account current (PLA) in terms of the provisions of N/N. 56/2002-CE dated 14.11.2002 as amended - whether the education cess and secondary higher education cess can be paid by utilizing BED Credit by a unit availing exemption under N/N. 56/2002-CE dated 14.11.2002? - HELD THAT - This issue has been considered by the Division Bench of this Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE, JAMMU VERSUS RB. JODHAMAL CO. PVT. LTD. 2013 (9) TMI 345 - CESTAT NEW DELHI , wherein it has been held that a unit availing of exemption under Notification No. 56/2002-CE cannot utilize BED Credit for payment of education cess and secondary higher education cess which are not exempted under the said notification. The appellant is registered in the state of Jammu Kashmir and were availing benefit of area based exemption under N/N. 56/2002-CE dated 14.11.2002. The said notification provides mechanism to give effect to aforesaid exemption by way of refund of duty paid through PLA. As per the procedure, the manufacturer avails Cenvat Credit of duty/cess paid by them on inputs and utilizes whole of the CENVAT credit available with them on last day of the month for payment of Central Excise duty and Cess. The balance amount of duty is paid in cash and on application of refund, the refund is granted for payment of Central Excise made in cash only. The refund is granted by way of cash or by way of self credit in PLA. There is no infirmity in the impugned order vide which the refund of the education cess and secondary higher education cess has been denied - the impugned order is upheld by dismissing all the three appeals of the appellant.

Summary

Issues:
- Rejected refund on account of education cess & HSEC
- Utilization of Cenvat Credit for payment of education cess and secondary & higher education cess
- Applicability of Notification No. 56/2002-CE
- Denial of refund for education cess and secondary & higher education cess

Analysis:
The appeals were filed against an Impugned Order rejecting the appellant's refund claims related to education cess and secondary & higher education cess. The appellant, engaged in manufacturing medicines and scrap, utilized Cenvat Credit of Basic Excise Duty (BED) for paying these cess amounts through account current (PLA), which was deemed impermissible under Notification No. 56/2002-CE. The Commissioner (Appeals) upheld the rejection, leading to the present appeals.

The appellant argued that the impugned order lacked legal sustainability and cited precedents favoring their stance, including their own case and other relevant judgments. On the contrary, the Revenue representative reiterated the findings of the impugned order, citing a Division Bench decision and a recent Supreme Court judgment that supported the denial of refund for utilizing BED Credit for education cess and secondary & higher education cess.

The crucial issue revolved around whether a unit availing exemption under Notification No. 56/2002-CE could use BED Credit for paying education cess and HSEC. The Tribunal referred to the Division Bench decision in Commissioner vs. R.B. Jodhamal & Co. Pvt Ltd, emphasizing that such utilization was impermissible under the said notification. Additionally, the Tribunal highlighted the recent Supreme Court judgment in M/s Unicorn Industries vs. Union of India, which clarified that without a specific exemption notification covering these additional duties, they could not be considered exempted.

Considering the submissions and legal precedents, the Tribunal concluded that the denial of refund for education cess and secondary & higher education cess was justified. Upholding the impugned order, the Tribunal dismissed all three appeals of the appellant, citing the binding nature of the legal principles established in relevant judgments.

In conclusion, the Tribunal's decision was based on the interpretation of Notification No. 56/2002-CE, the utilization of BED Credit for cess payments, and the absence of specific exemptions for education cess and HSEC. The judgment underscored the importance of legal clarity and adherence to established legal principles in matters concerning duty exemptions and refund claims.