2024 (11) TMI 1340 - AT - Central Excise

Benefit of N/N. 33/2022-CE dated 09.07.2012 - liability to pay Education Cess and Secondary Higher Education Cess - recovery alongwith interest and penalty - HELD THAT - The issue of liability to pay Education Cess as well as Secondary Higher Education Cess in the facts of the present case involves interpretation of statute which issue is sub-judice, before the Hon ble Apex Court. When such is the case, no mens rea could be attributed to the Taxpayer, especially since the appellant is claimed to have remitted the disputed cess of Rs.88,494/- along with applicable interest thereon vide Challan No. 21 dated 27.10.2014 and hence, there is no scope to burden the appellant with penalty under Section 25 ibid. The impugned order is set aside - matter remanded back to the Original Authority who shall wait for the verdict of the Hon ble Apex Court in the case of SRD Nutrients Pvt. Ltd. 2022 (1) TMI 615 - SUPREME COURT - appeal disposed off by way of remand.

Summary

Issues:
Interpretation of statute regarding liability to pay Education Cess and Secondary Higher Education Cess under a specific notification exempting Excise duty.

Analysis:
The appeal was filed against an Order-in-Appeal passed by the Commissioner of Customs, Central Excise & Service Tax. The appellant, a manufacturer of various goods, received an order under a Duty Credit Scrip scheme without paying the appropriate duty. The Revenue contended that the exemption under Notification No. 33/2022-CE did not cover Education Cess and Secondary Higher Education Cess. The Original Adjudicating Authority confirmed the demand for duty along with interest and penalty. The appellant approached the first Appellate Authority, which also dismissed the appeal, leading to the current appeal.

The appellant argued that when Excise duty is exempted, Education Cess and Secondary Higher Education Cess are also automatically exempted, citing CBEC Circulars. The appellant relied on legal precedents to support their case, including judgments involving Hero Moto Corp Ltd., Bajaj Auto Ltd., and Unicorn Industries. The conflicting decisions in these cases led to a referral to a Larger Bench by the Supreme Court, creating uncertainty regarding the liability to pay the mentioned cess.

The Tribunal noted the lack of clarity on the liability to pay Education Cess and Secondary Higher Education Cess in the present case due to the pending matter before the Supreme Court. Considering the sub-judice nature of the issue, the Tribunal found no mens rea on the part of the Taxpayer. The appellant had already remitted the disputed cess along with interest, eliminating the basis for imposing a penalty under Section 25 of the Central Excise Rules.

As a result, the Tribunal set aside the Order-in-Appeal and remitted the matter back to the Original Authority to await the Supreme Court's decision in the pending case. The Tribunal directed that no penalty or interest should be levied, as the appellant had already fulfilled the cess payment obligations. The decision was pronounced in open court on a specified date.