2012 (8) TMI 345 - AT - Central Excise

Discharge of Education Cess wherein Education Cess is to be calculated as a percentage of excise duty levied and collected - assessee contending that once duty liability is exempt, cess has to be nil - Held that - It was held in case of Indo Farm Tractors & Motors Ltd (2007 (7) TMI 150 - HIGH COURT, HIMACHAL PRADESH ) that Education Cess which is levied as a percentage of excise duty can be calculated irrespective of the fact whether the excise duty payable on such goods exempted. Hence, excise duty can always be calculated even if it is not collected and on this notional calculation, the education cess can be calculated. This cess has to be collected in terms of the Finance Act - Decided against assessee.

Summary

Issues:
- Appeal against order upholding non-liability to pay additional excise duty under Additional Duties of Excise Act, 1978.
- Interpretation of Education Cess calculation in relation to excise duty exemption.
- Application of High Court judgment on the leviability of additional duties of excise.

Analysis:
1. The appeal was filed by the Revenue challenging the order upholding the non-liability of the respondent to pay additional excise duty under the Additional Duties of Excise Act, 1978. The first appellate authority had upheld the adjudicating authority's decision, which stated that the respondent was not liable to pay the additional excise duty.

2. Both lower authorities based their decision on a Tribunal judgment in the case of Raymond Ltd. 2005 (192) ELT 868. The respondent did not appear during the hearing despite specific notices being sent, including a last chance adjournment notice.

3. The issue revolved around the calculation of Education Cess in cases of excise duty exemption. The Revenue argued that a High Court judgment from Himachal Pradesh in the case of Indo Farm Tractors & Motors Ltd. 2008 (222) ELT 184 (H.P.) settled the matter. The High Court held that Education Cess could be calculated irrespective of whether excise duty was exempted.

4. The Tribunal analyzed the submissions made by the Revenue and the records. It noted that the first appellate authority had based its decision on the Raymond Ltd. case, where nil duty liability under Section 195 resulted in nil Additional Duties of Excise. However, the Tribunal found that the High Court judgment in the Indo Farm Tractors & Motors Ltd. case addressed a similar issue regarding the calculation of Education Cess based on excise duty levied, even if not collected.

5. Relying on the High Court judgment, the Tribunal concluded that the excise duty portion for the discharge of additional duty of excise could have been notionally calculated, as held in the Indo Farm Tractors & Motors Ltd. case. Therefore, the impugned order was set aside, and all three appeals were allowed.

6. In summary, the Tribunal's decision was based on the interpretation of the leviability of additional duties of excise under the ADE Act, 1978, and the application of the High Court judgment regarding the calculation of Education Cess in cases of excise duty exemption. The judgment clarified that Education Cess could be calculated based on the excise duty levied, even if the duty was exempted, leading to the setting aside of the impugned order and allowing the appeals filed by the Revenue.