2013 (10) TMI 1040 - AT - Central Excise

Scope of Notification No. 28/2010 exempting eduction cess to the goods falling in Tenth Schedule of Finance Act, 2010 Exemption post levy of Clean Energy Cess - Waiver of Pre-deposit - Revenue was of the view that Cess is leviable as a percentage of Excise duty and the exemption notifications issued are not applicable to the Cess leviable as a percentage of Central Excise duty Held that - Education Cess is leviable under Sections 91 & 93 of the Finance Act, 1994 - All the goods specified in the Tenth Schedule are exempted from Education Cess under the Notification Nos. 28/2010 and 29/2010 and this exemption cannot be applicable only to the cess leviable as a percentage of C.E.C. since no such differentiation has been made - even after Excise duty was introduced on Coal in the Finance Act, 1994, this notification has been left un-amended - Following Commissioner of Cus. & C. Ex., Shillong vs. Dharampal Satypal Ltd. 2011 (8) TMI 99 - GAUHATI HIGH COURT - the levy and calculation of Education Cess is independent of levy of Excise duty - it is not necessary that when Excise duty is levied, Cess is consequently leviable and vice versa - the appellant has made out prima facie case in their favour for eligibility of exemption from Education Cess - there shall be waiver of pre-deposit and stay against recovery of dues during pendency of the appeal Stay granted.

Summary

Issues:
- Dispute over payment of Education Cess on Excise duty levied on coal under the Finance Act, 2011.

Analysis:
The appellant, engaged in coal extraction, challenged the imposition of Education Cess on coal under the Finance Act, 2011. The dispute centered on whether Education Cess is payable on the Excise duty of coal. The department contended that Education Cess was applicable as a percentage of Excise duty from 1.4.2011, demanding significant amounts from the appellant. The appellant argued that coal, specified in the Tenth Schedule, was exempt from Education Cess and Secondary Higher Education Cess as per Notification Nos. 28/2010 and 29/2010. The appellant relied on Section 83(7) of the Finance Act, 2010, which linked Cess provisions to the Central Excise Act, 1994.

The Revenue's position was that Cess was leviable as a percentage of Excise duty, and the exemptions did not apply to Cess related to the Central Excise Tariff Act. The Tribunal analyzed the relevant notifications and Acts, noting that the exemption was issued under Section 5A of the Central Excise Act, 1994, in conjunction with the Finance Act, 2004. It emphasized that Education Cess, levied under the Finance Act, 1994, was exempted for goods in the Tenth Schedule by the notifications. The Tribunal highlighted that the exemption was not limited to Cess on Clean Energy Cess but applied to all goods in the Tenth Schedule. It also referenced a High Court decision emphasizing the independence of Education Cess levy from Excise duty, supporting the appellant's claim for exemption.

Ultimately, the Tribunal found merit in the appellant's arguments, granting a waiver of pre-deposit and a stay against the recovery of the demanded amounts during the appeal's pendency. The judgment underscored the applicability of the exemption from Education Cess to coal and upheld the appellant's prima facie case for exemption, citing legal precedents and statutory provisions to support its decision.