2006 (11) TMI 192 - AT - Central Excise

Credit on education cess used for payment of duties of Central Excise other than education cess. Mistake happened during initial days of introduction of education cess. Demand not sustainable since confirmation of duty and permitting taking of credit again being a Revenue neutral exercise. However, penalty imposable, infraction of law being clearly established

Summary

Issues: Appeal against Commissioner (Appeals) order on education cess credit utilization.

Analysis:
1. Issue of Education Cess Credit Utilization: The appellant had utilized the credit of education cess for paying duties other than education cess, leading to a dispute with the department. The appellant argued that it was a technical error and requested setting aside the Commissioner (Appeals) order.

2. Contentions of the Parties: The appellant's advocate contended that the misuse was unintentional and requested permission to pay the demanded duty in cash to be eligible for education cess credit in the future. On the other hand, the Departmental Representative (DR) emphasized the importance of following the law strictly to prevent unintended misuse by other assesses.

3. Judicial Analysis: The Member (T) acknowledged the mistake occurred during the initial days of education cess introduction. While recognizing that education cess credit should only be used for education cess duty payment, the Member noted that allowing the credit again would be revenue-neutral, considering the partial payment of education cess by the appellant later. Consequently, the demand for duty was set aside, but the penalty imposed on the appellant was upheld due to the established infraction of law.

4. Decision: In light of the peculiar circumstances, the Member (T) disposed of the appeal by setting aside the duty demand but upholding the penalty. The judgment aimed to balance rectifying the error while upholding legal compliance and deterrence against infractions.

This comprehensive analysis outlines the key legal issues, arguments presented by the parties, judicial reasoning, and the final decision in the appeal against the Commissioner (Appeals) order regarding the utilization of education cess credit.