2008 (4) TMI 277 - HC - Central Excise

Denial of refund of Education Cess under the provisions of the Notification under clause 40 of 2001-C.E., even though refund of Cenvat credit on the export consignments has already been granted to the petitioner - just as excise duty amount was paid from CENVAT Credit Account, so also Education Cess was also paid from the same CENVAT Credit Account. Therefore, when the petitioner is found entitled to get refund of the excess duty amount, there is no reason to deny refund of the Education Cess

Summary

Issues:
Challenge of denial of refund of Education Cess under Central Excise Rules, 2002.

Analysis:
In a petition under Article 226 of the Constitution, the petitioner contested the denial of refund of Education Cess under the provisions of a Notification under clause 40 of 2001-C.E., dated 26-6-2001 issued under Rule 18 of the Central Excise Rules, 2002, despite already receiving a refund of Cenvat credit on export consignments. The petitioner argued that Education Cess is akin to a surcharge on excise duty, thus, if entitled to an excise duty refund, they should also receive a refund of Education Cess. Reference was made to a decision by a Division Bench of the Rajasthan High Court in a similar matter. The petitioner's contention was supported by Notification No. 19 of 2004, allowing rebate on Education Cess under certain conditions. A Division Bench of the Rajasthan High Court had previously ruled that the definition of 'duty' includes Education Cess on excisable goods even for the period before 6-9-2004, entitling an assessee to a refund of Education Cess paid as a surcharge on excise duty.

The respondents argued that since the petitioner paid duty from their CENVAT Credit Account, they were not entitled to a refund of Education Cess. However, the petitioner contended that both excise duty and Education Cess were paid from the same CENVAT Credit Account, thus, if a refund of excise duty was granted, Education Cess should also be refunded. The petitioner relied on a Tribunal decision to support their argument. The Court examined Section 2A of the Central Excise Act, which includes CENVAT in the definition of 'duty'. Considering the statutory provisions and the payment method of the duties by the petitioner, the Court agreed with the Rajasthan High Court's decision and directed the refund of Education Cess to be credited to the same CENVAT Credit Account from which it was paid, disregarding the Department's argument that Education Cess should be paid only from the PLA Account.

Consequently, the Court allowed the petition, directing the Assistant Commissioner of Central Excise to refund the Education Cess amount collected from the petitioner in relation to the goods for which excise duty had already been refunded, within one month. The refund was to be credited to the same account from which the Education Cess was initially paid. The Court made the rule absolute with no costs, permitting direct service.