2018 (8) TMI 1379 - AT - Central Excise

Refund of Education Cess and Secondary & Higher Secondary Education Cess - area based exemption availed - whether the appellants are entitled to refund of Edu. Cess and Secondary & Higher Secondary Edu. Cess when they availed area based exemption under N/N. 39/2001-CE dated 31.7.2001? Held that - The admissibility of refund of Edu. Cess and Secondary & Higher Secondary Edu. Cess paid by the appellant along with excise duty under area based exemption N/N. 39/2001-CE dated 31.7.2001 is considered by the Hon ble Supreme Court in the case of SRD Nutrients Pvt. Ltd. 2017 (11) TMI 655 - SUPREME COURT OF INDIA , where it was held that The appellants were entitled to refund of Education Cess and Higher Education Cess which was paid along with excise duty once the excise duty itself was exempted from levy. Refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund entitlement of Edu. Cess and Secondary & Higher Secondary Edu. Cess under area-based exemption Notification No. 39/2001-CE dated 31.7.2001.

Comprehensive Analysis:

Issue: Refund entitlement of Edu. Cess and Secondary & Higher Secondary Edu. Cess under area-based exemption Notification

The primary issue in the present appeal was whether the appellants were entitled to a refund of Education Cess and Higher Education Cess when availing area-based exemption under Notification No. 39/2001-CE dated 31.7.2001. The judgment referred to a previous decision by the Hon'ble Supreme Court in the case of SRD Nutrients Pvt. Ltd., which clarified the rationale behind Education Cess being levied on excise duty. The Education Cess was deemed to be payable on excisable goods as per Section 93 of the Finance Act, 2004, and calculated at 2% on the aggregate of excise duties. It was concluded that when excise duty was exempted, no Education Cess would be applicable, as the surcharge was to be calculated on the excise duties. The judgment highlighted the importance of judicial discipline, noting that when two views were possible, the one favoring the assessees should be adopted.

Judicial Precedents and Interpretations:
The judgment also delved into various legal interpretations and precedents. It referenced the decisions in Bharat Box Factory Ltd. and Cyrus Surfactants Pvt. Ltd., where it was held that Education Cess and Higher Education Cess were refundable along with excise duty. The Rajasthan High Court's decision in Banswara Syntex Ltd. was cited to support the refundability of surcharges collected under different enactments. The Explanation appended to a specific Notification clarified the treatment of Education Cess as a special Duty of Excise under the Finance Act, 2004. The judgment further drew parallels with a previous case involving automobile cess, emphasizing that Education Cess and Higher Education Cess levied at 2% of excise duty were akin to excise duty itself.

Conclusion and Relief:
Based on the legal principles and precedents discussed, the Tribunal concluded that the appellants were indeed entitled to a refund of Education Cess and Higher Education Cess paid along with excise duty once the excise duty itself was exempted. Consequently, the appeals were allowed, the impugned orders were set aside, and the appellants were granted consequential relief as per the law.

In summary, the judgment extensively analyzed the refund entitlement of Education Cess and Higher Education Cess under a specific area-based exemption notification, drawing on legal interpretations, precedents, and the rationale behind the levy of such surcharges on excise duties.