R.K Rengaraj, Advocate
The Hon’ble Finance Minister in the recent Union Budget 2015-16 announced in the floor of the Parliament that “As part of the movement towards GST, I propose to subsume the Education Cess and the Secondary and Higher Education Cess in Central Excise duty. In effect, the general rate of Central Excise Duty of 12.36% including the cesses is being rounded off to 12.5%”. So, this has come into effect from 01.03.2015 and there is no CESS for Excise Duty and the same is subsumed in the BED. However, the Budget notification and circular was silent about the unutilised balance of CESS and Higher Education CESS as on 28.02.2015 as to whether the CESS would be lapsed or can be adjusted in the major head of Basic Excise Duty. Now after two months, the Board has issued Notification No. 12/2015-Central Excise (N.T.) Dated- 30th April, 2015 about the utilisation of CESS which can be accessed at the following link :-
The above notification allows the manufacturers to utilize the Cenvat credit on CESS towards payment of basic excise duty on certain situations. The amendment is applicable only to CESS paid on inputs, capital goods and input services received in the factory of the manufacturer on or after 01-03-2015. The situations may arise like this.
Therefore, this amendment is not applicable to inputs, capital goods and input services received in the factory of the manufacturer upto 28th February, 2015. In other words, even after the amendment of Rule 3(7) (b) of Cenvat Credit Rules, 2004 the excise Units cannot utilize the balance of CESS lying as on 28-02-2015 towards payment of excise duty,
Further, the manufacturers can utilise the CESS available as on 28.02.2015 in the following situations also, even before receiving this notification 12/2015:
It is expected and hoped that the Department would further clarify about the fate of the CESS unutilised as on 28.02.2015 in the near future. In the author’s opinion, the Department has not taken care the real expectation of the trading community about the utilisation of the balance amount as the current notification says about only the CESS paid on inputs, capital goods and input services received in the factory on or after 01.03.2015.