Education Cess & SHEC can be used for Excise Duty payment

CA Srikant Agarwal

We know that education cess and Higher education cess has been withdrawn on excise duty (though the same continues with service tax, income tax and other applicable taxes) w.e.f 01.03.2015.

As a result w.e.f 01.03.2015 the manufacturer is paying only basic excise duty (excluding education cess and higher education cess).

However in many cases manufacturer has received the goods dispatched by their vendors prior to 01.03.2015 and as a result the manufacturer was required to make payment of education cess and SHEC to such vendors. It leaded to a dilemma whether such Education cess and SHEC can be adjusted as CENVAT against output excise duty liability   (since output excise duty liability does not contain any element of Education cess and SHEC). The same clarity was also not there w.r.t education cess and SHEC paid by the manufacturer on services availed.

In order to clarify the above situation, CBEC has issued notification No. 12/2015-Central Excise (N.T.) dated 30.04.2015, whereby it has clarified that a manufacturer can take CENVAT credit of Education cess and SHEC paid on input as well input services against their output excise duty liability.

Relevant Notification No. 12/2015-Central Excise (N.T.) dated 30.04.2015 can be viewed at the following link :-

https://taxguru.in/excise-duty/utilisation-credit-education-cess-paid-inputs-capital-goods.html

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