Case Law Details
The claim of the appellants for refund of Education Cess was based on the Notification bearing no. 56/2002, dated 14-11-2002, which provided for exemption to the goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (other than the goods specified in Annexure I to the Notification), from so much of the duty of excise or additional duty of excise, as the case may be, leviable thereon under any of the three Acts, namely, The Central Excise Act, 1944; The Additional Duties of Excise (Goods of Special Importance) Act, 1957; and The Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, as was equivalent to the amount of duty paid by the manufacturer of goods, other than the amount of duty paid by utilization of Cenvat credit. Under this Notification, it was, inter alia, provided by Paragraph 1A that the exemption contained therein shall be available subject to the condition that the manufacturer first utilizes whole of the Cenvat credit available to him on the last day of the month under consideration for payment of duty on goods cleared during such months and paid only the balance amount in cash. Paragraph 2 of the said Notification laid down the manner in which the said exemption was to be given effect to. Accordingly, a manufacturer was required to submit a statement of the duty paid, other than the amount of duty paid by utilization of Cenvat credit, to the Assistant Commissioner by the 7th of the next month, in which the duty had been paid. This obviously means that the statement of only the duty paid in cash (or from the PLA) was to be submitted. Thereupon, it was to be verified by the Assistant Commissioner or the Deputy Commissioner, and the amount of duty paid in cash was to be refunded to the manufacturer by the 15th day of the said next month. In the event of likelihood of delay in the verification of the statement, refund was to be made on a provisional basis by 15th day of the next month to the month under consideration. Paragraph 2A of the Notification gave an option to the manufacturer to take credit of the amount of duty paid during the month under consideration, other than by way of utilization of Cenvat credit, in his account current, maintained in terms of Part V of the Excise Manual. When such option was exercised by the manufacturer, the credit of duty paid in cash during the month under consideration, could be given by the manufacturer in his account current by the 7th day of the next month to the month under consideration, who upon verification was required to determine the amount correctly refundable to the manufacturer and intimate the same to the manufacturer by 15th day of the next month to the month under consideration. Any excess credit taken, was required to be reversed within 5 days of the intimation to the manufacturer. If the credit was irregularly taken or excess credit is availed and not reversed, it became recoverable as if it was a recovery of duty of excise erroneously refunded.
8.2In our opinion, there was no need for including the provisions relating to Education Cess in the nature of excise duty required to be levied and collected under Section 93 of the Act in the said Notification, because the Education Cess was in the nature of piggy back duty, which would not operate in respect of the excise duty exempted under the relevant law. Moreover, inclusion of the said provisions of Section 93 of the Finance Act, 2004 in the said Notification would have led to an anomalous situation as indicated above. It would also to be noticed that the “refund” contemplated in Paragraph 2 of the Notification in the context of statement of duty paid in cash, has no relevance with any Education Cess in the nature of excise duty, because the provisions of the Notification, including the manner of giving effect to the exemption contained thereunder, were devised only in the context of the excise duties which otherwise would have been payable under the said three Acts, but for such exemption. It cannot, therefore, be said that Education Cess cannot be refunded because there was no provision for its refund in Paragraph 2 of the said Notification. It became refundable because the exemption became operative.
9.For the foregoing reasons, it is evident that when the exempted amount of duty was required to be refunded for operationalising the exemption, Education Cess, which was in the nature of piggy back duty on the excise duties under the said three Acts, was also required to be refunded, because it was not at all leviable, in view of the entitlement to exemption worked out under Paragraph 2 of the said Notification. The impugned orders of the Commissioner (Appeals) cannot, therefore, be sustained and is hereby set aside with consequential reliefs. These appeals are accordingly allowed.
IN THE CESTAT, PRINCIPAL BENCH, NEW DELHI
[CIRCUIT BENCH AT SRINAGAR]
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