TMI Blog2007 (6) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the appeals and upholding the order of the adjudicating authority rejecting the refund claim of the appellants on account of Education Cess levied under the Finance Act, 2004. 2. 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 availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2004, claimed refunds of the duties and the Education Cess, which was also in the nature of excise duty, as provided by Section 93 of the Finance Act, 2004. As noticed above, since the Finance Act, 2004 was not mentioned in the exemption Notification and only the aforesaid three Acts were referred, the Revenue, while upholding the claim for the refund of duties paid in cash under the said three Acts, denied the refund of the Education Cess, which was also in the nature of the excise duty, paid at 2% of the aggregate of the duties which were paid under the said three Acts, on the ground that the Finance Act, 2004 was not specified in the Notification. 4. The controversy before us centres around the interpretation of the provisions of Section 93 of Chapter VI of the Finance Act, 2004, which provides for levy and collection of Education Cess on excisable goods which was in the nature of excise duty, at the rate of 2% calculated on the aggregate of all duties of excise including special duty of excise or any other duty of excise, which are levied and collected under the provisions of the Central Excise Act, 1944 or under any other law for the time being in force, by the Central Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e duties paid under the said three Acts, even the Education Cess in the nature of excise duty paid at the rate of 2% thereof, was required to be refunded. It was submitted that, the Education Cess was clearly accepted as excise duty, which was paid by the appellants through PLA account in terms of the said Notification. It was submitted that the Appellate Commissioner has committed an error in rejecting the appellants claim for refund of the Education Cess paid under Section 93 of the Act on the ground that the provisions of the Finance Act, 2004 relating to levy of Education Cess which was in the nature of excise duty was not incorporated in the said Notification which exempted duties only in respect of the three Acts named therein. It was also argued that, in view of the exemption under the said Notification in respect of the duties payable under the three Acts named thereunder, no Education Cess was payable under the provisions of Section 93. It was, therefore, submitted that, Education Cess would not have been recoverable in connection with the duties which were exempted under the said Notification on its conditions being satisfied. 6. Levy and collection of excise duty is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n other words, if there is no levy and collection by virtue of any exemption of the excise duties which otherwise would be payable under the Central Excise Act, 1944 or under any other law which could be levied and collected by the Ministry of Finance, there would be no occasion to calculate Education Cess in the nature of excise duty under Section 93 of the Finance Act, 2004. There is no need to provide any scheme of exemption from Education Cess in the nature of excise duty, because if the excise duty in respect of which it is reguired to be calculated is itself exempted, automatically, no question of levy of the said Education Cess in the nature of excise duty can ever arise. There was, therefore, no need to incorporate the provisions of Chapter VI of Finance Act, 2004 in the said Notification. The reasoning of the Commissioner (Appeals) that because Education Cess in the nature of excise duty which can be levied and collected under Section 93 did not find place in the said Notification which referred to only the aforesaid three Acts proceeds on an erroneous footing, in view of the fact that there is no separate scheme of exemption from Education Cess in the nature of excise dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturers, but is basically designed to give effect to exemption. In other words, the mechanism has been adopted to operationalise the exemption envisaged in these two notifications. In view of this aspect of the matter, the provisions of Section 11-B of the Central Excise Act, 1944 would not apply in the case of these Notifications. [Emphasis added] 7.1 We may also incidentally refer to the clarification issued by letter dated 10th August, 2004 by the Ministry of Finance on the question, whether the goods that are fully exempted from excise duty/customs duty, would be subjected to Education Cess. It was clarified in answer to issue no. 2 that if the goods are fully exempted from excise duty and are chargeable to NIL duty, there is no collection of duty and, therefore, no Education Cess would be leviable on such clearances. 7.2 Therefore, once the entitlement to exemption of the duty of excise or additional duty of excise, which would otherwise be payable under the three Acts named in the Notification, is established by following the manner indicated in paragraph 2 for ascertaining the extent exemption, there cannot arise any question of imposin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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