TMI Blog2016 (10) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... ink fit for being utilised exclusively for the purpose of this Act. Under Section 16, a broad discretion is available with the Central Government for necessary allocation of excise. On the other hand, under the Sugar Cess Act, the entire duty shall mandatorily go to consolidated fund required to be maintained as per the Sugar Development Fund Act, 1982. Learned Tribunal without examining this aspect of the matter decided the appeal by applying the law laid down in the case of Commissioner v. Sahakari Khand Udyog Mandi Ltd., that is apparently erroneous. As per Section 93 and 138 of the Acts aforesaid, the cess is a duty of excise which is to be levied and collected by the Central Government in the Ministry of Finance under provisions of the Central Excise Act, 1944 or under any other law for time being in force. The scope of the provisions referred above is quite wide and that covers levy and collection of all excisable goods under provisions of the Central Excise Act, 1944 or even under any other law for time being in force. In light of this provision also we do not find any wrong in applying the cess in question upon the excise duty referred under Section 15(1) of the Act of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Ministry of Petroleum, even though it is collected by the Ministry of Finance as excise duty, the same cannot be included in the duty of excise for the purpose of education cess. The factual background, giving rise to present litigation, is that M/s Cairn Energy India Private Limited (hereinafter referred to as the company), the respondent No.1 herein, is a company incorporated under the Companies Act, 1956, and is involved in the business of exploration, development and production of crude oil and natural gas. The company and the Government of India entered into a production sharing contract on 15.5.1995. As per the terms of the production sharing contract, the company conducts petroleum operations at Rajasthan Block/RJ/OM/90/1 and produces crude oil falling under Chapter XXVII of first Schedule to the Central Excise Tariff Act, 1985. The production of crude oil does not attract excise duty, but national calamity contingent duty alongwith applicable cess on the quantity of crude oil received by the oil refinery is required to be paid as per the Oil Industries (Development) Act, 1974. The company discharged its revenue liability as stated above, but did not pay ed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner (Appeals) vide order dated 8.5.2013 with a finding that the oil cess is levied and collected as excise duty as mentioned in Section 15 of Chapter- III of the Oil Industries (Development) Act, 1974 and all the provisions of Central Excise Act, 1944 and the Rules made thereunder are applicable. The authority to levy and collect oil cess being passed on to the Ministry of Finance, the education cess and secondary and higher education cess are chargeable from the company. A challenge was further given by the company to the order passed by the Commissioner of Central Excise (Appeals) by way of filing an appeal before the Tribunal. The Tribunal under the order impugned dated July 24, 2014 accepted the appeal by arriving at the conclusion that in terms of the provisions of Section 91 read with Section 93 of the Finance Act, 2004 and Section 136 read with Section 138 of the Finance Act, 2007, for the purpose of charging education cess and secondary and higher education cess, the excise duty would include only those cess levied as duty of excise which are levied by the Ministry of Finance, Department of Revenue. Since the oil cess is levied by the Ministry of Petroleum, even thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointing out to the Scheme which is distinct from the provisions of the Central Excise Act read with the Tariff Act. When one reads sub-section (4) of Section 3 of the Cess Act, it becomes clear that for the purposes of levy and collection of the cess levied under sub-section (1) of Section 3 of the Cess Act, the procedural provisions relatable to levy and collection of the duty of excise, provisions relating to refund and exemption from duty, etc., are made applicable by invoking principle of incorporation. In other words, instead of bodily repeating the provisions of levy and collection of cess by this provision, the provisions under the Central Excise Act and the Rules thereunder have been incorporated and are to be read as part and parcel of the Cess Act. By adopting this legislative procedure, the legislature has used a well known legislative tool, but from the said exercise, it cannot be inferred or stated that the sugar cess imposed under the provisions of the Cess Act assume the characteristic of central excise duty so as to warrant calculation of education cess on the amount of cess so collected. 8. Section 4 of the Cess Act is again an inherent indicator when it provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act of 1974 are quite different than the provision of the Sugar Cess Act, 1982. 2. by virtue of deeming provisions as provided under Section 15(4) of the Oil Industries (Development) Act, 1974, it is to be legally construed that the oil cess is nothing but excise duty. While pressing the arguments above, it is emphasised by Shri Vipul Singhvi, learned counsel for the appellant, that the provisions of the Act of 1974 as well as the Act of 2004 and the Act of 2007, must be interpreted by taking take care of the legislative intent. The education cess was introduced as a consequence to the National Common Minimum Programme of United Progressive Alliance Government to have a complete education and health plan, and for that purpose the education cess and secondary and higher education cess was introduced. The relevant portion of the National Common Minimum Programme, as cited on behalf of the appellant, reads as under:- The UPA government pledges to raise public spending in education to least 6% of GDP with at least half this amount being spent of primary and secondary sectors. This will be done in a phased manner, The UPA government will introduce a cess on all central taxe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is provided on behalf of the student. Thus, no student admitted to any professional course, including courses in IITs, IIMs and medical colleges, will be deprived of the opportunity to study because of lack of funds. With this factual background, the education cess was introduced under the Act of 2004 as per Sections 91 and 93, which are as under:- 91. Education Cess.-- (1)Without prejudice to the provisions of sub-section(11) of section 2, there shall be levied and collected, in accordance with the provisions of this Chapter as surcharge for purposes of the Union, a cess to be called the Education Cess, to fulfil the commitment of the Government to provide and finance universalised quality basic education. (2)The Central Government, may after due appropriation made by Parliament by law in this behalf, utilise, such sums of money of the Education Cess levied under sub-section (1) of section 2 and this Chapter for the purposes specified in sub-section (1), as it may consider necessary. 93. Education Cess or excisable goods.-- (1)The Education Cess levied under section 91, in the case of goods specified in the First Schedule to the Central Excise Tariff Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (in this section referred to as the Secondary and Higher Education Cess on excisable goods), at the rate of one per cent, calculated on the aggregate of all duties of excise (including special duty of excise or any other duty of excise but excluding Education Cess chargeable under section 93 of the Finance (No.2) Act, 2004 (23 of 2004) and Secondary and Higher Education Cess on excisable goods which are levied and collected by the Central Government in the Ministry of Finance (Department of Revenue), under the provisions of the Central Excise Act, 1944 (1 of 1944) or under any other law for the time being in force. (2)The Secondary and Higher Education Cess on excisable goods shall be in addition to any other duties of excise chargeable on such goods, under the Central Excise Act, 1944 (1 of 1944) or any other law for the time being in force and the Education Cess chargeable under section 93 of the Finance (No.2) Act, 2004 (23 of 2004). (3)The provisions of the Central Excise Act, 1944 (1 of 1944) and the rules made thereunder, including those relating to refunds and exemptions from duties and imposition of penalty shall, as far as may be, apply in relation to the levy and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the provisions of the Central Excise Act, 1944 or under any other law for the time being in force. The purpose of the cess in question is to yield about ₹ 4000 - 5000 crores per year, which is to be earmarked for education. The education, as per the policy applicable, is not simple teaching, but includes nutritious meals in primary school sector and further for establishing skill and employment oriented educational institutions. The cess under the Act of 2004 as well as under the Act of 2007 refers to be levied on the duties of excise which are levied and collected by the Central Government in the Ministry of Finance (Department of Revenue), under the provisions of the Central Excise Act, 1944 or under any other law for the time being in force. Learned Tribunal, under the order dated July 24, 2014, while relying upon the judgment of Gujarat High Court in the case of Commissioner v. Sahakari Khand Udyog Mandi Ltd., held that the education cess is not leviable upon the liability created under Section 15 of the Act of 1974 being not levied by the Ministry of Finance (Department of Revenue), Government of India. The Tribunal, while arriving at the conclusion as above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 16, the duty of excise levied shall be first credited to the consolidated fund of India and the Central Government may, if Parliament by appropriation made by law in this behalf, so provides, pay to the Board from time to time, from out of such proceeds, after deducting expenses of commercial and such sums of money as it may think fit for being utilised exclusively for the purpose of this Act. Under Section 16, a broad discretion is available with the Central Government for necessary allocation of excise. On the other hand, under the Sugar Cess Act, the entire duty shall mandatorily go to consolidated fund required to be maintained as per the Sugar Development Fund Act, 1982. Learned Tribunal without examining this aspect of the matter decided the appeal by applying the law laid down in the case of Commissioner v. Sahakari Khand Udyog Mandi Ltd., that is apparently erroneous. Now coming to the issue as to whether any education cess/secondary and higher education cess could have been levied from the appellant or not as per provisions of the Act of 2004 and the Act of 2007. The sole emphasis of learned counsel for the respondents is that under Section 15 of the Act of 1974 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o that it cannot be inferred or stated that the Sugar Cess imposed under the provisions of the Sugar Cess Act assumed the characteristic of central excise duty so as to warrant calculation of education cess on the amount of cess so collected. No doubt, under the Act of 1974 also the procedure given under the Act of 1944 has been adopted, but the cess sought to be collected under the Act of 1974 is not exclusively for the purposes of that Act only. As already stated, the use of the cess collected is well within the broad discretion of the Central Government as per the appropriation made by law by the Parliament. It would also be appropriate to notice that Section 91 and 136 of the Acts of 2004 and 2007 respectively provide nature and scope of the cess. Section 93 and 138 of the Acts of 2004 and 2007 respectively provide the application of cess and procedure to quantify and recover it. As per Section 93 and 138 of the Acts aforesaid, the cess is a duty of excise which is to be levied and collected by the Central Government in the Ministry of Finance under provisions of the Central Excise Act, 1944 or under any other law for time being in force. The scope of the provisions referred ab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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