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TMI Blog2017 (11) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... , CIVIL APPEAL NO. 4609 OF 2010, CIVIL APPEAL NO. 4610 OF 2010, CIVIL APPEAL NOS. 5300-5303 OF 2011, CIVIL APPEAL NO. 5926 OF 2010, CIVIL APPEAL NOS. 6085-6092 OF 2010, CIVIL APPEAL NO. 18437 OF 2017, (ARISING OUT OF SLP (C) NO. 26126 OF 2012), CIVIL APPEAL NO. 18438 OF 2017, (ARISING OUT OF SLP (C) NO. 26134 OF 2012), CIVIL APPEAL NO. 18439 OF 2017, (ARISING OUT OF SLP (C) NO. 21896 OF 2012), CIVIL APPEAL NO. 18440 OF 2017, (ARISING OUT OF SLP (C) NO. 22201 OF 2012), CIVIL APPEAL NO. 18441 OF 2017, (ARISING OUT OF SLP (C) NO. 21563 OF 2012), CIVIL APPEAL NO. 18442 OF 2017, (ARISING OUT OF SLP (C) NO. 26133 OF 2012), CIVIL APPEAL NOS. 8732-8735 OF 2013, CIVIL APPEAL NOS. 10253-10258 OF 2010, CIVIL APPEAL NOS. 10245-10252 OF 2010, CIVIL APPEAL NO. 8330 OF 2010, CIVIL APPEAL NO. 8326 OF 2010, CIVIL APPEAL NO. 8331 OF 2010, CIVIL APPEAL NO. 8328 OF 2010, CIVIL APPEAL NO. 8336 OF 2010, CIVIL APPEAL NO. 8335 OF 2010, CIVIL APPEAL NO. 8332 OF 2010, CIVIL APPEAL NO. 8329 OF 2010, CIVIL APPEAL NO. 8178 OF 2012, CIVIL APPEAL NO. 813 OF 2013, CIVIL APPEAL NO. 7605 OF 2012, CIVIL APPEAL NO. 8181 OF 2012, CIVIL APPEAL NO. 8180 OF 2012, CIVIL APPEAL NO. 811 OF 2013, CIVIL APPEAL NO. 8185 OF 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NVAT credit available to him on the last date of the month under consideration for payment of duty of goods cleared during such period and was to pay only the balance amount in cash. It is this balance amount which was refundable to him. Insofar as payment of the excise duty after availing the CENVAT credit and refund thereof subsequently is concerned, there is no dispute about the same. We are concerned with altogether different aspect which is associated with the aforesaid notification granting exemption from payment of excise duty. 3) It so happened that vide Finance Act, 2004, the Education Cess and Higher Education Cess were also imposed, which are surcharge on the excise duty. These Education Cess and Higher Education Cess were also levied and collected from the manufacturers who had set up their units in the aforesaid areas, along with the excise duty. However, while refunding the excise duty paid by these manufacturers, the Education Cess and the Higher Education Cess that were paid by the manufacturers along therewith were not refunded. The dispute, thus, which arises for consideration in these appeals is as to whether the Education Cess and Higher Education Cess which we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods specified in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) other than those mentioned in the Annexure and cleared from a unit located in the States of Assam or Tripura or Meghalaya or Mizoram or Manipur or Nagaland or Arunachal Pradesh or Sikkim, as the case may be, from so much of the duty of excise leviable thereon under the said Act as is 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 the CENVAT Credit Rules, 2004. 2. In cases where all goods produced by a manufacturer are eligible for exemption under this notification, the exemption contained in this notification shall be available subject to the condition that, the manufacturer first utilises 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 and pays only the balance amount in cash. 3. The exemption contained in this notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of specified goods, wholly or partly. 7) As mentioned above, the Parliament levied Education Cess by Finance (No.2) Act, 2004. Chapter VI of the said Finance Act deals with Education Cess. Sections 91 to 93 thereof are relevant and are reproduced below: "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 universalisd 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 (11) of section 2 and this Chapter for the purposes specified in sub-section (1), as it may consider necessary. 92. Definition. - The words and expressions used in this Chapter and defined in the Central Excise Act, 1944 (1 of 1944), the Customs Act, 1962 (52 of 1962) or Chapter V of the Finance Act, 1994 (32 of 1994), shall have the meanings respectively assigned to them in those Acts or Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch of the Tribunal had opined that the Education cess and Higher Education Cess were also refundable along with the excise duty. 10) The Revenue, on the other hand, had relied upon another judgment of Tribunal in the case of Commissioner of Central Excise, Jammu v. Jindal Drugs Ltd. 2011 (267) ELT 653 (Tri.-Del.). In this judgment which was also rendered by the Delhi Bench of the Tribunal, a contrary view has been taken, viz., the Excise Department was under no obligation to refund the Education Cess and Higher Education Cess as the notification exempted only the excise duty and, therefore, it is the excise duty which was to be refunded. 11) The CESTAT, by impugned judgment, has preferred to follow the view taken by the Tribunal in Jindal Drugs Ltd. case on the ground that it is later in point of time in which earlier judgment in Cyrus Surfactants Pvt. Ltd. case has also been considered. 12) In the aforesaid backdrop, learned counsel for the appellant was vehement in his criticism of the view taken by the Tribunal. His first submission was that in case the Division Bench of the Tribunal in Jindal Drugs Ltd. decided to differ from the view taken by earlier Division Bench in Cyru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich had decided the case in favour of the assessee referring to Circular dated April 04, 2011. Even the Rajasthan High Court has leaned in favour of the assessee in the case of Banswara Syntex Ltd. v. Union of India 2007 (216) ELT 16 (Raj.) holding that since Education Cess in the form of surcharge is levied and collected, there was no question of retaining this amount once the excise duty itself got exempted. 14) He also read out the following passage from the judgment of this Court in R.S. Joshi, Sales Tax Officer, Gujarat and Others v. Ajit Mills Limited and Another AIR 1977 SC 2279 : (1977) 40 STC 497 : "34. Section 37(1) uses the expressions, in relation to forfeiture, "any sum collected by the person . . . shall be forfeited'. What does "collected" mean here? Words cannot be construed effectively without reference to their context. The setting colours the sense of the word. The spirit of the provision lends force to the construction that "collected" means "collected and kept as his" by the trader. If the dealer merely gathered the sum by way of tax and kept it in suspense account because of dispute about taxability or was ready to return it if eventually it was not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cess is part of excise. In this Circular, certain clarifications are given by the Ministry of Finance (Department of Revenue), Government of India and relevant portion thereof reads as under: "Subject: Issues relating to imposition of Education Cess on excisable goods and on imported goods, as pointed out by the trade and the field formations-reg. The undersigned is directed to state that subsequent to Budget 2004 announcements, a number of representations/ references have been received from the trade as well as from the field formations pertaining to imposition of Education Cess on excisable goods and on imported goods. The points raised and the clarifications thereon are as follows. Issue No. (1): Whether Education Cess on excisable goods is leviable on goods manufactured prior to imposition of Cess but cleared after imposition of such cess? Clarification: Education Cess on Excisable goods is a new levy. In similar cases, it has been held by the Supreme Court that if a levy is not there at the time the goods are manufactured or produced in India, it cannot be levied at the stage of removal of the said goods. Thus, Education Cess is not leviable on excisable goods manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stands exempted. According to section 95(1) of Finance (No.2) Act, 2004 and section 140(1) of Finance Act, 2007, Education Cess and Secondary and Higher Education Cess are leviable and collected as service tax, and when whole of service tax is exempt, the same applies to education cess as well. Since Education Cess is levied and collected as percentage of Page 1 of 2 service tax, when and wherever service tax is NIL by virtue of exemption, Educ uon Cess would also be NIL. 3. This being the principle, field formations are directed not to initiate proceedings to recover the education cess, where 'whole of service tax' stands exempted under the notification. Extending the same principle, where education cess has been refunded to exporters along with service tax, by virtue of exemption notifications where 'whole of service tax' is exempt, the same need not be recovered. 4. Field formations may be instructed accordingly. 5. Please acknowledge the receipt ofthis circular: Hindi version to follow. 18) No doubt, it clarified the position in relation to the exemption from payment of service tax that was given vide Notification No. 41/2007-SCT dated August 06, 2007. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding on the Department. 21) Even otherwise, we are of the opinion that it is more rational to accept the aforesaid position as clarified by the Ministry of Finance in the aforesaid circulars. Education Cess is on excise duty. It means that those assessees who are required to pay excise duty have to shell out Education Cess as well. This Education Cess is introduced by Sections 91 to 93 of the Finance (No.2) Act, 2004. As per Section 91 thereof, Education Cess is the surcharge which the assessee is to pay. Section 93 makes it clear that this Education Cess is payable on 'excisable goods' i.e. in respect of goods specified in the first Schedule to the Central Excise Tariff Act, 1985. Further, this Education Cess is to be levied @ 2% and calculated on the aggregate of all duties of excise which are levied and collected by the Central Government under the provisions of Central Excise Act, 1944 or under any other law for the time being in force. Sub-section (3) of Section 93 provides that the provisions of the Central Excise Act, 1944 and the rules made thereunder, including those related to refunds and duties etc. shall as far as may be applied in relation to levy and collection of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax payer in respect of its discharge as well as exemption concession by way of rebate attached with such levies. This aspect has been made clear by combined reading of sub-sections (1), (2) & (3) of Section 93. xxx xxx xxx 18. The Explanation appended to Notification dated 26.6.2001 included within the ambit of Excise Duty any special Excise Duty collected under any Finance Act when under Finance Act, 2004 it was ordained that Education Cess to be collected as surcharge on Excise Duty payable on excisable goods and shall be a Duty of Excise, it became a special Duty of Excise by way of Education Cess chargeable and collected under Finance Act, 2004 and fell within the ambit of clause (3) of Explanation appended to Notification dated 26/6/2001. Consequently, rebate became available on collection of surcharge on Excise Duty under Finance Act, 2004 in terms of existing Notification dated 26/6/2001 immediately. Later Notification including the Education Cess in enumerative definition in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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