TMI Blog2005 (8) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... cified in the said notification, the exemption operates by allowing duty credit in the Duty Entitlement Pass Book on exports at the rates specified and subsequently by debiting an amount equal to duty payable, against such credit in the Pass Book, on imports. As such, such crediting and debiting of duty amounts is a matter of procedure and convenience, but the notification basically provides full exemption from customs duty. Our view is supported by earlier decision of the Tribunal in Essar Steel Ltd. v. CCE, [ 2004 (8) TMI 123 - CESTAT, NEW DELHI] ), wherein it was held that Modvat credit against DEPB Debits cannot be allowed, as duties are exempted under the DEPB Scheme and the relevant notification. Accordingly, we hold that no Education ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. - SHRI KRISHNA KUMAR, MEMBER (J) AND C. SATAPATHY, MEMBER (T) Shri Sanjay Singhal, JDR , for the Appellant. Shri J.J. Bhatt, Sr. Advocate, for the Respondent. ORDER Heard both sides. This appeal filed by Revenue involves a small amount of Rs. 42,789/- (ranging from Rs. 11/- to Rs. 19,233/- in respect of the 16 impugned Bs/E) but relates to an important question of law as to whether the newly imposed Education Cess of 2% is leviable on goods cleared under the Duty Entitlement Pass Book (DEPB) Scheme. We are informed by both sides that there is no precedent decision on this issue. 2. Chapter VI of the Finance (No. 2) Act, 2004 imposes Education Cess on imported goods @ 2% of duties of customs levied and collected on such goods :- Extract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1975; (b) the countervailing duty referred to in section 9 of the Customs Tariff Act, 1975; (c) the anti-dumping duty referred to in section 9A of the Customs Tariff Act, 1975; and (d) the Education Cess on imported goods. (2) The Education Cess on imported goods shall be in addition to any other duties of customs chargeable on such goods, under the Customs Act, 1962 or any other law for the time being in force. (3) The provisions of the Customs Act, 1962 and the rules and regulations 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 collection of the duties of customs on such goods under the Customs Act, 1962 or the rules or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hemes. The issue has been discussed with TRU which drafted the budget proposals. For the purpose of removal of doubts it is hereby clarified that the said 2% Education Cess shall be collected in cash only for that portion of aggregate of customs duties which are being collected in cash. In other words, in cases where customs duties are fully exempted under an export promotion scheme then 2% education cess shall also stand exempted. In cases where part of the customs duty is being collected in cash under an export promotion scheme, then 2% education cess shall also be collected on that portion of the customs duty collected in cash as per the illustration given by TRU. 4. However, subsequently another wing of the Ministry of Finance has issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re debited from DEPB. In other words, in the case of DEPB Scheme, though the imports are governed by an exemption notification, the fact remains that in case of such imports the duty is debited from the DEPB scrip. Therefore, it has been decided that in the case of imports under DEPB Scheme, the Education Cess @ 2% would also be debited from the DEPB scrip. 5. The lower appellate authority has decided the issue in favour of the respondents contrary to and before issue of the Circular dt. 31-1-2005. Hence this appeal by Revenue. 6. We find that the DEPB Scheme operates under an exemption Notification No. 45/2002-Customs, dated 22-4-2002. The said notification specifically exempts goods imported under DEPB Scheme from basic, additional and sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... becomes nil for exempted DEPB imports. 8. Accordingly, we hold that no Education Cess is leviable on fully exempted DEPB imports and therefore, no debits from DEPB scrip are required. We are also of the view that the Circular dated 31-1-2005 is contrary to the provisions of the Finance (No. 2) Act, 2004 read with Notification No. 45/2002-Customs, dated 22-4-2002. The Revenue appeal is, therefore, rejected. 9. In view of our findings that no debit towards Education Cess is required, it may be necessary for the concerned authorities to ensure that no DEPB credits are allowed at the time of exports giving rise to undue benefit. 10. Before parting with the case, we note that the following remarks have been made by the lower appellate authority ..... X X X X Extracts X X X X X X X X Extracts X X X X
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