By TIOL News Service

AHMEDABAD, DEC 04, 2015: THE issue involved is as to whether the Education Cess is payable on Paper Cess paid for clearance of Paper and Paper Board.

Both the lower authorities held otherwise and, therefore, the Revenue appeal.

Clause 83 of the Finance (No.2) Bill, 2004 reads:

"the Education Cess levied under Section 81, in the case of goods specified in the First Schedule to the Central Excise Tariff Act, 1985, being goods manufactured or produced, shall be a duty of Excise (in this section referred to as the Education Cess on excisable goods), at the rate of two percent, calculated on the aggregate of all duties of Excise (including special duty of excise or any other duty of excise but excluding 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 or under any other law for the time being in force".

The AR submitted that the Paper Cess is payable on the excisable goods and, therefore, the Education Cess is payable on Paper Cess. It is also contended that the Paper Cess is collected by the Ministry of Finance (Department of Revenue) and it should be treated as a duty of Excise. Reliance is placed inter alia on the decision in CCE Vapi Vs R.A. Shaikh Paper Mills Pvt. Ltd - 2008-TIOL-1066-CESTAT-AHM.

The Respondent submitted that the Division Bench of the Tribunal in the case of Andhra Pradesh Paper Mills Vs CCE Visakhapatnam-II - 2008-TIOL-2398-CESTAT-BANG has held in favour of the Assessee. Support is also drawn from the Board Circular F.No.262/2/2008-CX.8, dt.07.01.2014.

The CESTAT noted that CBEC vide Circular F.No.345/2/2004-TRU (Pt.), dt.10.08.2004, has clarified that "as the Education Cess is calculated on the aggregate duties of Excise/Customs (excluding certain duties of Customs like anti-dumping duty, safe guard etc) levied and collected by the Department of Revenue, only such duties, which are (a) levied and collected as duties of Excise/Customs and (b) are both levied and collected by the Department of Revenue should be taken into account for calculating Education Cess."

After extracting the decision of the Tribunal in the case of Andhra Paper Mills Ltd (supra), the Bench also observed that it is clear from the Board Circular F.No.262/2/2008-CX.8, dt.07.01.2014 that a cess levied under an Act, which is not administered by Ministry of Finance (Department of Revenue) but only collected by Department of Revenue under the provisions of that Act, cannot be treated as a duty, which is both levied and collected by Department of Revenue; that the Board further clarified that the Education Cess is not to be calculated on cesses which are levied under Acts administered by the Department/Ministries other than the Ministry of Finance (Department of Revenue) but are only collected by the Department of Revenue in terms of those Acts.

Holding that the amount of Paper Cess collected by the Ministry of Finance (Department of Revenue)but levied by another Ministry cannot be treated as duty, the CESTAT concluded that the demand of Education Cess on Paper Cess cannot be sustained.

The Revenue appeal was rejected.

(See 2015-TIOL-2583-CESTAT-AHM)