Exclusion of Paper Cess from Education Cess calculation under Finance Act, 2004

The Tribunal held that Paper Cess should not be included in the calculation of Education Cess as it is not collected by the Department of Revenue, a crucial condition under Section 93 of the Finance Act, 2004. The Tribunal set aside the orders, allowing the appeals by M/s. AP Paper Mills Ltd. The revenue's appeal was rejected based on this decision.

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Issues:
Calculation of Education Cess including Paper Cess.

Analysis:
The appeals involved in this judgment were filed by M/s. AP Paper Mills Ltd. and the revenue against orders passed by the Commissioner (A). The main issue in all appeals was whether the Paper Cess should be included in the calculation of Education Cess. The department argued that since Education Cess is levied on Excise Duty and Paper Cess is a type of Excise Duty, it should be included. However, the Commissioner (A) referred to Section 93 of the Finance Act, 2004, which states that Education Cess is calculated on the aggregate of all duties of Excise excluding Education Cess on excisable goods. The Commissioner concluded that the Cess on Paper is a duty of Excise and should be included for Education Cess calculation.

The departmental representative emphasized that Section 93 should prevail over any other clarifications issued by the Board. The appellant relied on a clarification by the Board stating that only duties collected as Excise/Customs by the Department of Revenue should be considered for Education Cess calculation. The appellant argued that even though Paper Cess is a type of Excise Duty, it is not levied by the Department of Revenue but under a different enactment.

Upon careful consideration, the Tribunal found that the words "levied and collected by the Central Government in the Ministry of Finance, Department of Revenue" were crucial in Section 93. While Paper Cess may be considered a duty of Excise, it is not levied by the Department of Revenue but by the Department of Industrial Development. As per the Board's clarification, both conditions of being a duty of Excise and being collected by the Department of Revenue must be met for inclusion in Education Cess calculation. Since Paper Cess did not fulfill the second condition, it was held not includable. The Tribunal found no ambiguity and set aside the impugned orders, allowing the appeals with consequential relief.

In another appeal filed by the revenue, the Tribunal upheld the Commissioner (A)'s decision based on the findings in the party's appeals. The revenue's appeal was rejected, and the party's appeals were allowed. The judgment was pronounced on 25-9-2008.

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