Imposition of education cess on sugar cess rejected as cess not part of excise base; levy disallowed.

Whether education cess is payable on sugar cess was resolved by construing the legislative scheme: sugar cess collected under the Cess Act is first credited to the Consolidated Fund and thereafter appropriated to the sugar development fund under the statutory scheme, and it is not equivalent to central excise duty for purposes of calculating education cess; consequently education cess is not to be levied on the sugar cess and the impugned order upholding that position stands, with no substantial question of law arising to disturb it.

---

---

Issues: Whether the Education Cess is leviable on the sugar cess imposed under the Sugar Cess Act, 1982.

Analysis: Section 3(1) of the Sugar Cess Act states that the levy is of a cess "levied and collected as a cess" and describes the rate as a duty of excise for convenience; subsection (2) makes the cess additional to excise duty under the Central Excise Act, and subsection (4) incorporates procedural provisions of the Central Excise Act for levy, collection, refunds and exemptions. Section 4 directs that proceeds be credited to the Consolidated Fund of India and, by appropriation, to the Sugar Development Fund as provided in the Sugar Development Fund Act, 1982. The statutory scheme, read conjointly, shows a distinct legislative mechanism creating a cess and a special fund; the procedural incorporation of Central Excise Act provisions does not convert the sugar cess into central excise duty for the purpose of computing education cess. The Tribunal's reliance on the fact that the notification for levy was issued by the Ministry of Consumer Affairs, Food & Public Distribution and on the Finance Ministry clarification about education cess computation is consistent with the statutory scheme.

Conclusion: Education Cess is not leviable on the sugar cess imposed under the Sugar Cess Act, 1982; appeal dismissed (decision in favour of the assessee).

---