Education cess refund on exempt excisable goods held inadmissible where levy can be computed on a notional basis.

Refund of education cess and secondary and higher education cess on goods fully exempt from excise duty was held inadmissible. The Tribunal noted the consistent view that, even where basic excise duty is not payable because the goods are exempt, education cess may still be computed on the aggregate of duties on a notional basis. It also relied on the Ministry of Finance clarification that no education cess is leviable only where there is no collection of duty on exempt or nil-duty clearances. As the refund claim was not supported by the governing notification or law, the claim failed against the assessee.

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Issues: Whether refund of education cess and secondary and higher education cess was admissible in respect of goods exempt from excise duty.

Analysis: The Tribunal noted the consistent view that where basic excise duty is not payable because the goods are fully exempt, education cess is nevertheless leviable on the aggregate of duties. It relied on the clarification issued by the Ministry of Finance stating that no education cess would be leviable only where there is no collection of duty on exempt or nil-duty clearances, but the appellate authority found that the refund claim was not supported by the governing notification or law. The reasoning also followed the view that the levy of education cess can be worked out on a notional basis even when duty is not actually collected.

Conclusion: Refund of education cess and secondary and higher education cess was held not admissible and the issue was decided against the assessee.

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