2015 (2) TMI 641 - AT - Central Excise

Tribunal Rules Education Cess Not Applicable on Oil Cess

The Tribunal held that education cess and secondary and higher education cess are only applicable to excise duties levied by the Ministry of Finance, ... Levy of education cess and secondary and higher education cess on duties of excise - Inclusion in excise duty limited to cesses levied by the Ministry of Finance, Department of Revenue - Exclusion of cesses levied by other Ministries from the base for education cess - Interpretation of Finance Act provisions governing aggregation of duties for cess computationLevy of education cess and secondary and higher education cess on duties of excise - Exclusion of cesses levied by other Ministries from the base for education cess - Education cess and secondary and higher education cess are not leviable on the oil cess collected under Section 15 of the Oil Industries Development Act, 1974. - HELD THAT: - The Tribunal examined the charging provisions in the Finance Act, as amended, and held that for the purpose of levying education cess and secondary and higher education cess the relevant 'duty of excise' includes only those cesses which are levied as duties of excise by the Ministry of Finance, Department of Revenue. The oil cess, although collected as excise by the Ministry of Finance, is levied under the Oil Industries Development Act by the Ministry of Petroleum & Natural Gas and therefore does not fall within the class of cesses includible in the excise duty base for computing education cess. The Tribunal noted and followed the decision in Sahakari Khand Udyog Mandli Ltd., and the view taken by the Gujarat High Court, that a cess levied by a Ministry other than the Ministry of Finance cannot be aggregated for the purpose of levying education cess under the Finance Act. Applying this principle, the demand confirmed by the departmental authorities could not be sustained.Demand for education cess and secondary and higher education cess on the oil cess is not sustainable; the impugned order is set aside and the appeal is allowed.Final Conclusion: The Tribunal allowed the appeal, holding that education cess and secondary and higher education cess cannot be levied on the oil cess levied by the Ministry of Petroleum & Natural Gas, and accordingly set aside the departmental demand. Issues:Whether education cess and secondary and higher education cess are leviable on the oil cess collected from the appellant.The issue in the present case was whether education cess and secondary and higher education cess were applicable to the oil cess collected from the appellant under Section 15 of the Oil Industries Development Act, 1974. The department contended that these cesses were leviable, leading to a demand of &8377; 21,80,957/- along with interest. The Addl. Commissioner's order confirming this demand was upheld by the Commissioner (Appeals), prompting the appellant to file an appeal against it.During the hearing, the appellant's counsel argued that as per the provisions of Section 91 and Section 93 of the Finance Act, 2004, and Section 136 and Section 138 of the Finance Act, 2007, education cess and secondary and higher education cess should only apply to duties of excise levied by the Ministry of Finance, Department of Revenue. Since the oil cess was imposed by the Ministry of Petroleum & Natural Gas, it should not be subject to these cesses. Reference was made to a Tribunal judgment and subsequent Gujarat High Court decision supporting this interpretation.On the other hand, the Departmental Representative defended the impugned order by supporting the Commissioner (Appeals)'s findings.After considering the arguments and reviewing the records, the Tribunal concluded that education cess and secondary and higher education cess should only be charged on excise duties levied by the Ministry of Finance, Department of Revenue. As the oil cess was imposed by the Ministry of Petroleum, it should not be included in the duty of excise for the purpose of education cess. Citing the Gujarat High Court's decision in a similar case, the Tribunal set aside the impugned order, ruling in favor of the appellant and allowing the appeal.