Education cess applies to paper cess treated as excise duty when computing the excise-duty base.

Education cess was chargeable on paper cess where the latter was statutorily treated as a duty of excise under the Industries (Development and Regulation) Act, 1951. The governing clarification and section 83 of the Finance Act indicated that education cess is computed on the aggregate of duties of excise or customs, excluding only education cess itself. Since paper cess formed part of the excise-duty base, it was included in the computation of education cess. The earlier Delhi High Court decision relied on by the assessee was distinguished because it did not address whether such cess could form part of the base for another cess.

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Issues: Whether education cess was chargeable on paper cess treated as a duty of excise under the Industries (Development and Regulation) Act, 1951, for the relevant period.

Analysis: The Board's clarification stated that education cess was to be calculated on the aggregate of duties of excise or customs levied and collected under the relevant enactments. The cess under section 9 of the Industries (Development and Regulation) Act, 1951 had already been held to be a duty of excise, even though it was levied and collected as cess. The earlier Delhi High Court decision relied upon by the assessee dealt with a different question and did not address whether such cess formed part of the base for computing another cess. The statutory text of section 83 of the Finance Act also showed that education cess on excisable goods was to be computed on the aggregate of duties of excise, excluding only education cess itself.

Conclusion: Education cess was payable on paper cess, and the assessee's claim was not sustainable.

Final Conclusion: The levy of education cess extended to the paper cess component because it was a duty of excise forming part of the excise-duty base for computation.

Ratio Decidendi: A cess that is statutorily treated as a duty of excise forms part of the base for computing education cess, unless expressly excluded by the charging provision.

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