Refund of Education Cess and Higher Education Cess follows area-based excise exemption, with the Revenue challenge rejected.

Where final products were cleared under an area-based excise exemption, Education Cess and Higher Education Cess paid along with the exempt duty were refundable. The CESTAT followed the Supreme Court ruling in SRD Nutrients Pvt. Limited, which held that once excise duty itself is exempted, the cess levied with that duty cannot be retained by the Revenue. The remaining grounds were not pressed, and the refund claim was upheld.

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Issues: (i) Whether the assessees were entitled to refund of Education Cess and Higher Education Cess paid on clearances made under area based exemption.

Analysis: The dispute concerned refund claims for Education Cess and Higher Education Cess where the final products were cleared under Notification No. 56/2002-CE dated 14.11.2002. The issue was already covered by the Supreme Court ruling in SRD Nutrients Pvt. Limited, which held that once excise duty itself is exempted, the cess paid along with such duty is also refundable. The remaining grounds were not pressed.

Conclusion: The assessees were held entitled to refund of Education Cess and Higher Education Cess, and the Revenue's challenge failed.

Ratio Decidendi: Where excise duty is exempted under an area based exemption, Education Cess and Higher Education Cess collected along with such duty are refundable.

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