Tribunal Allows Education Cess Credit, Overturns Order Denying Rs. 29.81 Lakh Credit Under Cenvat Credit Rules 2004.

The Tribunal set aside the impugned order disallowing the appellant's credit of Education Cess and Secondary and Higher Education Cess, amounting to Rs.29,81,602/-. It concluded that Education Cess is admissible as a surcharge enhancing tax and is not restricted by Rule 3(7)(a) of the Cenvat Credit Rules, 2004. The appeal was allowed with consequential relief.

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Issues:
The issue involved in this case is the disallowance of credit of Education Cess and Secondary and Higher Education Cess availed by the appellant, who are manufacturers of stainless steel bright bars, due to the goods being supplied by a 100% EOU, M/s Viraj Profiles Ltd.

Summary:

Issue 1: Disallowance of Credit of Education Cess and Secondary and Higher Education Cess

The appellant's credit of Education Cess and Secondary and Higher Education Cess amounting to Rs.29,81,602/- was disallowed by the Authorities below, citing Rule 3(7)(a) of Cenvat Credit Rules, 2004, which restricts credit to Basic Excise Duty only for inputs supplied by a 100% EOU. The Tribunal referred to previous decisions and held that the objective was not to levy excise duty on goods cleared by EOU, and Education Cess is admissible as it is a surcharge enhancing tax, not covered by Rule 3(7)(a). The impugned order disallowing the credit was set aside, and the appeal was allowed.

Decision:
The Tribunal found that Education Cess credit is admissible to the appellants, similar to previous decisions, and set aside the impugned order, allowing the appeal with consequential relief.

(Order pronounced in the open court on 03. 04. 2024)

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