2008 (8) TMI 98 - AT - Central Excise

Court rules sugar cess not calculated for education cess, not levied by Ministry of Finance.

The Tribunal ruled in favor of the appellant, holding that the sugar cess should not be considered for calculating education cess as it was not levied by ... Education cess - sugar cess - duty of excise - calculation on the aggregate dues of excise/customs - levy by the Central Government through Ministry of Finance - Board clarification on dues to be included for education cessEducation cess - sugar cess - duty of excise - calculation on the aggregate dues of excise/customs - levy by the Central Government through Ministry of Finance - Whether sugar cess is to be included for the purpose of calculating education cess. - HELD THAT: - Sugar cess was levied by notification issued by the Ministry of Consumer Affairs, Food & Public Distribution under the Sugar Cess Act, 1982 read with the Sugar Development Fund Act, 1982. The Board's clarification dated 10-8-2004 states that education cess is to be calculated on the aggregate dues of excise/customs which are levied and collected by the Department of Revenue and, critically, are dues levied by the Central Government in the Ministry of Finance. Tribunal precedents (Bombay Burmah Trading Corpn. Ltd. v. CCE, Tirunelveli and M/s. TAPE v. CCE, Madurai) applied this principle to hold that cesses levied by Ministries other than the Ministry of Finance, though collected by revenue officers, are not to be included in the base for education cess. Applying that ratio, since sugar cess is levied by the Ministry of Consumer Affairs and not by the Ministry of Finance, it cannot be treated as part of the aggregate excise dues for computation of education cess, and therefore must be excluded.Sugar cess is not to be taken into account while calculating education cess; appeal allowed.Final Conclusion: The Tribunal allowed the appeal and directed that sugar cess, being levied by the Ministry of Consumer Affairs and not by the Ministry of Finance, shall be excluded from the aggregate excise dues for the purpose of computing education cess. Issues involved: Whether sugar cess should be considered while paying education cess.Analysis:1. The main issue in this appeal was whether the sugar cess should be taken into consideration while paying education cess. The Tribunal examined the provisions of the Sugar Cess Act, 1982 and the Sugar Development Fund Act, 1982, which empower the Central Government to fix the rate of sugar cess. A notification was issued levying a duty of excise on sugar. The question was whether this sugar cess should be considered as excise duty for the purpose of calculating education cess, which is leviable at 2% of all excise dues.2. The Tribunal referred to a circular issued by the Ministry of Finance clarifying that education cess should be calculated on the aggregate excise/customs dues collected by the Department of Revenue. It cited a previous case where it was held that for education cess to apply, the duty must be levied and recoverable by the Central Government in the Ministry of Finance. In this case, since the sugar cess was levied by the Ministry of Consumer Affairs, Food & Public Distribution, it was not considered a duty of excise for the purpose of education cess calculation.3. The Tribunal also cited another case where it was reiterated that a duty not levied by the Central Government in the Ministry of Finance cannot be considered for education cess calculation. Applying the same reasoning, the Tribunal concluded that the sugar cess, although collected by the Department of Revenue, was not levied by the Ministry of Finance. Therefore, it should not be taken into account while calculating education cess.4. The Tribunal distinguished a decision of the Himachal Pradesh High Court, stating that the issue in that case was different as it dealt with the applicability of education cess on goods exempted from excise duty. The question of quantifying education cess by considering other cesses imposed by different Ministries was not the subject of that case. Ultimately, the Tribunal ruled in favor of the appellant, allowing the appeal and granting consequential relief.5. In conclusion, the Tribunal held that the sugar cess should not be considered for calculating education cess, as it was not levied by the Ministry of Finance. The decision was pronounced on 26-8-2008.