2016 (10) TMI 340 - AT - Central Excise

100% EOUs exempt from Education Cess on DTA clearances: Tribunal ruling

The Tribunal allowed the appeal of a 100% export-oriented unit regarding the demand of Education Cess and Secondary and Higher Education Cess on DTA ... Education Cess - Secondary and Higher Education Cess - Chargeability of cesses on DTA clearances by a 100% Export Oriented Unit - Interpretation of Finance Act provisions concerning cesses (Sections 91, 93 and 94) - Precedential effect of a Larger Bench decisionEducation Cess - Secondary and Higher Education Cess - Chargeability of cesses on DTA clearances by a 100% Export Oriented Unit - Interpretation of Finance Act provisions concerning cesses (Sections 91, 93 and 94) - Precedential effect of a Larger Bench decision - Whether Education Cess and Secondary and Higher Education Cess are recoverable from a 100% EOU on clearances made to DTA for the period January 2007 to December 2011. - HELD THAT: - The tribunal applied the decision of the Larger Bench in Kumar Arch Tech. Pvt. Ltd., which framed the question on whether Education Cess and S&H Cess are chargeable on DTA clearances by a 100% EOU where such cesses were included in aggregate customs duties. After considering the Larger Bench's analysis of the relevant provisions of the Finance Act (Sections 91, 93 and 94) the Larger Bench held that these cesses are not to be recovered from a 100% EOU in respect of DTA clearances. The present appeal raises the same legal question and is squarely covered by that Larger Bench conclusion. Accordingly the impugned order demanding recovery of the cesses on DTA clearances is unsustainable. [Paras 5, 6, 7]The impugned order demanding Education Cess and Secondary and Higher Education Cess on DTA clearances by the 100% EOU for the stated period is set aside; the appeal is allowed.Final Conclusion: The appeal succeeds: following the Larger Bench decision in Kumar Arch Tech. Pvt. Ltd., Education Cess and Secondary and Higher Education Cess are not recoverable from a 100% EOU on clearances to DTA for January 2007 to December 2011; the impugned order is set aside and the appeal allowed. Issues:Demand of Education Cess and Secondary and Higher Education Cess on DTA clearances by a 100% export-oriented unit.Analysis:The appeal was against Order-in-Appeal No. PII/MMD/298/2012 dated 19.12.2012. The issue revolved around the demand of Education Cess and Secondary and Higher Education Cess for DTA clearances made by the appellant between January 2007 to December 2011. The appellant, a 100% export-oriented unit, contested the demand. The counsel highlighted that a similar issue had been referred to the Larger Bench previously, and in the case of Kumar Arch Tech.Pvt. Ltd. 2003 (290) ELT 372, the Larger Bench ruled in favor of the assessee. Following this decision, subsequent orders by the Commissioner (Appeals) for later periods set aside the Order-in-Original.The Departmental Representative reiterated the findings of the lower authorities. The issue was whether Education Cess and Secondary and Higher Education Cess were chargeable on DTA clearances by a 100% EOU, even if these cesses were included in the calculation of aggregate duties payable under the Customs Act or any other applicable law. The Larger Bench, after examining Sections 91, 93, and 94 of the Finance Act, concluded that these cesses should not be recovered from 100% EOUs for DTA clearances.Given that the decision of the Larger Bench directly addressed the issue at hand, the Tribunal held that the impugned order should be set aside. Consequently, the impugned order was set aside, and the appeal was allowed. The operative part of the decision was pronounced in court.