Education Cess applies only to excisable goods; no cess is payable on Rule 6 reversal tied to non-excisable rectified spirit.

Education Cess under Section 83 of the Finance Act, 2004 is leviable only on excisable goods, so it cannot be demanded where the common input relates to non-excisable goods such as rectified spirit. The 8% amount reversed under Rule 6 of the Cenvat Credit Rules was held not to attract Education Cess because the underlying product was outside Central Excise duty. On that basis, the cess demand on the reversal amount was rejected and the assessee's position was accepted.

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Issues: Whether Education Cess was payable on the 8% amount reversed under Rule 6 of the Cenvat Credit Rules when the common input was used in the manufacture of dutiable and non-excisable goods, including rectified spirit.

Analysis: Education Cess under Section 83 of the Finance Act, 2004 is leviable only on excisable goods. Rectified spirit is not liable to Central Excise duty and, therefore, falls outside the charge of Education Cess. Where the underlying product is not excisable, no Education Cess can be demanded on the amount reversed in relation to such product.

Conclusion: Education Cess was not payable on the 8% amount, and the issue was decided in favour of the assessee.

Ratio Decidendi: Education Cess is chargeable only where the goods are excisable and liable to Central Excise duty; no cess can be levied on amounts connected with non-excisable goods.

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