2025 (7) TMI 1956 - AT - Central Excise

Cess payment on hessian bags and fabric stage-proof of first-stage levy payment leads to demand being set aside

The dominant issue was whether cess was unpaid at the fabric/hessian cloth stage, justifying the demand. The Tribunal held that the levy stood discharged ... Non-payment of Cess at the fabric/hessian cloth stage - Revenue submits that the Appellant has not provided any proof towards payment of Cess during the earlier stages - HELD THAT:- After going through the factual details, it is found that the Cess has been paid at the first stage while purchasing the hessian bags by the Appellant. The impugned order is set aside - appeal allowed. A Show Cause Notice demanded Cess on hessian/jute bags for 2005-06 to 2007-08 on the allegation that the manufacturer had not paid Cess, and the adjudicating authority confirmed the demand on the footing that 'no Cess has been paid at the fabric/hessian cloth stage.' The appellant argued the issue was 'no more res integra,' relying on prior Tribunal orders holding that once Cess is paid at the fabric stage, it is not payable again on the finished bags, and noted that the Revenue's appeal against that view was dismissed by the Calcutta High Court at the admission stage. The Revenue contended there was no proof of payment of Cess at earlier stages. On scrutiny, the Tribunal found the appellant had produced vendor invoices showing 'Cess @ 1% ad valorem paid along with Education Cess of 2% of Cess duty,' and held that 'the Cess has been paid at the first stage.' Since the matter was 'squarely covered' by the earlier Tribunal decision upheld by the High Court, the impugned order was set aside and the appeal allowed.