2007 (7) TMI 308 - HC - Central Excise

Court allows rebate on education cess as part of excise duty; erroneous orders quashed

The court held that education cess should be considered part of excise duty, and existing notifications covered its rebate. The orders disallowing rebate ... Education Cess on excisable goods - Duty of excise - Section 93 of the Finance Act, 1994 - Application of Central Excise Act provisions to surcharge - Rebate on export under Rule 18 of the Central Excise Rules, 2002 - Clarificatory nature of subsequent notificationEducation Cess on excisable goods - Duty of excise - Section 93 of the Finance Act, 1994 - Application of Central Excise Act provisions to surcharge - Rebate on export under Rule 18 of the Central Excise Rules, 2002 - Notification dated 26-6-2001 - Clarificatory nature of subsequent notification - Whether the Education Cess levied w.e.f. 9-7-2004, being made a duty of excise by Section 93, was eligible for rebate on export under existing notification without requiring a fresh notification dated 6-9-2004. - HELD THAT: - The Court examined Sections 91-93 and held that Section 93(1) expressly declares the Education Cess to be a duty of excise and Section 93(3) directs that the provisions of the Central Excise Act and rules, including those relating to refunds and exemptions, apply to the Education Cess 'as far as may be'. Consequently, when the Education Cess assumed the character of a parent levy it became subject to the same regime of rebate and exemption applicable to excise duties. The Explanation to the Notification dated 26-6-2001 already encompassed special excise duties collected under any Finance Act; therefore the Education Cess, being a special excise duty under the Finance Act, 2004, fell within the scope of that Notification and entitled exporters to rebate immediately on the Education Cess collected during the period 9-7-2004 to 5-9-2004. The later Notification dated 6-9-2004, which expressly defined 'duty' to include Education Cess, was held to be clarificatory and not the source of a new or retrospective rebate; a separate notification was not required to make the existing rebate applicable to the Education Cess once Section 93 rendered it a duty of excise. For these reasons the appellate and revisional authorities' conclusions denying rebate on the Education Cess were erroneous and were set aside. [Paras 16, 18, 19, 20, 21]Rebate on the Education Cess paid by the petitioner for the period 9-7-2004 to 5-9-2004 is available under the existing notification and the impugned orders denying such rebate are quashed.Final Conclusion: Writ petition allowed; orders of the Commissioner (Appeals) and the revisional authority are set aside insofar as they denied the petitioner's claim to rebate on the Education Cess paid as part of excise duty for the period 9-7-2004 to 5-9-2004; no order as to costs. Issues involved:Challenge to withdrawal of claim to rebate on exports of goods due to education cess payable under the Finance Act, 1994.Analysis:1. The petitioner, engaged in manufacturing goods, filed a refund claim for rebate on Excise Duty paid, including education cess, on exports of fabrics. The claim was initially sanctioned by the Deputy Commissioner.2. An appeal was made to the Commissioner (Appeals) against the order-in-original, where the claim was disallowed, stating that education cess paid on exports was not eligible for rebate.3. The revisional authority, referring to a specific notification, held that rebate on education cess was not available before the notification date, even though rebate on Excise Duties was available prior to that.4. The petitioner argued that education cess should be considered part of excise duties automatically, without the need for a separate notification, as per the Finance Act, 1994.5. The respondents contended that rebate is dependent on notifications issued by the government, and since no prior notification provided for rebate on education cess, it was not available.6. Sections 91, 92, and 93 of the Finance Act, 1994 were analyzed, specifying the levy and collection of education cess on excisable goods.7. The court noted that education cess was to be collected as a duty of excise, in addition to other excise duties, and the provisions of the Central Excise Act applied to its levy and collection.8. The court highlighted that the levy of education cess was intended to fund government projects for universal quality education, collected as a surcharge on various taxes.9. The court concluded that the orders disallowing rebate on education cess were erroneous, as education cess should be considered part of excise duty, and existing notifications covered its rebate.10. The impugned orders were quashed, allowing the petitioner's claim for rebate on education cess paid as duty of excise during a specific period, as it was part of the excise duty itself.