Export exemption extends to sugar cess where cess retains the character of excise duty under central excise law.

Sugar cess is treated as duty of excise under the Sugar Cess Act, 1982, and Section 3(4) applies the Central Excise Act, 1944 and related rules to levy, collection, refund and exemption. On that basis, the export exemption available under Notification No. 42/2001-CE (NT) extends to sugar cess as well. The Tribunal followed its coordinate decisions holding that sugar cess does not lose its excise character merely because it is described as a cess. Accordingly, sugar cess was held not payable on export of sugar under the notification, and the demand could not be sustained.

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Issues: Whether sugar cess is payable on export of sugar when the clearance is made under Notification No. 42/2001-CE (NT) dated 26.06.2001.

Analysis: Sugar Cess Act, 1982 treats sugar cess as duty of excise, and Section 3(4) applies the provisions of the Central Excise Act, 1944 and the rules made thereunder to levy, collection, refund and exemption. On that footing, the exemption mechanism available under the export notification applies to sugar cess as well. The Tribunal followed its earlier coordinate decisions holding that sugar cess does not lose its character as excise duty merely because it is levied as a cess, and therefore the export exemption extends to it.

Conclusion: Sugar cess was not payable on export of sugar under Notification No. 42/2001-CE (NT), and the demand could not be sustained.

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