Carry forward of Education Cess credit remained usable for central excise duty after the Cenvat amendment.

Accumulated Education Cess and Secondary and Higher Education Cess credit lying unutilised on 01.03.2015 was treated as available for payment of central excise duty after the amendment to Rule 3(7)(b) of the Cenvat Credit Rules, 2004 by Notification No. 12/2015-CE(NT). The amendment was read as permitting use of such credit for duty payment on specified post-01.03.2015 inputs, capital goods and input services, and the notification was not read as causing pre-existing credit to lapse or become unusable. On that basis, the credit remained utilizable and the demand and penalty were set aside.

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Issues: Whether accumulated Education Cess and Secondary and Higher Education Cess credit lying in balance as on 01.03.2015 could be utilized for payment of central excise duty after the amendment introduced by Notification No. 12/2015-CE(NT) dated 30.04.2015.

Analysis: Rule 3(7)(b) of the Cenvat Credit Rules, 2004, as amended by the notification, permitted utilization of specified Education Cess and Secondary and Higher Education Cess credit for payment of excise duty on the stated post-01.03.2015 inputs, capital goods and input services. The notification did not expressly provide that the balance credit already available as on 28.02.2015 would lapse or become unusable. The amendment was read in the context of the policy to subsume such cesses into central excise duty, and the available credit was treated as capable of utilization for payment of duty.

Conclusion: The accumulated Education Cess and Secondary and Higher Education Cess credit was held to be available for utilization towards central excise duty, and the demand and penalty were set aside.

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