2010 (2) TMI 231 - AT - Service Tax

Tribunal Upholds Commissioner's Decision on Cenvat Credit for Education Cess Payment

The Tribunal upheld the Commissioner's decision, rejecting the Revenue's appeal against the demand for duty and penalty for paying Education Cess using ... Cenvat credit utilization - payment of education cess from Cenvat credit of basic excise duty - interpretation of Rule 3(7)(b) of the Cenvat Credit Rules - precedential effect of Tribunal decisionsPayment of education cess from Cenvat credit of basic excise duty - interpretation of Rule 3(7)(b) of the Cenvat Credit Rules - precedential effect of Tribunal decisions - Whether education cess payable on duty could be discharged by utilizing Cenvat credit of basic excise duty. - HELD THAT: - The Tribunal considered the Revenue's contention that education cess must be paid only from the education cess credit account, relying on Rule 3(7)(b) of the Cenvat Credit Rules and an earlier decision in Sun Pharmaceutical. The Commissioner (Appeals) had allowed the assessee's appeal permitting utilization of basic excise duty credit for payment of education cess. This Bench noted that the same question was earlier decided in favour of utilization of basic excise duty credit in CCE Vapi v. Balaji Industries and that several subsequent Tribunal decisions supported that view. The Revenue failed to place any stay order in proof of the continuing correctness of Sun Pharmaceutical or to distinguish the later Tribunal precedents. In view of the Tribunal's subsequent consistent decisions permitting such utilization, the appeal was held to be without merit.Appeal dismissed; utilization of Cenvat credit of basic excise duty for payment of education cess upheld in accordance with the Tribunal's subsequent decisions.Final Conclusion: The Revenue's appeal is rejected; the Tribunal's subsequent precedents permitting payment of education cess by utilizing Cenvat credit of basic excise duty govern the matter and the Commissioner (Appeals) order in favour of the assessee is affirmed. Issues:- Appeal against demand of duty and penalty for payment of Education Cess utilizing Cenvat Credit.- Commissioner (Appeals) allowing the appeal.- Revenue's appeal against the Commissioner's decision.- Interpretation of Rule 3(7)(b) of Cenvat Credit Rules.- Tribunal's decision in M/s Sun Pharmaceutical Vs. CCE.- Tribunal's decision in CCE Vapi Vs. M/s Balaji Industries.Analysis:1. The appellant paid Education Cess using Cenvat Credit of basic excise duty, leading to a demand for duty and imposition of penalty. The Commissioner (Appeals) allowed the appeal, prompting the Revenue to file an appeal. The Revenue argued that the Commissioner relied on a Tribunal decision in M/s Sun Pharmaceutical Vs. CCE, which is under appeal and hence should not have been considered. Additionally, the Revenue cited Rule 3(7)(b) of Cenvat Credit Rules to support its stance that education cess should only be paid from the education cess credit account.2. The Tribunal, per the judgment in CCE Vapi Vs. M/s Balaji Industries, had previously allowed utilizing credit of basic excise duty for paying education cess. The Tribunal noted that there were subsequent decisions post the M/s Sun Pharmaceutical case supporting a similar view. The Revenue failed to provide a copy of the stay order related to the M/s Sun Pharmaceutical case. Consequently, the Tribunal found that the issue had already been settled by its subsequent decisions and upheld the Commissioner's decision, rejecting the Revenue's appeal.This judgment clarifies the permissible use of Cenvat Credit for paying Education Cess, highlighting the Tribunal's consistent stance on the matter and emphasizing the importance of relevant precedents in deciding such cases.