CENVAT credit on sugar cess was treated as admissible because the levy was characterised as a duty of excise.

CENVAT credit of sugar cess paid on inputs was held admissible to a manufacturer paying central excise duty because the cess was treated as a duty of excise, not a fee. The analysis noted that the levy is credited to the Consolidated Fund and does not involve a direct quid pro quo, supporting its character as an excise-related impost eligible for credit under the CENVAT scheme. A later decision adopting the same view was preferred, while a contrary jurisdictional decision was distinguished as arising in a different context. The credit claim was therefore allowed in favour of the assessee.

---

---

Issues: Whether CENVAT credit of sugar cess paid on inputs is admissible to a manufacturer of final products paying central excise duty.

Analysis: The credit claim was examined in the light of the nature of sugar cess and the applicable CENVAT credit scheme. Sugar cess was treated as a duty of excise and not as a fee, since the levy is credited to the Consolidated Fund and lacks a direct quid pro quo. The reasoning adopted the view that the cess, being an excise-related levy, falls within the category of duties eligible for credit under the relevant CENVAT rules. The later decision following the same view was preferred, and the contrary jurisdictional decision was distinguished as arising in a different context.

Conclusion: CENVAT credit of sugar cess is admissible and the issue is answered in favour of the assessee.

---