Ed.Cess & SH Cess credit to be taken or not

[Ramakrishnan Seshadri]

Dear Sir,

We are the manufacturers of automobile parts. We used to purchase paints for our paint shop.

One of our supplier has supplied the materials in the month of March 2015 by charging Cess and SH.Cess in their invoices. We have not taken credit of the Cess and SH.Cess. Hence we have not made payment of this. Now the supplier is asking payment for the Ed.Cess and SH.Cess claimed in their invoices. They also informed that the invoices were raised from Duty paid Godown and they are removing the goods as such. Since the materials are pertaining to February 2015 stock they are charging Ed.Cess and SH.cess. Whether their method is correct. Shall we take credit or what to do.

What is the procedure.

Kindly experts give your views in this issue.

Thanks and Regards,

S.Ramakrishnan.

[Rajagopalan Ranganathan]

Sir,

Education Cess and Secondary and Higher Education Cess are exempted form 1.3.2015 vide Notification No. 14 and 15 of 2015 CE dated 1.3.2015. therefore upto 28.2.2015 the above mentioned cesses are payable. Therefore you suppliers demand for payment of the same is correct in law. You can take credit of such cesses and keep them in your credit account but you cannot utilise the same in view of the exemption. However only CBEC can clarify whether such credits earned prior to 1.3.2015 has to lapse or can be utilised in any other manner.

[MUKUND THAKKAR]

Agree wtih view of Rajagopalan Ranganathan sir,

[Guest]

Dear All

Education Cess and Secondary and Higher Education Cess are exempted form 1.3.2015 vide Notification No. 14 and 15 of 2015 CE dated 1.3.2015. therefore upto 28.2.2015 the above mentioned cesses are payable. You can merge Ed.cess and H.Ed.cess in Basic Excise Duty. You can take credit of such cesses and keep them in your credit account and you can also utilize.---- As per superintendent of Excise.

We have discuss with Superintendent of Central Excise.

Regards

Amit Gupta

[Ganeshan Kalyani]

Recently a clarificatory notification has been issued by CBEC enabling utilisation of education cess and Sec.H. ed cess in following situations“Provided also that the credit of Education Cess and Secondary and Higher Education Cess paid on inputs or capital goods received in the factory of manufacture of final product on or after the 1st day of March, 2015 can be utilized for payment of the duty of excise leviable under the First Schedule to the Excise Tariff Act: Provided also that the credit of balance fifty per cent. Education Cess and Secondary and Higher Education Cess paid on capital goods received in the factory of manufacture of final product in the financial year 2014-15 can be utilized for payment of the duty of excise specified in the First Schedule to the Excise Tariff Act: Provided also that the credit of Education Cess and Secondary and Higher Education Cess paid on input services received by the manufacturer of final product on or after the 1st day of March, 2015 can be utilized for payment of the duty of excise specified in the First Schedule to the Excise Tariff Act.”However the notification is silent as regard the utilization of credit lying as of 31.03.2015.

[VIJAY KOUNDAL]

Pl note below the recent changes in CENVAT scenarios of utilisation of Edu. Cess and SHE Cess post Notification No. 12/2015-Central Excise (N.T.) dated 30^th April 2015.

Sr. No.	Scenario	Date of receipt	Utilised against	WHEN to utilise	Remarks
1	Edu Cess and SHE Cess paid on Inputs	On or after 1st March, 2015	Basic Excise Duty	On or after 30th April, 2015	Can be availed and utilised for BED
2	Edu Cess and SHE Cess paid on Input services	On or after 1st March, 2015	Basic Excise Duty	On or after 30th April, 2015	Can be availed and utilised for BED
3	Edu Cess and SHE Cess paid on Capital goods - 1st 50%	1st April, 2014 to 28th February, 2015	Not Applicable	Not Applicable	Can be availed only and not to be utilised for BED
4	Edu Cess and SHE Cess paid on Capital goods - Balance 50%	1st April, 2014 to 28th February, 2015	Basic Excise Duty	On or after 30th April, 2015	Can be availed and utilised for BED
5	Edu Cess and SHE Cess paid on Capital goods	On or after 1st March, 2015	Basic Excise Duty	On or after 30th April, 2015	Can be availed and utilised for BED fully [upto 50% in FY 2014-15 and balance in FY 2015-16]
6	Edu Cess and SHE Cess paid on Capital goods	In the FY 2013-14	Not Applicable	Not Applicable	Can be availed only and not to be utilised for BED
7	Unutulised Cenvat Credit balance of Edu Cess and SHE Cess as on 28-02-2015.	Before 28th February, 2015	Not Applicable	Not Applicable	Cannot be utilised for payment of BED.

Pl intimate concern department in writing that the utilisation of the cenvat credit of Edu Cess and SHE Cess as per amendments made above and that such utilization is not from the opening balance of

EDU Cess and SHE Cess as on 28-02-2015.

Also please note that put the remark in ER-1 return by stating that “closing balance of EDU Cess and SHE Cess as on 28-02-2015 not utilized”.

AI Summary

Education cess credit: utilisation permitted for inputs, capital goods and services received on or after March 1, 2015. Education Cess and Secondary and Higher Education Cess charged up to 28 February 2015 may be recorded as cenvat credit but their utilisation is limited by exemption notifications. Board clarifications permit utilisation of such cesses for payment of basic excise duty only where inputs, input services or capital goods on which the cesses were paid are received in the factory on or after 1 March 2015, with a transitional allowance for a portion of capital goods cesses; opening or earlier balances are generally not utilisable and require administrative guidance and disclosure.