Education Cess & S&H Cess

[Kuldeep Kapoor]

Respected Experts

With kind regards submitted

That In my Books I have received the education Cess as under :

2013-14 Education Cess 50% = ₹ 69316 S&HE Cess 34658

2014-15 50% of last Year Education Cess 50% = ₹ 69316 S&HE Cess 34658

2014-15 50% of Current Year Education Cess 50% = ₹ 336549 S&HE Cess 168283

2015-16 50% of Last Year Education Cess 50% = ₹ 336549 S&HE Cess 168283

2015-16 No Education Cess Nil S&H Cess = Nil

I have cenvat Credit in my books as today is EDu Cess : 814307 - S&H Cess = 407172

Since we have Just started 1st sale in Jan-2017 and I seek guidance from experts how much Education Cess and S&H Cess I can merge with BED to make duty under Central Excise notification No. 12/2015-CE(NT) dated 30.04.2015 amended the rule 3(7)(b) of Cenvat Credit Rules ,2004

[Ganeshan Kalyani]

Education cess cannot be clubbed with basic excise duty to claim credit. 2% education cess can be set off against 2% output excise duty and 1% education cess can be adjusted against 1% output education cess. Cross utilisation is not allowed.

Further, since there is no education cess is applicable now, you cannot avail the previous accumulated credits. Thanks.

[YAGAY andSUN]

Edu Cess and SHE Cess can not be adjusted against BED. However, there is no clarity in MGST Law.

[KASTURI SETHI]

Dear Querist,. Do the X-ray of Notification No.12/15 CE (NT) and 22/15 CE NT carefully, and you will find that still it is possible to use credit of cesses in BED.

[YAGAY andSUN]

But just for after March 2015 receipts on which ED & SHE were paid.

[KASTURI SETHI]

Dear Querist,. PL. Note that it is a matter of "Time Factor". Such credit cannot be lapsed.

[YAGAY andSUN]

However, there is no clarity on CESS from the MOF DOR.

[KASTURI SETHI]

 Worth reading

1999 (106) E.L.T. 3 (S.C.) = 1999 (1) TMI 34 - SUPREME COURT OF INDIA EICHER MOTORS LTD. Versus UNION OF INDIA

2012 (279) E.L.T. 194 (H.P.) RANBAXY LABORATORIES LTD.Versus COMMISSIONER OF C. EX., CHANDIGARH

[KASTURI SETHI]

Dear Querist,. Whenever there is ambiguity in law, benefit always goes to assessee. Govt. Should not be allowed to be enriched unjustifiably and unconstitutionally at the cost of assessee. Issue is worth legal fighting. Issue is not complicated. It is so simple that you can draft reply, if required, on your own on the pattern of The Supreme Court judgment. When area based exemption was allowed to Himachal Pradesh, SCNs were issued on this issue of lapse of credit. That case has also been decided in favour of assessee by the Supreme Court in the year 2015. Issue calls for moral courage to get substantive right.It is our duty to guide you honestly and decision is yours.

[HARSHAD BHAMRE]

Dear Sir ,

I gone through Noti No: 22/2015 & 12/2015 , as per both notification I can utilises credit as per given date condition .

condition:

1. Credit availed on or after the 1st day of June, 2015 can be utilized for payment of service tax on any output service:
2. Credit availed on or after the 1st day of March, 2015 can be utilized for payment of the duty of excise liveable under the First Schedule to the Excise Tariff Act:

but what about balance of 2% & 1% which is available with me before above dates.

Please suggest.

Thanks & Regards

Harshad Bhamre

[KASTURI SETHI]

As per circular appended below, the accumulated credit of Education Cesses (lying before before 1.3.15 and 1.6.15 respectively ) would lapse. You will have to fight legally to get natural justice by taking the support of above mentioned case laws. You know Board's circulars have no statutory force.

96/85/2015-CX.1 dated 7.12.15

B.21 - Hyderabad, Coimbatore, Vadodara, Vishakhapatnam, Delhi Zone - Cenvat Credit - Balance of Education Cess and Secondary & Higher Education Cess lying in the CENVAT Credit Account :

Issue:

Exemption from levy of Education Cess and Secondary & Higher Education Cess has been provided w.e.f. 1-3-2015 vide notification no. 14/2015-C.E. & 15/2015-C.E. both dated 1-3-2015, Sub-rule 7(b) of Rule 3 of CENVAT Credit Rules, 2004, specifies that CENVAT credit of specified duties shall be utilized for payment of those specified duties only. CENVAT Credit of Education Cess and Secondary & Higher Education Cess can be utilized only for payment of Education Cess and Secondary & Higher Education Cess, respectively. Consequent upon grant of exemption there is issue of utilization of the accumulated credit of the past. It is suggested that an amendment to sub-rule 7(b) of Rule 3 of CENVAT Credit Rules, 2004 may be made to allow the utilization of balance CENVAT Credit of Education Cess and Secondary & Higher Education Cess towards payment of either duty of excise or Service Tax.

Discussion & Decision.

The conference after discussion and briefing from the officers from the Board noted that it was Government’s conscious policy decision to withdraw the Education Cess and Secondary & Higher Education Cess. It is a policy decision to not allow utilization of accumulated credit of education cess and secondary and higher education cess after these Cesses have been phased out. As these Cesses have been phased out and no new liability to pay such Cess arises, no vested right can be said to exist in relation to the accumulated credit of the past. The rule and notifications as they exist need to be followed and do not need any amendment.

[KASTURI SETHI]

Dear Querist, Two judgements of Supreme Court are in your hands. Still not convinced ?

AI Summary

Education cess credit cannot be merged with basic excise duty, limiting use to corresponding cess liabilities and likely lapsing. CENVAT credit of Education Cess and Secondary and Higher Education Cess is restricted to payment of those respective cesses and generally cannot be applied against Basic Excise Duty; transitional notifications permit limited use only for receipts after specified dates, while administrative circulars regard accumulated pre transition credits as lapsed, leaving litigation as the suggested means to contest that administrative position.