How to deal with Balances 2% & 1% cess on 01.03.2015

[ABHINAY TARE]

How to deal with Balances of 2% Primary Education Cess of Central Excise & 1% Secondary & Higher Education Cess of Central Excise, lying in CENVAT Credit Register on 01.03.2015 ?

[Himansu Sekhar]

please refer to the minutes of the tariff conference

Issue:

Exemption from levy of Education Cess and Secondary & Higher Education Cess has been provided w.e.f. 01.03.2015 vide notification no. 14/2015-CE & 15/2015-CE both dated 01.03.2015, 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.

[Ganeshan Kalyani]

The answer given by Sri Himasu Ji is Crystal clear. Thanks Sri Himansu ji.

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Himanshu Sha

[Himansu Sekhar]

Thank you very much for your support

AI Summary

Education Cess credit: accumulated balances cannot be utilized after cess withdrawal; existing rules and notifications apply.
After exemption of Education Cess and Secondary & Higher Education Cess from levy w.e.f. 01.03.2015, Sub rule 7(b) of Rule 3 CENVAT Credit Rules, 2004 restricts credit use to the corresponding cesses. The tariff conference concluded the withdrawal was a policy decision and that accumulated credit of those cesses cannot be utilized for other excise or service tax liabilities; existing rules and notifications continue to govern.