UTILIZATION OF ED CESS AND SHE CESS

[Monaji gupta]

Dear Sir,

kindly guide us whether balance of ed cess and she cess which was in cenvat account as on 01.06.2017 could be utilized for payment of excise duty as i did in june,17.As per department call, they have sugestted that i have commited mistake in making utilization for payment of excise duty for the month June,17.kindly guide there can be any issue?

[Ganeshan Kalyani]

Both the cenvat amount is lacking clarity as to whether it can be taken or not. There is no backing in the law which will enable the assesse to take the credit.

[Alkesh Jani]

Sir, I agree with the view of Ganesh ji, as the Ed. Cess and SHE Cess is on the duty. You can take credit of Cess but you have restriction for utilization. As it is settled by various judgement that basic duty can be utilized for the payment of Ed. cess and SHE Cess but Cess cannot be utilized for payment of duty.

[KASTURI SETHI]

In October, 15 Notification was issued by which credit of edu.cesses (in transit) was allowed to be transferred to duty. Similar a notification for Educ . Cess in Central Excise was also allowed to be transferred and used towards duty.

[SANJEEV JADHAV]

Dear Sir,

As per Notf. No. 12/2015 - CE (NT) dated 30.04.2015, the credit of Ed. Cess. & HS Ed. Cess paid on input services paid on Input Services received by the manufacturer of final product on or after 01.03.2015, can be utilised for payment of duty of excise. Please check whether you received credit of Ed. Cess and H.S.Ed. Cess after 01.03.2015. If credit of cesses are received after 01.03.2015, then it can be utilised for payment of duty.

[KASTURI SETHI]

For credit on Education Cess in respect of Service Tax, relevant Notification No.22/15 CE NT dated 29.10.15.

[Ganeshan Kalyani]

the notifications states that education cess and secondary higher education cess of the input / service received on or after 01.03.2015 / 01.06.2015 can be taken . it is not clear on the cesses that are available in books as on the 01.03.2015 / 01.06.2015. Few case i heard that department had rejected the credit taken on the credit available as on the aforesaid date. and there was need for a clarificatory communication from the department. at the time of migration from erstwhile tax regime to GST also there was no provision enabling the credit to be carry forward to GST .

[YAGAY and SUN]

Cellular Operators Association of India vs Union of India, the Delhi High Court rejected the claim to allow credit of the un-utilized education and higher education cess.

[Ganeshan Kalyani]

injustice on the part of the assessee. credit should have been allowed in erstwhile tax regime . considerable credit is there in the books of accounts of the assesse.

[KASTURI SETHI]

Every case has different facts and circumstances.

AI Summary

Education cess credit: post cut off credits may be used for excise duty, but pre existing balances face legal and administrative limits.
Balances of Education Cess and SHE Cess in CENVAT accounts were generally not permitted to be used to pay excise duty; however, 2015 notifications allowed credit of such cesses paid on inputs and input services received after specified cut off dates to be transferred and utilised for duty. Uncertainty persists as to whether cess balances existing in books on the cut off dates qualify for transfer, administrative rejections have occurred, migration to GST did not carry forward unutilised cesses, and a court declined claims for unutilised cess credit.