Payment of ED Cess and SH Cess from BED Cenvat a/c

[Asked by Guest]

Dear sir, Can CENVAT Credit of Basic Excise Duty be used for payment of Education Cess / Secondary and Higher Education Cess? please let us know the provisions of rules if it is allowed srinivas

[Vijay Chitte]

In terms of Rule 3(4) (a), credit of duty of excise may be utilized for payment of ‘any duty of excise' on any final product and as mentioned above ‘duties of excise' includes both ECess and SHE Cess as well. There is no restriction prescribed under Rule 3(7) of the CENVAT rules about such utilization of credit of basic duty (or basic excise duty) which is governed by Rule 3(4) (a). in absence of any restriction and as provided under Rule 3(4) of Cenvat Credit Rules, 2004 the CENVAT credit of basic duty may be utilized for payment of any duty of excise on any final product.

Credit of basic excise duty can be utilised for payment of education cess and SAHE cess but not vice versa allowable.

[sv bhasker]

I am in agreement with the views expressed by Shri Vijay Chitte.

[rajkumar shukla]

yes. it can be used. Rule itself providesfor the same

 

thanks for giving rule provisions

how could i transfer from BED to Cess since we have no balance in ED & SH cess a/c for payment

please advise

[rajkumar shukla]

you can simply debit the same from BED balance

AI Summary

CENVAT credit for Basic Excise Duty may be used to pay education cesses under Rule 3(4)(a).
Rule 3(4)(a) permits utilization of CENVAT credit of Basic Excise Duty for payment of any duty of excise on final products, which includes Education Cess and Secondary and Higher Education Cess; no restriction in Rule 3(7) bars such use. Therefore BED credit may be used to pay education cesses, but cess credits cannot be used to pay basic excise duty, and taxpayers may debit the BED account to make such cess payments when cess account balances are absent.