Is it compulsory to pay cess

[RAM SHARMA]

Dear Experts,

As per under rule 6(3)1 of Cenvat Credit Rule, 2004. Is it compulsory to pay cess on 5% duty. Pl advice.

(3)   Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow either of the following options, as applicable to him, namely:-

(i)	the manufacturer of goods shall pay an amount equal to five per cent. of value of the exempted goods and the provider of output service shall pay an amount equal to six percent. of value of the exempted services;  I want your opinion on above subject rule. Thanks

[YAGAY andSUN]

No, it is not mandatory to pay the Cess (Education and Secondary Education Cess) under Rule 6 of the CENVAT credit Rules, 2004 as amended from time to time, since Rule 6 says payment of an amount which cannot be treated at par with the Central Excise Duty.

AI Summary

Payment of cess under Cenvat Rule 6 is not mandatory where the prescribed amount is not treated as excise duty. Rule 6(3)(i) of the Cenvat Credit Rules permits a manufacturer or output service provider who does not maintain separate accounts to pay a prescribed percentage of the value of exempted goods or services instead of separate accounting; the prescribed payment is treated as an amount distinct from Central Excise Duty, and therefore payment of the Education and Secondary Education Cess is not mandatory under that rule.