Education cess from BED

[Asked by Guest]

Is it permissable to debit edu cess from CENVAT credit of BED ?

In my view, Cenvat Credit in respect of the Education Cess can only be used only in respect of Education cess not BED

[RAKESH R]

There is no restriction to utilise the Cenvat credit of BED against payment of Education cess. The restriction is applicable only to duties of excise other than 'basic cenvat duty credit'. Rule 3(4) of CCR says " The cenvat credit may be utilised for payment of (a) any duty of excise on any final product;... Sub rule (7) of Rule 3 of CCR says " Notwithstanding anything contained in sub rule (1) and sub rule (4)........clause (b) restricts the utilisation of all duties such as ADE, CESS SHES etc only against the payment of such duties. In this rule, Cenvat on BED has not been included. Hence, in the absence of any such specific expression in sub rule (7)clause (b)in respect of Basic Cenvat Duty credit, the assessee has every right to utilise the credit of basic cenvat duty for payment of any other duties. S. Gokarnesan advocate Chennai 098400 87349

AI Summary

Cenvat credit utilisation: basic cenvat duty credit may be applied to education cess absent a specific restriction.
Whether Cenvat credit attributable to Basic Excise Duty may be applied against Education Cess is contested; one view limits Cenvat credit for Education Cess to Education Cess alone, while an alternative interpretation of the Cenvat Credit Rules holds that the restriction on cross utilisation applies only to certain expressly listed duties and cesses, and therefore Basic Cenvat Duty credit may be used to meet Education Cess where no specific prohibition exists.