Commissioner, Central Excise & Service ... vs M/S Shah Pulp & Paper Mills Ltd

Appeal No.E/252/2008-DB [Arising out of OIA No.KRS/74/Vapi/2007, dt.29.11.2007, passed by Commissioner (Appeals), Central Excise & Service Tax, Vapi]

Commissioner, Central Excise & Service Tax, Vapi Appellant

Vs

M/s Shah Pulp & Paper Mills Ltd. Respondent

Represented by:

For Appellant: Shri L. Patra, Authorised Representative For Respondent: Shri D.K. Trivedi, Advocate

For approval and signature:

Honble Mr. P.K. Das, Member (Judicial) Honble Mr. P.M. Saleem, Member (Technical)

1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of Seen the order?

4. Whether order is to be circulated to the Departmental Yes authorities?

CORAM:

HONBLE MR. P.K. DAS, MEMBER (JUDICIAL) HONBLE MR. P.M. SALEEM, MEMBER (TECHNICAL)

Date of Hearing/Decision:29.10.2015

Order No. A/11580 / 2015, dt.29.10.2015

Per: P.K. Das

Revenue filed this appeal against the order of Commissioner (Appeals), where the appeal of the Revenue was dismissed and the order of the Adjudicating authority was upheld.

2. After hearing both the sides and on perusal of the records, we find that the issue involved in this case is as to whether the Education Cess is payable on Paper Cess for clearance of Paper and Paper Board. Both the authorities below held that the Education Cess is levied by Ministry of Industries by GOI, in exercise of powers under sub-section (1) of Section 9 of Industrial Development and Regulation Act, 1961.

3. Clause 83 of the Finance (No.2) Bill, 2004 reads as under:-

the Education Cess levied under Section 81, in the case of goods specified in the First Schedule to the Central Excise Tariff Act, 1985, being goods manufactured or produced, shall be a duty of Excise (in this section referred to as the Education Cess on excisable goods), at the rate of two percent, calculated on the aggregate of all duties of Excise (including special duty of excise or any other duty of excise but excluding Education Cess on excisable goods) which are levied and collected by the Central Government in the Ministry of Finance (Department of Revenue), under the provisions of the Central Excise Act, 1944 or under any other law for the time being in force.

4. The learned Authorised Representative for the Revenue reiterates the grounds of appeal. It is submitted that the Paper Cess is payable on the excisable goods and therefore, the Education Cess is payable on Paper Cess. It is also contended that the Paper Cess is collected by the Ministry of Finance (Department of Revenue) and it will be treated as a duty of Excise. He relied upon the Single Member decision of the Tribunal in the case of CCE Vapi Vs Shah Paper Mill Ltd  2009 (236) ELT 122 (Tri-Ahmd) and in the case of CCE Vapi Vs R.A. Shaikh Paper Mills Pvt. Ltd  2008 (228) ELT 59 (Tri-Ahmd).

5. On the other hand, the learned Advocate appearing on behalf of the Respondent, submits that the Division Bench of the Tribunal in the case of Andhra Pradesh Paper Mills Vs CCE Visakhapatnam-II  2009 (235) ELT 474 (Tri-Bang) held in favour of the Assessee. He also drew the attention of the Bench to the Board Circular F.No.262/2/2008-CX.8, dt.07.01.2014.

6. We find that CBEC vide Circular F.No.345/2/2004-TRU (Pt.), dt.10.08.2004, clarified that as the Education Cess is calculated on the aggregate duties of Excise/Customs (excluding certain duties of Customs like anti-dumping duty, safe guard etc) levied and collected by the Department of Revenue, only such duties, which are (a) levied and collected as duties of Excise/Customs and (b) are both levied and collected by the Department of Revenue should be taken into account for calculating Education Cess. For the proper appreciation of the case, we reproduce below the decision of the Tribunal in the case of Andhra Paper Mills Ltd (supra) as under:-

6. On a very careful consideration of the issue, we find that while reproducing Section 93, the Commissioner (A) has omitted certain important words which come after Central Government. The words which are omitted are which are levied and collected by the Central Government in the Ministry of Finance, Department of Revenue. These words have been omitted. Once these words are there, it is very clear that two conditions have to be fulfilled for inclusion of the Cess. The first condition as per the clarification is that Cess should be levied and collected as duty of Excise/Customs. In this case, it is satisfied as the Cess on Paper may be considered as duty of Excise. But, there is another condition by which the Cess should be levied and collected by the Department of Revenue. Obviously, Paper Cess is not levied by the Department of Revenue, it is levied by the Department of Industrial Development, Ministry of Commerce and Industry. Therefore, the second condition is not satisfied fully. No doubt it is collected by the Department of Revenue, but not levied by it. Hence, Paper Cess is not includable. We find that the Boards clarification is in consonance with Section 93. There is no ambiguity. Hence, we are of the view that the Cess on Paper is not includable in the calculation of the Education Cess. It is not necessary for us to discuss the case-laws relied on by both sides, as the law itself is very clear. In view of the above, we do not find any merit in the impugned orders and the same are set aside by allowing the appeals with consequential relief.

7. It is clear from the Board Circular F.No.262/2/2008-CX.8, dt.07.01.2014 that a cess levied under an Act, which is administered by Ministry of Finance (Department of Revenue) but only collected by Department of Revenue under the provisions of that Act, cannot be treated as a duty, which is both levied and collected by Department of Revenue. The Board further clarified that the Education Cess is not to be calculated on cesses which are levied under Acts administered by the Department/Ministries other than the Ministry of Finance (Department of Revenue) but are only collected by the Department of Revenue in terms of those Acts. Thus, it is clear that the amount collected by the Ministry of Finance (Department of Revenue), levied by the other Ministry cannot be treated as duty. There is no dispute that the Paper Cess levied by other than the Ministry of Finance (Department of Revenue), and therefore, demand of Education Cess on Paper Cess cannot be sustained.

8. In view of the above discussion, we do not find any reason to interfere the order of the Commissioner (Appeals). Accordingly, the appeal filed by the Revenue is rejected.

(Dictated & Pronounced in Court)

(P.M. Saleem) (P.K. Das) Member (Technical) Member (Judicial)

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