Jammu manufacturers not entitled to Refund of Education Cess: CESTAT

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Jammu manufacturers not entitled to Refund of Education Cess: CESTAT

AIT News Network

NEW DELHI. Division Bench of CESTAT headed by President Justice Khandeparkar has pronounced a Ruling on 12^th August 2009 in bunch of appeals filed by Commissioner, Central Excise, Jammu that manufacturers located in J & K are not entitled to refund of Education Cess and SHE Cess paid by them in cash under Central Excise Tariff Notification No.56/2002.

The Ruling was pronounced after arguments running over 3 days by a dozen Advocates who appeared for manufacturers located in Jammu & Kashmir. As per the Ruling; manufacturers are not entitled to Refund of Cess as Notification No. 56/2002 allows refund of duty leviable under the following Acts only:

(i) Central Excise Act,1944

(ii) Additional Duties of Excise(Goods of Special Importance) Act, 1957

(iii)Additional Duties of Excise (Textile and Textile Articles) Act

Since the Education Cess and Secondary and Higher Education Cess are leviable under the Finance Act,2004 and Finance Act, 2007; the benefit of Refund of cess paid by cash/debit in PLA under Notification No. 56/2002 is not admissible to manufacturers according to Justice Khandeparker. The ruling says that the Notification is complete in all respects and leaves no room for doubt.

Though in case of Bharat Box decision of Division Bench of CESTAT AIT-2007-460-CESTAT ; the then President of CESTAST Justice Abhichandani ruled that refund is admissible to Jammu manufacturers. It was held that “when the exempted amount of duty was required to be refunded for operationalising the exemption, Education Cess , which was in the nature of piggy back duty on the excise duties under the said three Acts, was also required to be refunded, because it was not at all leviable”

But the according to present President the said ruling is of no help to manufacturers. However, since there are conflicting decisions of Division Benches; the matter should naturally be referred to Larger Bench on the request of the parties involved after receipt of certified copy of the Order.

But since the order is against the manufacturers; they have no option but to file SLP in Supreme Court.

But why the manufacturers were denied the Refund of Cess?. The intention of the Government is to give the refund of whole excise duty paid under said Notification. When the Notification came in 2002; there was no levy of Education Cess and SHE Cess. But when the Cess was levied; there was omission by the Finance Ministry that it did not amend the Notification to provide for refund of cess leviable under the Finance Act, 2004 and Finance Act,2007. It is high time the Finance Ministry should amend the Notification with retrospective effect to make provision of refund of Education Cess and Secondary and Higher Education Cess. When Refund of duty is being granted why a manufacturer should not be granted refund of cess which is merely 3 per cent of duty. It is also against the promise made under the Industrial Policy that no tax or duty will be charged when one sets up unit in Jammu & Kashmir and Promissory Estoppel applies.

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