Sca No. 19799 of 2006 · Gujarat High Court

CORAM : HONOURABLE MR.JUSTICE M.S.SHAH HONOURABLE MR.JUSTICE RAVI R.TRIPATHI Date : 03/04/2008 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE M.S.SHAH) Rule. Mr.Harin P. Raval, learned Assistant Solicitor General waives service of rule. In the facts and circumstances of the case, the petition is taken up for final disposal. SCA/19799/2006 JUDGMENT

In this petition under Article 226 of the Constitution, the petitioner has challenged denial of refund of education cess under the provisions of the Notification under clause 40 of 2001-CE dated

26.06.2001 issued under Rule 18 of the Central Excise Rules, 2002, even though refund of CENVAT credit on the export consignments has already been granted to the petitioner. It is submitted that education cess is levied in the nature of surcharge on excise duty. Therefore, when the petitioner is compelled to pay excise duty with education cess and ultimately, it is held that the petitioner is entitled to refund of excise duty as a necessary and logical corollary, the petitioner must also be held to be entitled to refund of education cess. Our attention is invited to the decision of a Division Bench of the Rajasthan High Court in Banswara Syntex Ltd. Vs. Union of India, 2007 (216) E.L.T. 16 (Raj.)

There is no dispute about the fact that by Notification No.19 of 2004 dated 06.09.2004, rebate on education cess is allowed in terms of Rule 18 of Central Excise Rules, 2002; by providing that the expression, 'duty' also includes education cess on excisable goods as levied under clause 81 read with clause 83 of the Finance Bill 2/ 2004. The dispute, therefore, is only for the period prior to

06.09.2004. After considering all the relevant statutory provisions and the notifications, a Division Bench of the Rajasthan High Court has held that even for the period prior to 06.09.2004, the definition of 'duty' would include education cess on excisable goods and that SCA/19799/2006 JUDGMENT therefore, an assessee, who is entitled to refund of excise duty would also be entitled to refund of education cess paid in the nature of surcharge on excise duty.

The other objection raised on behalf of the respondents is that the petitioner had not paid excess duty in cash, but had paid duty from his CENVAT Credit Account and therefore, while the amount of excess duty paid from CENVAT Credit Account may have been refunded, the petitioner is not entitled to refund of the education cess as such, to which Mr.Dave, learned advocate for the petitioner submitted that just as excise duty amount was paid from CENVAT Credit Account, so also education cess was also paid from the same CENVAT Credit Account. Therefore, when the petitioner is found entitled to get refund of the excess duty amount, there is no reason to deny refund of the education cess. Mr.Dave also relied on the decision of the Tribunal in Sun Pharmaceutical Industries, 2006 (77) Revenue Law Times 824 (Tri. Delhi).

We find in the provisions of section 2A of the Central Excise Act, 1944 that:- “In this Act, save as otherwise expressly provided and unless the context otherwise requires, references to the expressions “duty”, “duties”, “duty of excise” and “duties of excise” shall be construed to include a reference to “Central Value Added Tax (CENVAT)” SCA/19799/2006 JUDGMENT Having regard to the above statutory provisions and also having regard to the fact that the petitioner had paid excise duty as well as education cess thereon from out of the petitioner's CENVAT Account, when the petitioner is found entitled to refund of excise duty and the actual refund of the excise duty amount is also given to the petitioner, agreeing with the decision of the Rajasthan High Court in Banswara Syntex Ltd., reported in 2007 (216) ELT 16 (Raj.), we see no reason why the amount on education cess paid from out of the CENVAT Credit Account should not be refunded to the petitioner and credited in the same account. The stand of the Department that education cess was required to be paid only from PLA Account and not from the CENVAT Credit Account, is not required to be examined in the facts of the present case, because the refund of education cess is being directed to be made to the same account from which the education cess was paid by the petitioner.

We accordingly allow this petition. Respondent no.2- Assistant Commissioner of Central Excise, Makarpura Division, Vadodara-II is directed to sanction rebate of education cess of Rs.7,225/- collected from the petitioner in relation to the goods on which excise duty has already been refunded to the petitioner, within one month from the date of receipt of this judgement, by crediting the refund in the same account from which the education cess was paid by the petitioner. SCA/19799/2006 JUDGMENT

Rule is made absolute in the aforesaid terms with no order as to costs. Direct service is permitted. (M.S. SHAH, J.)

(RAVI R. TRIPATHI, J.)