Recovery Provisions Of Central Excise Act Are Not Applicable To Service Tax: Chandigarh CESTAT

The Chandigarh Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that recovery provisions of the Central Excise Act are not applicable to service tax.

The bench of S. S. Garg (Judicial Member), while upholding the rejection of the refund on account of education cess and Secondary & Higher (S&H) education cess, held that the refund cannot be appropriated when there is no confirmed demand at the time of adjudication.

The appellant/assessee is in the business of manufacturing P&P medicines and scrap, falling under Tariff Item Nos. 30049099, 30039090, and 39203090.

The appellant filed a refund claim for the Cenvat duty. The adjudicating authority partly allowed the refund but partly rejected the refund claim on account of education cess and secondary and higher education cess paid through Cenvat Credit and also appropriated an amount from the sanctioned refund amount.

The assessee filed an appeal before the Commissioner (Appeals), who has upheld the Order-in-Original and rejected the appeal of the assessee.

The assessee contended that the appellant filed a refund claim on account of duty paid in the personal ledger account as a balance of total duty payable in the month of February 2011 after the utilization of the Cenvat Credit Balance. As per Notification No. 56/2002-CE, the amount paid in cash shall be eligible for refund.

The department contended that the rejection of the refund claim on account of education cess and S&H education cess paid through the Cenvat Credit account of BED for the month of February 2011 is justified. The department relied on the tribunal's decision in the case of Commissioner of C.E., Jammu vs. R.B. Jodhamal & Co. Pvt. Ltd. The tribunal held that a unit availing of exemption under Notification No. 56/2002-CE cannot utilize BED credit for payment of education cess and secondary and higher education cess, which are not exempted.

The tribunal relied on the decision of the Supreme Court in the case of M/s Unicorn Industries vs. Union of India. The Apex Court, after considering the provisions of Notification No. 71/2003-CE dated September 9, 2003, has held that a notification has to be issued for providing exemption under the source of power, and in the absence of a notification containing an exemption to additional duties in the nature of education cess and secondary and higher education cess, they cannot be said to have been exempted.

The tribunal upheld the rejection of refunds on account of education cess and S&H education cess and quashed the appropriation of an amount from the sanctioned refund amount.

Counsel For Appellant: Kiran Sawale

Counsel For Respondent: Aneesh Dewan

Case Title: Sun Pharmaceuticals Industries Versus Commissioner

Case No.: Excise Appeal No. 1238 of 2012

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