Cess on sugar manufactured out of cess paid raw material – CBEC Clarifies

By Vijay Kumar

References have been received from some field formations that some manufacturers purchase sugar, on which central excise duty and sugar cess is paid by sugar manufacturers. Such manufacturers use the duty paid sugar to manufacture products like Pharmaceutical grade sugar and Bura sugar. All the products, namely sugar, pharmaceutical sugar and Bura sugar fall under the same tariff classification. The manufacturers have represented that both the raw material and final product fall under the same tariff heading, and as cess has been paid on raw material viz., sugar, they are not required to pay sugar cess on products as it amounts to double taxation.

Board Clarifies:-

The Ministry of Public Distribution and Consumer Affairs has now exempted the levy of cess on sugar, collected as a duty of excise, under subsection (1) of the Section 3 of Sugar Cess Act, 1982, on any sugar “manufactured from such other sugar” on which cess, leviable under sub section (1) of Section 3 of the said Act has been paid already . - Notification S.O.102 (E) published in Gazette of India on 7th January, 2009

This Notification has no retrospective effect.

CBEC Circular No. 883/3/2009- CX - Dated: February 26, 2009