No Education Cess on amount paid under Rule 6 of CCR, 2004
AS per Rule 6(3)(1),
If a manufacturer or Service Provider taking credit of inputs or input services and manufactures both dutiable and exempted goods/ provides taxable and exempted services, he is required to maintain separate accounts and if he doesn't, one of the options is to pay an amount of 5% of the value of exempted goods/6% of the value of the exempted services.
Now when he pays this 5% or 6%, is he required to pay Education Cess on this amounts?
This was a question that the Chief Commissioner of Central Excise, Delhi asked the Board. The CBEC has been kind to clarify that “the amount paid under Rule 6 of the CENVAT Credit Rules, is not excise duty; therefore the education cess is not payable thereon”.
Unfortunately, such important clarifications are not made public by the Board and it has been a difficult job for us in TIOL to fish out such private communications of huge public interest. Why can't they take a decision that all clarifications WILL be always in the Public Domain. Why do you hide information from the Public in whose interests you give that and circulate it only among your officers who have only scant respect for your authority and views?
In this clarification, itself, we can be sure some bright field officer will come up with a brilliant idea that these instructions are not applicable to Service Tax as the Board clarification was only in respect of Central Excise!
CBEC Letter in F. No. 267108/2009 – CX 8 Dated: August 25, 2009