S S Patta/Patti or Aluminium Circles Units under Compound Levy Scheme liable to pay ECess and SHE Cess
BOARD received references from field formations on the issue of levy of education cess and secondary & higher education cess on the central excise duty determined under Notification No. 17/2007-CE dated 1-3-2007 under compound levy scheme on S.S. Patta/Patti and Aluminium Circles.
It has been reported that the manufacturers of these items have stopped paying education cess and secondary & higher education cess on the ground that the amount determined under the compound levy scheme is inclusive of education cess and secondary & higher education cess as is mentioned in the compound levy scheme in respect of pan masala/gutkha.
After examining the issue, Board clarified that education cess and higher education cess would be required to be paid on S.S. Patta Patti and Aluminium Circles, covered by the compound levy over and above the notified central excise duty as the same has not specifically been included in the compound levy amount specified in the relevant notification.
Moreover, there is no exemption provided for the same. The comparison with compound levy scheme in respect of pan masala/gutkha etc is erroneous as the two schemes are covered under different notifications. Whereas the notification No. 42/2008-CE dated 1.7.2008 in respect of pan masala/gutkha specifically includes the education cess and secondary & higher education cess in the amount fixed under compound levy scheme, there is no such stipulation in the scheme in respect of Stainless Steel Patta/Patti and Aluminium Circles in the Notification No. 17/2007-CE dated 1-3-2007.
When Notification No 42/2008 CE is very clearly worded to say that the duty payable is inclusive of the E.Cess and SHE Cess, why there is no such clarity in Notification 17/2007 CE? And for issuing such an ambiguous notification, the Board now says the comparison with Notification No 42/2008 CE is wrong. If these manufacturers have not paid the cesses and assuming that no show cause notices are issued for recovery of the amounts till date, then how are they going to recover the cesses short paid for the past three years? Will they invoke extended period for demand of cesses not paid? Instead, the Board should think of amending the notification to specify that the duty is not inclusive of the cesses and exempt for the past period by issuing notification in terms of section 93(3) of FA 2004 and section 138(3) read with section 11C of the CEA 1994.
Circular No. , Dated: May 10, 2010