Clean Energy Cess on imported goods - Clean Air....
IN DDT 1395 dated 06.07.2010, on the issue of levy of clean energy cess on imported coal, lignite and peat, it was reported that by virtue of Section 3 of the Customs Tariff Act, 1975, additional duty of customs in lieu of a duty of excise (CVD in common parlance) shall be levied on import of a like article manufactured or produced in India. Further, this aspect of levy of CVD on imports of the said specified goods was also clarified vide paragraph 6 of TRU letter D.O.F. No. 334/1/2010-TRU dated February 27, 2010. CVD on import of the said specified goods would be equivalent to the effective rate of 'clean energy cess' i.e. Rs. 50 per tonne.
An importer called DDT and wanted to know whether the importers are liable to pay “customs education cess” on this levy of Rs 50/- per MT.
The clean energy cess is collected on imported goods by virtue of the provisions of Section 3 of the Customs Tariff Act, 1975 at the effective rate of Rs 50/- per MT. Though the “excise education cess” component on this Rs 50/- is exempted by Notification Nos 28 and 29 CE dated 22.6.2010, the customs education cess will be applicable on this amount. This can be illustrated by the following example:
Let one MT of coal at a value of Rs 20,000/- be imported. Let the basic customs duty rate be 5%.
Now, the BCD payable is Rs 1,000/-
Additional duty equal to clean energy cess = Rs 50/- ( education cesses are exempted under Notifications 28 and 29 CE dated 22.6.2010)
Total customs duty = Rs 1050/-
Education Cess on total customs duty = 3% on Rs 1050.
However, it appears some of the importers are insisting that no education cess is payable on the clean energy cess and hence the customs education cess should be computed only on Rs 1000/- but not Rs 1050/- as it would amount to levy of education cess on clean energy cess which is against the spirit of the clarification issued by the Board vide F.No.354/72/2010-TRU dated 24th June, 2010.
It seems the Customs EDI System is showing 3% on the Rs.50/- as the central excise exemption notifications could not be fed into EDI by Directorate of Systems.Meanwhile most of the customs houses resorted to collection of Clean Energy Cess manually @ Rs.50 pmt. It seems some Custom Houses are not collecting this 3% on Rs.50/- while some others feel that in the absence of a specific exemption from levy from Customs side, it is to be levied.
Though the collection of customs education cess on clean energy cess is legally correct, it defeats the purpose of keeping this clean energy cess out of levy of education cess. Therefore, to provide a level playing field to the importers, Board should consider issuing exemption notifications providing exemption to Customs Education Cesses on this levy instead of clarifying that there is no flaw in collection of customs education cess on clean energy cess, with the usual pro-revenue attitude.