DTA Clearances from EOUs - Third Time Cess - High Court Dismisses Revenue Appeals
- 15.03.2010 observed, "FOR setting up an EOU in India, you need two things. One is LOP from the Development Commissioner and the other is a Master's in Mathematics from a reputed University. The former is required for carrying the operations as EOU and the latter for computing the duties payable on DTA clearances and the CENVAT Credit against such clearances"
In the Sarla Polyesters case 2008-TIOL-985-CESTAT-AHM, the CESTAT held that the third time cess is payable.
The High Court () set aside the CESTAT order and remanded the matter to the Tribunal.
On remand, as per the directions of the Bombay High Court, Tribunal served notice to the general public so that all the parties who are interested may also apply as interveners. After hearing the appellants, the interveners and the departmental representative, the CESTAT held, "What is required for the purpose of proviso to Section 3 of Central Excise Act, 1944 is to arrive at aggregate of customs duties and once we take a view that education cess is part of the customs duty and is an enhancement, the question of adding it again does not arise". (Sarla Performance Fibres Ltd v CCE, Vapi - 2010-TIOL-408-CESTAT-AHM)
In spite of this, Show Cause Notices and Adjudication Orders are being issued in almost all Commissionerates.
In the RAC meeting held on 16.09.2011, the Commissioner of Central Excise, Noida clarified, "As regard to issue of Show Cause Notice to EOU for the recovery of Education Cess and Secondary Higher Education Cess for third time, it is intimated that CESTAT order in case of M/s Sarla Performance Fibre Ltd has not been accepted by the department and an appeal against aforesaid order has been filed by the department". This is what many of the Adjudicating and Appellate Authorities are writing in their orders without even mentioning the Appeal Number and the Court where it is appealed.
The Gujarat High Court has dismissed the appeals filed against the CESTAT Order. The High Court dismissed the Department's appeals on the ground that the appeals were not maintainable before the High Court as it was a question of rate of duty and the appeal had to be made to the Supreme Court.
Let us hope the Department accepts the High Court order without going to the Supreme Court.