DTA Clearances from EOUs - Third Time Cess - SC Dismisses Revenue Appeal
- 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 fact 10 months after the tribunal order, Board issued a clarification that education cess had to be paid a third time. (Please see - 06.04.2011). Utter contempt for CESTAT Orders!
While this confusion was in full swing, the Delhi Bench of the CESTAT did not agree with the decision in Sarla Performance and referred the issue to the Larger Bench - 2011-TIOL-1180-CESTAT-DEL
Revenue also appealed against the Sarla case in the High Court. The Gujarat High Court dismissed the Revenue appeal 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.
Revenue was perseverant, as they always are, in matters of perpetual litigation - and took the matter to the Supreme Court. The Supreme Court on Friday dismissed the Revenue appeal on the ground of delay.
Any chance of litigation ending with the matter still pending in the Larger Bench, from where it can still go to the Supreme Court? Does the Revenue Board work only to fill the pockets of the lawyers?
DDT raised this issue in 07 02 2005 eight years ago and the matter stands today exactly where we started!
This is a very simple issue which the Board can easily solve, but they wouldn't.
Also see the following well researched articles published by TIOL on this contentious issue:
Education cess payable by EoUs on DTA sale : Will this Budget clarify?
Setback for EOUs: CESTAT rules Education Cess is payable on DTA clearances in addition to duties computed under relevant Notifications
And
1. 15 03 2010
2. 07 05 2010
3. 06 04 2011
4. 12 09 2011
5. 11 05 2012