CENVAT Credit of Sugar Cess - Entitled - Rules High Court
THE Karnataka High Court in a recent landmark judgement held that the assessee was entitled to claim CENVAT credit in respect of the cess paid as additional duty (CVD) on raw sugar imported under the Sugar Cess Act of 1982 read with Section 3 of the Customs Tariff Act, 1975.
The High Court held that Sugar Cess is a tax and to be precise it is DUTY OF EXCISE and not a fee. The High Court examined the provisions of the Constitution and observed, "The cess collected under the Act invariably goes to the Consolidated Fund, which ultimately is utilized for all public purposes. Therefore, there is no quid pro quo between the cess levied and collected and the services rendered for such payment. On the contrary, the proceeds are credited to the Consolidated Fund of India, which is meant to be utilized for all public purposes, may be including the purpose contemplated under the Sugar Development Fund Act, 1982. In the light of the aforesaid statutory provisions, the cess imposed under the Act is a duty of excise or a tax."
The High Court observed that once it is established that what is paid is excise duty or in other words, a tax, then under Rule 3, the assessee is entitled to the CENVAT Credit.
This judgement has far reaching consequences and CENVAT Credit may have to be allowed even on the cess paid on indigenous sugar.
Though this Order is dated 6th August 2013, it was made available only last week and we bring you this judgement today.
Please see Breaking News. Today's Breaking News also has a very important Service Tax order pertaining to taxability of water supply projects.