Third time Cess fiasco - 100% EOU clearances to DTA
MUCH has been written in these columns about the triple Cess and the so-called burial to the issue by the Tribunal Larger Bench decision in Kumar Arch Tech Pvt. Ltd. - 2013-TIOL-614-CESTAT-DEL-LB. See , 2086, 2047, 1885, 1690, 1584, 1354 & 1318.
At last the Government has felt a need to put the issue to rest in this budget.
So, Notification No. dated 11.7.2014 makes an appearance and amends Notification No. 23/2003-CE, dated the 31st March, 2003so as to avoid double levy of cess on DTA clearances of 100% EOUs.
The clarification given in the D.O. F.No. 334/15/2014-TRU letter dated 10.7.2014 in Annexure II under the head ‘Miscellaneous' at serial number 8 says:
"Education cess and secondary & higher education cess (customs component) is being exempted on goods cleared by an EOU into the DTA.
However, this appears to have inadvertently created some more fresh confusion of the issue. Let us examine the cess payable by EOUs on DTA clearances during different periods:
Before 2012 | After exemption Of cess on CVD (Ntfn-14-Cus dt.17.03.12) | With present amendment | ||
Value of goods | 100 | 100 | 100 | |
Customs duty (10% - reduced by 50% as per Sl No 2 of the Notn 23/2003 CE ) | 5 | 5 | 5 | |
Value for CVD | 105 | 105 | 105 | |
CVD (say 10%) | 10.50 | 10.50 | 10.50 | |
Both Cess on CVD (3%) | 0.32 | 0 | 0 | First cess |
Total customs duty | 15.82 | 15.50 | 15.50 | |
Cess on Customs duty | 0.48 | 0.46 | 0 | Second Cess - this is the Cess on customs component which is now exempted by Notification No. 18/2014-CE. |
CE duty under Section 3 Of CE Act | 16.30 | 15.96 | 15.50 | |
Cess (3%) on CE duty | 0.49 | 0.48 | 0.465 | Third cess - This cess is held to be not leviable by the Larger Bench |
Total duty payable | 16.79 | 16.44 | 15.50 or 15.965? |
Finally, is it a case where an EOU is not required to pay any Cess? (Except in the cases of exceptions mentioned in Notifications No 18 & 19 Cus dated 11.07.2014 for which there is no exemption from cess on CVD component).
Will the case again go the Larger Bench/High Court and Supreme Court?