CE - 100% EOU - DTA Clearances - Third Time CESS - Supreme Court Dismisses Revenue SLP on ground of delay
THIS is much fought out battle.
DDT raised this issue in 07.02.2005.
- 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)
Ten months after the tribunal order, Board issued a clarification that education cess had to be paid a third time. (Please see - 06.04.2011).
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 tax and the appeal had to be made to the Supreme Court.
So, the Revenue took the matter to the Supreme Court but the appeal was dismissed on the ground of delay. [See ]
The Larger Bench delivered its order on 22.02.2013 in Kumar Arch Tech Pvt Ltd Vs Commissioner of Central Excise - , holding, "The intention of the legislature was never to charge education cess on education cess."
The Gujarat High Court passed strictures against the department and quashed the Show Cause Notice in Claris Lifesciences Ltd vs UOI, reported in 2013-TIOL-802-HC-AHM-CX. The High Court observed, Despite clear and specific directions and authoritative pronouncements, act of issuance of show cause notice by the Deputy Commissioner is wholly impermissible and unpalatable and deserves to be quashed and struck down with a specific note of strong disapproval.
Against this judgement of the High Court, the Department filed an SLP in the Supreme Court. The Apex Court yesterday dismissed the petition on the sole ground of delay. . Department can still say the matter is not decided on merits.
What is the present position? Please see Third time Cess fiasco in 22.07.2014.
For more on this, please see:
, , 2086, 2047, 1885, 1690, 1584, 1354 & 1318.