Carbon Resources PVT. LTD. vs. Union Of INDIA And 5 Ors.

Held

The Court held that in view of the consensus reached between the parties, and following the pronouncement of the Hon’ble Supreme Court in M/s SRD Nutrients Private Limited –vs- Commissioner of Central Excise, Guwahati, the respondents are bound to refund the education cess and the higher education cess paid by the petitioner. The Supreme Court had concluded that education cess and higher education cess levied at 2% of the excise duty partake of the character of excise duty itself. Therefore, the petitioner was entitled to a refund of these cesses paid along with the excise duty, which was exempted under the NEIIPP, 2007. The Court directed the respondents to make an appropriate calculation and refund the education cess and higher education cess paid by the petitioner from March 2013 to March 2015 within five months of receiving a certified copy of the order. No issue was expressly left undecided.

Facts

The petitioner, Carbon Resources Pvt. Ltd., an industrial unit in Assam, claimed benefits under the North East Industrial and Investment Promotion Policy (NEIIPP), 2007, which provided for excise duty exemptions. The petitioner had paid excise duty, education cess, and higher education cess. While excise duty was refunded as per the policy, a question arose whether the education cess and higher education cess were also refundable as part of excise duty. The petitioner sought a refund of these cesses for the period March 2013 to March 2015, relying on a Supreme Court judgment in M/s SRD Nutrients Private Limited vs. Commissioner of Central Excise, Guwahati. The respondents, including the Ministry of Finance and GST authorities, agreed to the refund.

Key Issues

1. Whether education cess and higher education cess are part of excise duty for the purpose of refund under the North East Industrial and Investment Promotion Policy, 2007, as interpreted by the Supreme Court in M/s SRD Nutrients Private Limited –vs- Commissioner of Central Excise, Guwahati? Petitioner's Argument: The petitioner argued that the Supreme Court in M/s SRD Nutrients had held that education cess and higher education cess partake of the character of excise duty itself and are thus refundable when excise duty is exempted. They sought a direction for refund of these cesses for the period March 2013 to March 2015, citing the Supreme Court's judgment and a Meghalaya High Court order. Revenue's Argument: The learned ASGI, appearing for the respondents, submitted that following the pronouncement of the Hon’ble Supreme Court in M/s SRD Nutrients Private Limited, the authorities are bound to refund the education cess and the higher education cess paid by the petitioner for the specified period.