M/S. Star Paper And Board Mill vs. Union Of INDIA And 6 Ors.

Held

The Court held that the education cess and higher education cess levied under the Finance (No.2) Act of 2004 partake the character of excise duty itself. This finding is based on the Supreme Court's judgment in M/s SRD Nutrients Private Limited –vs- Commissioner of Central Excise, Guwahati. Consequently, the petitioner is entitled to a refund of the education cess and higher education cess paid, as the excise duty on their goods was exempted under the North East Industrial Policy. The Court noted the consensus reached between the parties on this issue. The operative direction issued is for the respondents (Department of Excise/Goods and Services Tax) to make an appropriate calculation and refund the education cess and higher education cess paid by the petitioner for the period from May, 2006 to June, 2014. This process is to be completed within five months from the receipt of a certified copy of the order. No issue was expressly left undecided.

Facts

The petitioner, M/s. Star Paper and Board Mill, a partnership firm in Assam, sought a refund of education cess and higher education cess paid on excisable goods. The firm was entitled to excise duty exemptions under the North East Industrial Policy. While the excise duty was refunded, a question arose whether the education cess and higher education cess, levied under the Finance (No.2) Act of 2004, were also refundable as part of the excise duty. The petitioner relied on a Supreme Court judgment in M/s SRD Nutrients Private Limited –vs- Commissioner of Central Excise, Guwahati, which held that these cesses partake the character of excise duty and are refundable when excise duty is exempted. The disputed period for the refund claim is May, 2006 to June, 2014.

Key Issues

1. Whether the education cess and higher education cess levied under the Finance (No.2) Act of 2004 are part of the excise duty, and thus refundable under the North East Industrial Policy of 2007 when excise duty itself is exempted? The petitioner argued that the Supreme Court in M/s SRD Nutrients Private Limited –vs- Commissioner of Central Excise, Guwahati, had definitively held that education cess and higher education cess are part of excise duty and therefore entitled to refund when excise duty is exempted. They also referred to a Meghalaya High Court order where a similar refund was directed. The petitioner sought a direction for the refund of these cesses for the period May, 2006 to June, 2014. The respondents, representing the Union of India and excise authorities, submitted that they are bound by the pronouncement of the Hon’ble Supreme Court in M/s SRD Nutrients Private Limited –vs- Commissioner of Central Excise, Guwahati, and are thus obligated to refund the education cess and higher education cess paid by the petitioner.