Unutilised Credit of CESS
Q 1 What will be the fate of credit of Education Cess and Secondary and Higher Education Cess lying unutilized after it being subsumed in basic excise duty ?
Firstly , it will not lapse since no lapsing provision is existing as on date for the same.
Secondly , I strongly feel that a specific provision shall be made for its utilization towards the payment of basic excise duty since the Finance Minister has categorically stated in his budget speech for Finance Bill 2015 that
118. As part of the movement towards GST, I propose to subsume the Education Cess and the Secondary and Higher Education Cess in Central Excise duty. In effect, the general rate of Central Excise Duty of 12.36% including the cesses is being rounded off to 12.5%.”
Further in annexure to his budget speech it is mentioned as below
Education Cess and Secondary & Higher Education Cess leviable on excisable goods are being subsumed in Basic Excise duty. Consequently, Education Cess and Secondary & Higher Education Cess leviable on excisable goods are being fully exempted. The standard ad valorem rate of Basic Excise Duty is being increased from 12% to 12.5%….
If he has stated that it is subsumed or diluted in excise duty then its nature will be also considered as basic excise duty only . It must be understood that when something is subsumed then it has to be effectively meant in every possible manner and not for saying only . Therefore , I feel it will be allowed by way of specific rule for its utilization towards basic excise duty .
Before departing on this issue , I must remind that Section 91 under Finance Act 2004 under has the following clause
(3) The provisions of the Central Excise Act, 1944 (1 of 1944) and the rules made thereunder, including those relating to refunds and exemption from duties and imposition of penalty shall, as far as may be, apply in relation to the levy and collection of the Education Cess on excisable goods as they apply in relation to the levy and collection of the duties of excise on such goods under the Central Excise Act, 1944 or the rules, as the case may be.”
At the same , I must also caution that this clause has been interpreted in different manner when it was before the Honourable Tribunals for deciding upon the exemption and refund for area based industries .
Q2 During the period from 01.09.2014 to 28.02.2015, there was limitation to avail cenvat credit within 6 months from the date of invoice or specified documents .
However, in budget 2015-2016, such period has been extended to 1 year , whether one can avail now those credits which could not have been availed due to time factor ?
Yes , it can be availed now provided at any given point of time ,it fall under the ambit of stipulated criteria that the date of availment of cenvat credit is within 1 year from the date of invoice or specified documents vide Notification No.6/2015 C.E- NT Dt. 01.03.2015.
There is no restrictive rules that what was not availed due to 6 months restriction could not be availed in subsequently extended time period for availment of cenvat credit via Budget 2015-2016 .
The legislation realized the hardship faced by the industry and hence it has been extended to 1 year from 6 months .I must emphasise that it is settled law that the legislative restrictions should be in expressed and categorical words .
Q 3 Whether the proposed Section 11AC of CEA,1944 shall applicable to old cases or new cases in prospective manner?
It shall be applicable to old as well as New cases as below :
For simplicity , I take the following 3 situations :
Situation 1 – where no show cause notice has been issued before the the date of assent of president to the Finance Bill,2015 , the provisions of to be enacted new Section 11AC of the Finance Act,2015 shall be applicable .
Situation 2 – where show cause notice has been issued before the the date of assent of president to the Finance Bill,2015
order is not issued before the assent of the president to the Finance Bill 2015 , then provisions of to be enacted new Section 11AC of the Finance Act,2015 shall be applicable .
such person pays the interest, duty and penalty in terms clause d) of proposed Section 11AC within 30 days from the date on which the Finance Bill ,2015 receives the assent of the President .
Situation 3 – where order is passed after the assent of the president to the Finance Bill 2015 , then provisions of to be enacted new Section 11AC of the Finance Act,2015 shall be applicable .
Hope, it clarify the aforesaid querries . I will take up further querries in next part of Budget 2015-Querries & Answers .You may send your respective querries and feedback at firstname.lastname@example.org .
Anand Mishra, Founder Advocate, AMLEGALS
( The author is a leading indirect tax advocate handling cases in CESTAT & High Courts of India. )