CESTAT confirms denial of Cenvat Credit on Secondary and Higher Education Cess under Invoice issued by EOU [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Ahmedabad Bench confirmed denial of Cenvat Credit on Secondary and Higher Education Cess under invoice issued by EOU. The appellant in the present matter is Huber Group India Pvt Ltd.

The appeal is directed against the order passed by the Commissioner, Central GST and Central Excise whereby the Commissioner denied the Cenvat Credit in respect of Education Cess and Secondary & Higher Education Cess under the invoice issued by the 100% EOU.

The Counsel for the appellant, S. Suriyanarayanan submitted that the appellant had already reversed the Cenvat Credit of Education Cess prior to show cause notice, thereafter, the same was also excluded while calculating the demand of Cenvat credit.

Hence, the Education Cess and Secondary and Higher Education Cess was not the subject matter of the show cause notice, accordingly, the impugned order denying the Cenvat credit on Education Cess and Secondary and Higher Education Cess is beyond the scope of show cause notice, hence, the same is not sustainable.

The Counsel further submitted that there is substantial unutilized balance of Cenvat credit in respect of Education Cess in the Cenvat account of the appellant at the time of switching over to GST regime , hence, the credit balance was lapsed, for this reason also demand is not sustainable.

G. Kirupanandan, Superintendent (Authorized Representative) appearing on behalf of the Revenue reiterated the finding of the impugned order and submitted that there is no dispute that the appellant at the relevant time was not eligible for Cenvat Credit on Education Cess and Secondary and Higher Education Cess on the invoices issued by the 100% EOU.

The Bench comprising Ramesh Nair, Judicial Member observed that “In the show cause notice, it can be seen that the demand of Cenvat Credit is not only in respect of basic Excise duty but also of Education Cess and Secondary & Higher Education Cess. Therefore, in this fact it cannot be said that the order denying the Cenvat credit on Education Cess and Secondary & Higher Education Cess is travelling beyond the scope of show cause notice. Hence, the demand was rightly made by the adjudicating authority.”

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