When goods are fully exempted from Customs duty or are cleared without payment of Customs duty,Education cess under the Customs would not be levied.Commissioner of Customs, Tuticorin Vs. DCW Limited [2014 (12) TMI 728 – Madras High Court]
DCW Limited(“the Assessee”)was covered by One of the Notification granting exemption of Basic Customs Duty subject to debit of the DEPB Licence.
Later on, the Hon’ble Tribunal relying on the decision in case of Commissioner of Customs, Mumbai Vs. Reliance Industries Limited [2005 (188) E.L.T. 449], upheld the contention of the Assessee that education Cess was not to be levied on the exempted items. Hence, the levy of Education Cess as per the Finance Act, 2004 does not arise. Being aggrieved by the order of the Hon’ble Tribunal, the Department preferred an appeal before the Hon’ble High Court of Madras.
The Hon’ble High Court of Madras relying on clarification made by the Ministry of Finance in held that since Education Cess has to be calculated at the percentage on the excise duty , when the goods are fully exempted from Customs duty or are chargeable to Nil duty or are cleared without payment of duty such as clearance under security/surety bond, the education Cess to be levied does not arise.