Cenvat Credit on Education Cess

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AK Parthasarathy (Querist)
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25 June 2010 Whether cenvat credit on Education cess and higher education cess is allowable on inputs when they are purchased from 100% EOU. Any CESTAT DECISION available if decided. Your Expert Comments please.

Manmohan ACA, CS

Manmohan ACA, CS (Expert)
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25 June 2010 Rule 3(7)of CENVAT credit
Notwithstanding anything contained in sub-rule (1) and sub-rule (4),-

(a) CENVAT credit in respect of inputs or capital goods produced or manufactured, by a hundred per cent. export-oriented undertaking or by a unit in an Electronic Hardware Technology Park or in a Software Technology Park other than a unit which pays excise duty levied under section 3 of the Excise Act used in the manufacture of the final products or in providing an output service, in any other place in India, in case the unit pays excise duty under section 3 of the Excise Act read with serial number 2 of the notification No. 23/2003-Central Excise, shall be admissible equivalent to the amount calculated in the following manner, namely:-

Fifty per cent. of [X multiplied by {(1+BCD/400) multiplied by (CVD/100)}], where BCD and CVD denote ad valorem rates, in per cent., of basic customs duty and additional duty of customs leviable on the inputs or the capital goods respectively and X denotes the assessable value.

Provided that the CENVAT credit in respect of inputs and capital goods cleared on or after 1st March, 2006 but before 7/9/09 from an export oriented undertaking or by a unit in Electronic Hardware Technology Park or in a Software Technology Park, as the case may be, on which such unit pays excise duty under section 3 of the Excise Act shall be equal to X multiplied by {(1+BCD/200) multiplied by (CVD/100)}.

AK Parthasarathy

AK Parthasarathy (Querist)
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25 June 2010 My question is when EOU pays basic customs duty at 50% of 5% whether [1+BCD/400] X [cvd/100]apply or not.The department belatedly amended the notification as a result lot of show cause notice all over the country has been issued.

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