In Brief
Manufacturers of goods in North-Eastern industrial zones were granted 100% excise duty exemption under a 2007 notification. However, the authorities collected Education Cess (a 2% surcharge) along with the excise duty, but refused to refund it when the excise duty was refunded. The Supreme Court held that Education Cess is a surcharge calculated on excise duty; where excise duty is fully exempted, Education Cess also cannot be levied or collected. The Court approved the Department's own circulars confirming this principle and allowed the manufacturers' refund claims for both Education Cess and Higher Education Cess paid.
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