Circular No. 17 dated 19^th April 1999

The issue as to whether Cess is leviable on imported sugar came to be examined in the Board in the context of references received from some Commissioners of Customs as also some trade interests.

2.      It is seen that the Additional Customs duty on the import of sugar is exempt by virtue of Notification No. 11/ 97-Cus. The Additional Customs duty is equivalent to total amount of Central Excise duty, which includes Cess leviable under the Cess Act. As the Additional Customs Duty stands exempted, one opinion is that the amount of cess required to be collected, as additional duty should also stand exempt. The other opinion is that an exemption notification issued under the Central Excise Act does not ipso facto become a notification for collection of Cess but it needs a separate exemption from the Cess also. After considering both the opinions the Boards has taken the view that though an exemption from Central Excise duty does not ipso facto grant an exemption from Cess, in the case of imported sugar, the exemption being accorded is from Additional Customs duty and not from Central Excise duty. An exemption from the Additional Customs duties are required to be collected under Section 3 of the Customs Tariff Act and once exemption is issued under the said Section it would have the effect of exempting the goods both from Central Excise duty as well as Cess. Thus, no separate exemption from Cess need be issued under the Sugar Cess Act.

3.      I am directed to convey the above view of the Board and to request you to finalise all pending cases in accordance therewith.