Clean energy cess on shale rejects upheld, while penalty was deleted for absence of mala fide conduct.

Clean energy cess was held leviable on shale rejects generated during coal extraction because the statutory definition of specified goods covered raw coal and the rejects were treated as part of the extracted coal stream; the demand was therefore sustained. Penalty was not justified because the issue had arisen for the first time before the Tribunal, no supporting case law was produced by either side, and no mala fide intention was found. The assessee thus received partial relief, with the cess demand upheld but the penalty deleted.

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Issues: (i) Whether clean energy cess was leviable on shale rejects generated during coal extraction; (ii) whether penalty was exigible.

Issue (i): Whether clean energy cess was leviable on shale rejects generated during coal extraction.

Analysis: The applicable definition of specified goods covered raw coal, and shale rejects were treated as part of the raw coal extracted from the mine. On that basis, the cess was considered payable on the raw coal stream from extraction, and the contention that shale rejects were outside the levy was not accepted.

Conclusion: Clean energy cess was leviable on the shale rejects and the related demand was sustained against the assessee.

Issue (ii): Whether penalty was exigible.

Analysis: The issue was considered to have arisen for the first time before the Tribunal, there was no supporting case law produced by either side, and no mala fide intention was found on the part of the assessee. In these circumstances, penalty was held to be unwarranted.

Conclusion: Penalty was set aside in favour of the assessee.

Final Conclusion: The demand of clean energy cess was upheld, but the penalty was deleted, resulting in partial relief to the assessee.

Ratio Decidendi: Where the statutory definition of specified goods encompasses raw coal, cess remains chargeable on extracted shale rejects treated as part of the raw coal, but penalty is not justified in the absence of mala fide conduct and where the issue is debatable.

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