Clean energy cess was treated as a fee, so Cenvat credit under Rule 3 was not available.

Clean energy cess on coal was treated as a levy in the nature of a fee, not excise duty or tax, because it was imposed for a specific purpose of financing and promoting clean energy initiatives and its proceeds were earmarked for that object. As Rule 3 of the Cenvat Credit Rules, 2004 applies only to specified duties of excise, the cess did not fall within the credit framework. Cenvat credit on the clean energy cess was therefore not admissible, and the claim failed.

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Issues: Whether Cenvat credit was admissible on clean energy cess paid on coal.

Analysis: Clean energy cess under Section 83 of the Finance Act, 2010 was examined in light of its statutory object, the manner of collection and utilisation, and the settled distinction between tax and fee. The levy was found to be imposed for a specific purpose of financing and promoting clean energy initiatives, with proceeds credited to the Consolidated Fund of India and utilised for that defined object. Applying the principles of quid pro quo and the nature of a fee, the levy was treated as an amount in the nature of fee and not excise duty or tax. Rule 3 of the Cenvat Credit Rules, 2004 applies only to specified duties of excise, and the cess did not fall within that ambit.

Conclusion: Cenvat credit on clean energy cess was not admissible, and the appellant's claim failed.

Ratio Decidendi: Where a levy is in substance a fee for a specific purpose and not a duty of excise or tax, it is outside the scope of Cenvat credit under Rule 3 of the Cenvat Credit Rules, 2004.

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