DEPB scrips may be used for Clean Energy Cess, while refund disputes requiring verification must be decided on merits.

Clean Energy Cess levied as additional duty of customs was treated as distinct from payment through CENVAT credit, so the restriction in rule 3(4) of the CENVAT Credit Rules and the related instruction did not bar utilisation of DEPB scrips absent a specific prohibition in the DEPB scheme. The Tribunal therefore held DEPB payment permissible. On the refund dispute, the Commissioner (Appeals) had not decided the matter on merits where factual entitlement required verification, so the remand could not stand and the refund issue had to be adjudicated substantively. The Revenue's appeals failed and the assessee succeeded to that extent.

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Issues: (i) Whether DEPB scrips could be utilised for payment of Clean Energy Cess leviable as additional duty of customs. (ii) Whether the Commissioner (Appeals) was justified in remanding the refund matter instead of deciding it on merits.

Issue (i): Whether DEPB scrips could be utilised for payment of Clean Energy Cess leviable as additional duty of customs.

Analysis: Clean Energy Cess, when levied as additional duty of customs under section 3(1) of the Customs Tariff Act, 1975, is distinct from payment through CENVAT credit. The restriction in rule 3(4) of the CENVAT Credit Rules, 2004 and the related departmental instruction only bar utilisation of CENVAT credit for the cess. They do not place any restriction on payment through DEPB scrips, and no such prohibition was found in the DEPB notification scheme.

Conclusion: The utilisation of DEPB scrips for payment of Clean Energy Cess was held permissible, in favour of the assessee.

Issue (ii): Whether the Commissioner (Appeals) was justified in remanding the refund matter instead of deciding it on merits.

Analysis: The refund dispute required examination of the factual entitlement to cash refund after payment through DEPB debit and cash. The Tribunal held that the Commissioner (Appeals) had not decided the controversy on merits. Since the appeal had to be examined substantively, the remand order could not be sustained, and the matter was required to be adjudicated by the appellate authority on merits. The separate objection on remand power did not survive in view of this course.

Conclusion: The remand was set aside and the refund issue was sent back for decision on merits, in favour of the assessee.

Final Conclusion: The Revenue's appeals failed, while the assessee's appeal succeeded to the extent that the refund dispute was remitted for fresh decision on merits.

Ratio Decidendi: A statutory prohibition against utilisation of CENVAT credit for Clean Energy Cess cannot be extended to bar payment through DEPB scrips unless the DEPB scheme itself contains such a restriction, and a refund dispute should be decided on merits where factual verification is necessary.

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