Production-based cess liability survives repeal, but extended limitation and penalty fail without suppression or wilful evasion.

Clean Energy Cess on coal accrued at the stage of production because the levy was created on production and the payment rules did not change the taxable event; repeal under the 2017 amendment did not remove liability already accrued, so the demand for the normal period was sustained. The extended period could not be invoked because the dispute was interpretational, the relevant facts were already known to the department, and suppression or wilful evasion was not established. Interest remained payable for the normal period, but penalty could not be sustained once the extended period failed, so the demand was confined to the normal period with interest.

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Issues: (i) Whether Clean Energy Cess could be levied on coal produced before repeal but cleared after 01.07.2017. (ii) Whether the Revenue could invoke the extended period of limitation on the ground of suppression, fraud or wilful evasion. (iii) Whether interest and penalty were leviable on the cess demand.

Issue (i): Whether Clean Energy Cess could be levied on coal produced before repeal but cleared after 01.07.2017.

Analysis: Section 83(3) of the Finance Act, 2010 created the levy on production of coal and also prescribed the rate in the Tenth Schedule. The Rules governed the time and manner of payment, but did not alter the taxable event. On that basis, the liability accrued when the coal was produced, and the later repeal under Section 18 of the Taxation Laws (Amendment) Act, 2017 did not efface an already accrued liability. The cess demand on stock produced while the levy was in force was therefore sustainable for the normal period.

Conclusion: The issue was answered in favour of the Revenue.

Issue (ii): Whether the Revenue could invoke the extended period of limitation on the ground of suppression, fraud or wilful evasion.

Analysis: The dispute was treated as one of interpretation. The petitioner had been discharging GST Compensation Cess and the material facts were already within the knowledge of the department. In such a setting, the ingredients required for invoking the extended period were not made out, and the invocation of suppression and intent to evade was held unjustified.

Conclusion: The issue was answered in favour of the Assessee.

Issue (iii): Whether interest and penalty were leviable on the cess demand.

Analysis: Since the extended period was not available, penalty under Section 11AC of the Central Excise Act, 1944 could not be sustained. Interest remained payable on the cess for the normal period, but the penal demand and the extended-period demand were not legally maintainable.

Conclusion: The issue was answered partly in favour of the Assessee and partly in favour of the Revenue.

Final Conclusion: The cess demand was sustained only to the extent of the normal period with interest, while the extended-period demand and penalty were set aside, and the adjudication order was interfered with accordingly.

Ratio Decidendi: Where a fiscal levy is created on production and the rate is statutorily fixed, liability accrues at the stage of production even if payment is deferred to a later stage; however, in an interpretational dispute without suppression or wilful evasion, the extended period and penalty cannot be invoked.

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