2026 (2) TMI 960 - AT - Central Excise

Cenvat credit exclusion of Clean Energy Cess confirmed; cess on coal is not eligible for credit under Cenvat rules.

The article addresses whether Clean Energy Cess paid on coal qualifies for cenvat credit under the Cenvat Credit Rules, 2004 and concludes it does not. It ... Cenvat Credit - Clean Energy Cess - Eligibility for credit under Cenvat Credit Rules, 2004 - Rule 3 of Cenvat Credit Rules, 2004 - Statutory construction of enabling rules - Treatment of cess as duty of excise u/s 83(3) of the Finance Act, 2010 - Rule-making power u/s 37 of the Central Excise Act and Section 94 of the Finance Act - HELD THAT:- We find that the CCR is not a generic rule providing for credit of each and every type of taxes for utilising the same in an unfiltered way towards discharge of any type of duty and under all circumstances. The entire scheme of taking of credit and utilisation thereof is regulated in accordance with the rules framed under CCR, which has been framed by the Government in exercise of powers conferred by Section 37 of Central Excise Act and Section 94 of Finance Act. In terms of Section 94(2) (eee) of Finance Act, the Government is empowered to make rules in relation to matters dealing with credit of service tax paid on services consumed or duties paid or deemed to have been paid on goods used for providing a taxable service. Therefore, the eligibility for taking credit in respect of a particular type of tax or cess has to be examined in the context of the provisions of CCR. We also find that when the plain reading itself does not allow taking of any credit in respect of CEC therefore, we cannot, as a creature of Statute, go beyond the scope of the rules which is consistent with present Act. We also find that similar issue was considered by this Bench in the case of Deccan Cements Ltd., and others including the case of the appellant themselves in[2019 (7) TMI 764 - CESTAT HYDERABAD], whereby, the Tribunal after going through the scheme of CCR, Statutory provisions, wherein, interalia, the case of Shree Renuka Sugars [2014 (1) TMI 1469 - KARNATAKA HIGH COURT] referred by the appellant was also considered and thereafter held that the Rule 3 of CCR does not provide for taking of Cenvat Credit of CEC. Moreover, in the case of Shree Renuka Sugars Ltd., supra, the cess was sugar cess governed by different statute and provisions and hence the facts are also distinguished. Therefore, respectfully following the decision of this Bench in the case of Deccan Cements Ltd., and others, we find that the appeal has no merit and accordingly, the appeal is dismissed. Issues: Whether cenvat credit can be claimed in respect of Clean Energy Cess (CEC) paid on coal under the Cenvat Credit Rules, 2004 or otherwise.Analysis: The admissibility of credit is governed by the Cenvat Credit Rules, 2004, which specify the duties and cesses eligible for credit. Rule 3 of the Cenvat Credit Rules, 2004 lists the taxes and cesses that qualify for cenvat credit and does not include Clean Energy Cess. The rules were framed under powers conferred by Section 37 of the Central Excise Act and Section 94 of the Finance Act, 2010; eligibility for credit must be determined within the scope of those rules. Prior decisions and comparators involving different cess statutes were considered but distinguished on statutory and factual grounds.Conclusion: Credit of Clean Energy Cess paid on coal is not permitted under Rule 3 of the Cenvat Credit Rules, 2004; the appeal is dismissed and the decision is in favour of the revenue.