Cenvat Credit on Clean Energy Cess on Coal

[Vaidyanathan Venkat Raman]

Sir,

Clean Energy Cess levied from July 2010 on domestic and imported coal @ ₹ 50 / ₹ 100 PMT

​Karnataka High Court in Renuka Sugar allowed Cenvat Credit on Sugar Cess even though it is not specified under Rule 3 CCR (deptt appeal pending before Supreme Court)

Whether we can still avail cenvat credit on Clean Energy Cess from July 2010 onwards in Aug-2014 (but not utilise it) as time limit of six months for Input and Input Service will apply w.e.f. 01.09.2014

Pl give suggestions / reply

Rgds

Venkat

[Rajagopalan Ranganathan]

Sir,

Rule 3 of CENVAT Credit Rules, 2004 do not mention clean energy cess payable on coal is eligible for taking credit under the credit rules. Hence in my opinion you are not eligible to take credit of the same. Moreover clean energy cess cannot be paid by utilizing the credit available in the credit account. It is to be paid by cash. This is because proviso 7 of Rule 3 (4) of Credit Rules which states that-

Provided also that the CENVAT credit of any duty specified in sub-rule (1) shall not be utilized for payment of the Clean Energy Cess leviable under section 83 of the Finance Act, 2010 (14 of 2010)

In view of the above provisions, firstly you are not permitted to take credit of clean energy cess paid on coal and secondly even if you avail the credit you can keep it un-utilized in your credit account in view of the 7th proviso of Rule 3 (4) of CENVAT Credit Rules, 2004

[YAGAY andSUN]

Dear Vaidyanatha,

Though, a beautiful reply is submitted by 'Rajagopalan Sir', but we hereby request you since the Renuka Sugar's matter is pending before the Apex Court, therefore, please have wait and watch policy till then. If a favorable judgment is pronounced then you may write to the department for getting the clarification on the strength of the Apex Court's Judgment in you matter.

Because it is well said the "Government makes Law but it is interpreted by the Courts".

Regards,

YAGAY and SUN

(Management and Indirect Tax Consultants)

[Rajagopalan Ranganathan]

Dear Shri. Pradeep,

I agree with your comment. However it is a pity that the rule/Act framing authorities never take into account various judgments given by High Courts/Supreme Court while revising the legal provisions. I feel that if they do so so many legal practitioners will loss their jobs and army of Government Advocates will be job less.

[YAGAY andSUN]

Dear Rajagopalan,

Whenever, you revert on any query, I do personally read your enriching replies. Your replies are the reflection of your rich and dedicated experience which you have earned while serving in the Central Excise Department. Therefore, we do learn from each other.

Now coming back to the discussion (for lighter movements - joke starts from here), since the very inception of Human Race on this Earth, there are four kinds of businesses do exist (side by side with the Human Race), namely:-

1. Tax
2. Pawn
3. ...................... (cannot mention here).
4. Consultancy/Advocacy.

Even if, law maker do some miraculous jobs to make law in the simplest way or lucid language is being used which is understandable by a lay man, even then, consultants/advocates/legal practitioners will do exist. We have seen it's result product in Fiat's judgment.

It is not the law is complex, it is because, human behavior, human mind and it's interpretations are complicated and very complex. Such behavior, understanding and interpretation is unpredictable for a lay man. So, even other consultants/advocate/legal practitioners will loose their jobs on the occurrence of miraculous job done by law makers , but there would be always a genuine need for legal practitioners/advocates/consultants like you and me.

Thanks and Best Regards,

Pradeep Khatri - FounderYAGAY and SUN

(Management and Indirect Tax Consultants)

[Rajagopalan Ranganathan]

Sir,

Thanks for your compliments. I am not against legal profession. However, most of the legal practitioners are engaged to prolong the litigation to postpone payment of correct tax. If legal provision which is not morally and according to dharma is not correct then there is no question to fight against it. However in cases where law is very clear and you are bound to pay the duty people find litigation as as an acceptable way of voiding the payment.

Above all, the attitude of Adjudicating officers of the department who confirms the demand even they know very well that so many judgment/decision of Courts/ Tribunal are there in support of assessee's stand they simply confirm the demand and pave way for litigation. If the Government is willing to stop the attitude of their officers then almost 90% od the litigation will not be there. Government should make it compulsory for the superior officers to record whether the order of the authority is in accordance with law. Most of them simply accept the order if it is in favour of the department and they do not express any opinion whether the decision making officer has followed judicial discipline while passing the order.

[goldy ghy]

Sir

van we have to paid basic Excise Duty +ec+shc in addition to clean energy cess

[Rajagopalan Ranganathan]

Sir'

According to sub-section (5) of Section 83 of Finance Act, 2010, "the cess leviable under sub-section (3) of Section 83 of Finance Act, 2010 shall be in addition to any cess or duty leviable on the goods specified in the Tenth Schedule, namely,-

1.Coal; briquettes, ovoids and similar solid fuels manufactured from coal;

2. Lignite, whether or not agglomerated, excluding jet; and

3.Peat (including peat litter), whether or not agglomerated

under any other law for the time being in force."

Therefore you have to pay clean energy cess in addition to basic excise duty, education cess and secondary and higher education cess.

[RAJ KUMAR RAJKUMAR]

Sir,

Any updates on Clean Energy Cess. as ibelong to Cement Industry. few cement companies availed cenvat credit on Clean energy cess, but we have not utilised the credit. recently we have received a letter from Suptd to reverse the amount, and submit the information of Clean Energy Cess Amount may be for issuing the show cause notice. Have we to pay the penalty.

AI Summary

Cenvat credit eligibility denied for Clean Energy Cess; cess must be paid in cash and is additional to other duties. Rule 3 of the CENVAT Credit Rules, 2004 does not list Clean Energy Cess on coal as an eligible duty, so credit cannot be taken; moreover, proviso to Rule 3(4) prohibits utilisation of CENVAT credit for payment of the Clean Energy Cess, requiring the cess to be paid in cash. Finance Act provision treats the cess as additional to other duties and cesses on coal. A favourable High Court decision on another cess is under appeal, prompting some to recommend awaiting the Supreme Court outcome.