TaxTMI 
TaxTMI 
XYZ (Manufacturer) receiving Coal where the supplier is charging CESS in the Tax Invoice. Can XYZ take input tax credit of the CESS charged in the invoice? If no, is there any specific provision under the law to deny the credit?
Eligibility of input tax credit of CESS on Coal
09 Jan 2019 
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Compensation cess input tax credit restricted to cess payment; refundable for zero-rated supplies under bond, not when integrated tax paid.
Availment of input tax credit of compensation cess on coal is permitted but the credit may be utilised only for payment of compensation cess; it cannot be used for payment of integrated tax. Registered persons making zero-rated supplies under bond or LUT may claim refund of unutilized compensation cess credit when the final product is not subject to cess, whereas zero-rated supplies made on payment of integrated tax do not permit utilisation of cess credit for integrated tax nor refund of cess. (AI Summary)
Availment of input tax credit of compensation cess on coal is permitted but the credit may be utilised only for payment of compensation cess; it cannot be used for payment of integrated tax. Registered persons making zero-rated supplies under bond or LUT may claim refund of unutilized compensation cess credit when the final product is not subject to cess, whereas zero-rated supplies made on payment of integrated tax do not permit utilisation of cess credit for integrated tax nor refund of cess. (AI Summary)