2019 (6) TMI 1192

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....provision of Cenvat Credit Rules, 2004 vide Notification No. 1/2010-CE dated 22.06.2010 which came into force w.e.f. 01.07.2010. Section 83(2) of Finance Act, 2010 was amended imposing a clean energy cess on coal produced in India or when imported into India from other countries. The said Notification also provided for Clean Energy Cess Rules, 2002 for the purpose of collection and assessment of the clean energy cess. The appellant was noticed regularly availing the cenvat credit on clean energy cess paid on coal. Department was of the opinion that this is not the amount permissible under Rule 3 of Cenvat Credit Rules, 2004 (CCR, 2004, in short). Resultantly, the amount of cenvat credit availed, i.e. Rs. 54,43,40,872/- during April 2016 to June 2017 was proposed to be recovered alongwith the interest and the appropriate penalties vide show cause notice No. 16779 dated 01.02.2018. It is the said proposal that has been confirmed vide Order under challenge. Being aggrieved, the appellant is before this Tribunal. 3. We have heard Shri V.A. Rana, learned Advocate for the appellant and Shri R.K. Maji, learned Authorised Representative for the respondent. 4. It is submitted on behal....

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....dicate as to whether the clean energy cess qualifies to be called as excise duty or tax or is merely a fee. Section 83 of Finance Act, 2010 imposes the impugned cess which reads as follows: "Section-83. (1) This Chapter extends to the whole of India. (2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. (3) There shall be levied and collected in accordance with the provisions of this Chapter, a cess to be called the Clean Energy Cess, as duty of excise, on goods specified in the Tenth Schedule, being goods produced in India, at the rates set forth in the said Schedule for the purposes of financing and promoting clean energy initiatives, funding research in the area of clean energy or for any other purpose relating thereto. (4) The proceeds of the cess levied under sub-section (3) shall first be credited to the Consolidated Fund of India and the Central Government may, after due appropriation made by Parliament by law in this behalf, utilise such sums of money of the cess for the purposes specified in sub-section (3), as it may consider necessary. (5) The cess l....

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....: "17. The Constitution Bench of the Apex Court in the case of Kewal Krishna Puri & another V. State of Punjab & another reported in (1980) 1 SCC 416 in which it was held, the quid pro quo must exist between the payer of the fee and the special services rendered. It was observed: "that a fee is a charge for special services rendered to individuals by the Governmental Agency and therefore for a levy of fee an element of quid pro quo for the service rendered was necessary; service rendered does not mean any personal or domestic service and it meant service in relation to the transaction, property or the institution in respect of which the fee is paid. The element of quid pro quo may not be possible or even necessary to be established with arithmetical exactitude but even broadly and reasonably it must be established, with some amount of certainty, reasonableness or preponderance of probability that quite a substantial portion of the amount of fee realized is spent for the special benefit of its payers. Each case has to be judged from a reasonable and practical point of view for finding an element of quid pro quo." 18. The Constitution Bench of the Apex Cour....

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....vice is indistinguishable from public service, and in essence is directly a part of it, different considerations may arise. In such a case it is necessary to enquire, what, is the primary object of the levy and the essential purpose which it is intended to achieve. Its primary object and the essential purpose must be distinguished from its ultimate or incidental results or consequences. That is the true test in determining the character of the levy." 19. Again, yet another Constitution Bench of the Apex Court in the case of State of W.B. V. Kesoram Industries Ltd. & Ors. - 2004 (10) SCC 201 explained the distinction between the terms 'tax and fee' in the following words: "The term cess is commonly employed to connote a Tax with a purpose or a tax allocated to a particular thing. However, it also means an assessment or levy. 3 (2004) 10 SCC 201. Depending on the context and purpose of levy, cess may not be a tax; it may be a fee or fee as well. It is not necessary that the services rendered from out of the fee collected should be directly in proportion with the amount of Fee collected. It is equally not necessary that the services rendered by the Fee collec....

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....levied and collected in order to constitute a fee after such collection should go into a special fund earmarked for carrying out the purpose of the Act. The said fund so set apart should be appropriated specifically for the performance of the specified purpose and it should not be merged in the public revenues. In other words, the cess levied by way of fee is not intended to be and does not become a part of the Consolidated Fund. It should be earmarked and set apart for the purpose of services for which it is levied. Then only it should be described as a fee and not tax. If the cess levied and collected is credited to the Consolidated Fund of India and it has to be appropriated by the Parliament by law and then only the said amount could be credited to the Fund; it ceases to be a fee and partakes the character of a duty or a tax."  7. Reading the above settled principles alongwith Section 83 of Finance Act, 2010 it becomes clear that the cess was collected, irrespective of being nomenclated as excise duty, but for the specific purpose of funding the clean energy initiatives and for any other purpose in relation thereto. Thus, it becomes clear that the cess was not for the u....