TaxTMI 
TaxTMI 
2019 (7) TMI 764
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.... 5,09,24,537 As applicable - E/30532/2016 Bharathi Cement Corporation Pvt Ltd 4,12,85,200 - 41,28,520 E/30704/2016 Deccan Cements Ltd 1,72,76,172 - 2,000 E/30731/2016 Zuari Cement Ltd 10,42,51,048 33,68,209 1,04,25,106 E/31072/2016 Penna Cement Industries Ltd 3,38,05,371 - 10,00,000 E/31076/2016 Penna Cement Industries Ltd 3,22,34,230 - 30,00,000 E/30037/2017 Rain Cements Ltd 4,94,86,230 - 10,00,000 E/30634/2017 Penna Cement Industries Ltd 2,28,14,148 - 10,00,000 E/30220/2018 Deccan Cements Ltd 17,55,97,455 - 5,000 2. The appellants in all these cases have taken Cenvat credit of the Clean Energy Cess (CEC) which they paid on the coal imported by them for use in their factory. It is the case of the appellants that they are entitled to the Cenvat credit on the CEC paid by them while it is the case of the revenue that no Cenvat credit can be granted for the Clean Energy Cess as it is not covered under Rule 3 of Cenvat Credit Rules (CCR), 2004. Show cause notices have been issued and demands have been confirmed proposing recovery of the allegedly wrongly availed Cenvat credit along with interest and ....
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....en availed as well as utilized and not otherwise. In this regard they place reliance on the judgment of the Hon'ble High Court of Karnataka in the case of Bill Forge Pvt Ltd [2011-TIOL-799] in which it was held that if the assessee has reversed wrongly availed Cenvat credit without utilizing, it will amount to not taking credit at all. Therefore, if Cenvat credit is availed by the party but is unutilized and subsequently reversed, it amounts to nonavailment of Cenvat credit and no interest accrues. 5. On the question of penalty, it is submitted on behalf of the appellants that a plain reading of Rule 15(1) of CCR shows that penalty has to be levied in cases where Cenvat credit is availed or utilized. However, the Hon'ble High Court of Madras in the case of Strategic Engineering Pvt Ltd [2014 (310) ELT 509] held that mere taking of Cenvat credit is not sufficient for imposition of interest as well as penalty. In view of the above, they pleaded that the impugned orders may be set aside and their appeals may be allowed. 6. On behalf of the revenue, learned departmental representatives forcefully argued that no Cenvat credit is admissible with respect to CEC under CCR, 2004 for the....
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....nufacturer of final product or by the provider of output services on or after the 10th day of September, 2004 including the said duties, or tax, or cess paid on any input or input service, as the case may be, used in the manufacture of intermediate products, by a job-worker availing the benefit of exemption specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 214/86- Central Excise, dated the 25th March, 1986, published in the Gazette of India vide number G.S.R. 547 (E), dated the 25th March, 1986, and received by the manufacturer for use in, or in relation to, the manufacture of final product, on or after the 10th day of September, 2004. 7. Therefore, every form of cess or tax paid by the appellant is not admissible for Cenvat credit under CCR, 2004. They concede that CEC is collected as a duty of excise. However, they point out that various other forms of cesses are also collected by the Government and all Cesses are collected as if they are a form of duty of excise. If the intention of the Legislature/ Government was to provide credit of any duty of excise or any cess paid by the assessee, Rule 3 would have been worde....
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....so as to increase the cost of such form of energy. The amounts so collected from the CEC are to be used for development of cleaner forms of energy. Thus, it is a case of environment protection and those who are using dirty forms of energy such as coal have to pay for it. If the assessees are allowed Cenvat credit of CEC, it would amount to returning with one hand what has been collected from them with the other to discourage use of dirty polluting fossil fuels. This defeats the purpose of levying CEC. Therefore, no Cenvat credit should be given for the CEC paid by the appellants. 9. They, futher argued that Cenvat credit or erstwhile Modvat credit or present day GST input tax credit system are all based on the principle of avoiding cascading effect of taxes. The tax is levied at several stages and the tax paid at each stage is given as credit to the next stage payer. Thus, the tax paid gets sets off against the tax paid at the next stage. Ultimately, the consumer bears the full burden of tax on the full value. Therefore, where there is only levy of one tax at one point, no Cenvat credit is admissible. If Cenvat credit or any other form of refund of the tax is given with respect t....
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....ataka in the case of Shree Renuka Sugars (supra) with respect to sugar cess, Single Member Bench of Tribunal-Bangalore in the case of The Ramco Cements Ltd (supra) allowed credit of CEC. Therefore, the ratio may be followed and they may be allowed Cenvat credit. We proceed to decide this issue on merits. It is undisputed that a plain reading of Rule 3 of CCR, 2004 shows that Cenvat credit is admissible only in respect of some cesses and not in respect of all the cesses and duties of excise. The Hon'ble High Court of Karnataka gave benefit of credit of sugar cess in respect of Shree Renuka Sugars (supra) expanding the scope of Cenvat Credit Rules by taking a broader view and holding that sugar cess also being duty of excise Cenvat credit may not be denied. 13. It is, however, now a well settled legal position laid down, after the aforesaid decision of Hon'ble High Court of Karnataka that fiscal statutes must be interpreted strictly as per the letter of word and not the spirit of the law, ignoring any amount of hardship and eschewing any equity in taxation. However, in the event of ambiguity in taxation liability statute, the benefit should go to the assessee. From a plain reading ....
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....lature which frames the Acts. Subordinate legislations in the form of rules, regulations, notifications (including CCR, 2004) are notified by the Government and are then placed before the Parliament whose Committee of subordinate legislation examines them to see whether they reflect the intent of the Act and get modifications made, if necessary. Thus the legislative power delegated to the Government is again subject to control of the legislature. It is for this reason the rule making power is not delegated to any other arm of State but only to Government which is answerable to the legislature. 17. However, where there is a conflict between the constitutional provisions and the laws made or the parent act and the subordinate legislations vires of such act and rules are tested and decided by the Hon'ble Supreme Court and Hon'ble High Courts under Article 32 and 226 of the Constitution of India. The Tribunals (including this Tribunal) are created under Article 323B of the Constitution of India which was inserted by the 42nd amendment to the Constitution. The Jurisdiction of the Tribunals and their powers have been examined by the Five Member Constitutional Bench of the Supreme Court....
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....Articles 323A and 323B would, to the same extent, be unconstitutional. The jurisdiction conferred upon the High Courts under Articles 226/227 and upon the Supreme Court under Article 32 of the Constitution is part of the inviolable basic structure of our Constitution. While this jurisdiction cannot be ousted, other courts and Tribunals may perform a supplemental role in discharging the powers conferred by Articles 226/227 and 32 of the Constitution. The Tribunals created under Article 323A and Article 323B of the Constitution are possessed of the competence to test the constitutional validity of statutory provisions and rules. All decisions of these Tribunals will, however, be subject to scrutiny before a Division Bench of the High Court within whose jurisdiction the concerned Tribunal falls. The Tribunals will, nevertheless, continue to act like Courts of first instance in respect of the areas of law for which they have been constituted. It will not, therefore, be open for litigants to directly approach the High Courts even in cases where they question the vires of statutory legislations (except where the legislation which creates the particular Tribunal is challenged) by overlook....
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.... belief that they are entitled for Cenvat credit of CEC and hence have taken Cenvat credit. Therefore, we find that the imposition of penalty under Rule 15 of CCR, 2004 is not justified and needs to be set aside. In conclusion, the impugned orders are modified as follows: A. The denial of Cenvat credit on Clean Energy Cess is upheld. B. In all cases where Cenvat credit has been availed but not utilized, no interest is payable and in cases where Cenvat credit has been availed and utilized, appropriate amount of interest is payable. C. All penalties are set aside. 22. The appeals are partly allowed as herein above. (Order Pronounced in the open court on 16.07.2019) (SULEKHA BEEVI C.S) MEMBER (JUDICIAL) (P.VENKATA SUBBA RAO) MEMBER (TECHNICAL) Separate assenting order - Per Ms. SulekhaBeevi C.S. 23. I have gone through the order recorded by brother Member (Technical) in these appeals. I agree with the conclusion arrived by my brother Member as to the issue whether credit is eligible on Clean Energy Cess paid by the appellant. However, I do not concur with the entire discussions recorded by my brother Member for reaching such conclusion. I therefore record separ....