TaxTMI 
TaxTMI 
2019 (7) TMI 764
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....alty (in Rs) E/30305/2016 Deccan Cements Ltd 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 confi....
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....has been availed after 01.04.2012 and interest can therefore be imposed only if the credit has been 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 representative....
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.... or capital goods received in the factory of manufacture of final product or premises of the provider of output service on or after the 10th day of September, 2004; and (ii) any input service received by the manufacturer 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 ....
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....elated to the environment. This principle states that if any activity is causing pollution, the polluter has to pay for the cleanup. Coal is a cheaper but a polluting form of energy. Therefore, cess has been levied on it 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 consume....
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.... that since CEC is also a form of excise, they are entitled to Cenvat credit even in the absence of an explicit provision under Rule 3 of CCR, 2004. It is also their assertion that following the ratio of the decision of the Hon'ble High Court of Karnataka 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....
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....h CEC has been levied. 16. We also proceed to examine the matter in the larger context of our legal system. The Constitution of India has divided the powers between Legislature, Executive and Judiciary. The law making power has been given to the Legislature 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 Tribuna....
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....he extent they exclude the jurisdiction of the High Courts and the Supreme Court under Articles 226/227 and 32 of the Constitution, are unconstitutional. Section 28 of the Act and the "exclusion of jurisdiction" clauses in all other legislations enacted under the aegis of 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 th....
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.... credit has been taken as well as utilized as has been held by the Hon'ble High Court of Karnataka in the case of Bill Forge Pvt Ltd (supra). 21. As far as the imposition of penalties are concerned, we find that this is an interpretational issue and it is possible for the assessees to have held a genuine 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 rec....