TaxTMI 
TaxTMI 
TaxTMI 
2022 (10) TMI 285
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....as 'the appellants') have their cement manufacturing unit located in the district of Sirohi, Rajasthan. Furnace (Kiln) is used in the manufacturing process. For heating the furnace, the appellants use imported coal. 3. For the first time in the year 2010, vide Section 83 of the Finance Act, 2010, a Cess, called the 'Clean Energy Cess', was imposed on goods produced in India and specified in the Tenth Schedule of the Finance Act, 2010.Coal was one of the items specified in the Tenth Schedule. 4. At the time import of coal during the disputed period, the appellants paid /bore the 'Clean Energy Cess' as additional duty of customs in terms of Section 3 of the Customs Tariff Act, 1975. 5. The appellants were bonafidely of the view that they were eligible for and accordingly, took Cenvat Credit on the said amount of Clean Energy Cess. 6. The Department, however, was of the view that under the Cenvat Credit Rules, 2004, credit could be availed only in respect of those Duties, Taxes or Cesses as were specified in Rule 3 (1) of the Cenvat Credit Rules, 2004. Since Clean Energy Cess was not specified in the Rules, the Department was of the view that the Cenvat Credit was not available. ....
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....omestically manufactured coal. The Cenvat Credit of duty paid on domestically manufactured goods and on imported goods, are covered by different clauses of Rule 3(1) of the Cenvat Credit Rules, 2004. The Commissioner has, therefore, gone beyond the show cause notice, which is not permissible. (ii) As per Section 83(3) of the Finance Act, 2010 (the charging section) the Clean Energy Cess was to be collected as 'duty of excise'. In the instant case, the Clean Energy Cess had been paid as additional duty of Customs under Section 3(1) of the Customs Tarrif Act, 1975. This section requires that every imported article should be subjected to an additional duty of Customs equal to the excise duty for the time being leviable on like artiles if produced or manufactured in India. This additional duty of Customs was, therefore, available as Cenvat Credit as per Rule 3(vii) of the Cenvat Credit Rules, 2004. Hence, there was no infirmity in the appellants taking Cenvat Credit in respect of Clean Energy Cess paid by the appellants in the form of additional duty of customs on the imported coal. (iii) A similar matter had come up before the Hon'ble Karnataka High Court in connection with availmen....
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.... Cenvat Credit Rules, 2004. Interest has been proposed to be recovered under Rule 14 (1)(ii) of the Cenvat Credit Rules, 2004 and penalty has been proposed under Rule 15(1) of the Cevat Credit Rules, 2004. Thus, if Cenvat Credit Rules, 2004, are not applicable in respect of matters relating to Clean Energy Cess, the show cause notice itself is without basis as it invoked the very Cenvat Credit Rules, 2004, which the Department claims do not apply to Clean Energy Cess. (viii) If Cenvat Credit Rules, 2004 do not apply to Clean Energy Cess, recovery of irregularly availed and /or utilized credit of Clean Energy Cess cannot also be made under the Cenvat Credit Rules, 2004. There is no other machinery provision under Central Excise Law for recovery of irregularly availed and/or utilized credit of Clean Energy Cess. Due to lack of machinery provisions the instant demand cannot sustain. (ix) The demand in this case is in respect of Clean Energy Cess. However, as per Section 235 of the Finance Act, 2016 (effective from 14.05.2016) Clean Energy Cess no longer exists and has been substituted /replaced by 'Clean Environment Cess'. The Cess paid on the Bills of Entry from 14.05.2016 was Clea....
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....g with interest and further penalty of Rs.10 lakh was imposed under Rule 15(1) of the Cenvat Credit Rules, 2004 read with Section 11 AC (1)(a) of the Central Excise Act. 15. Being aggrieved, the assessee appealed before the Commissioner (Appeals), who vide impugned order dated 26.07.2019, was pleased to allow the appeal of the assessee relying on the ruling of the Hon'ble Karnataka High Court in the case of CCE, Bangalore Vs. Renuka Sugars and also the ruling of the Single Member Bench of this Tribunal in the case of Ramco Cement Ltd - 2018 (362) ELT 841 (TBang). 16. Being aggrieved against the order-in-appeal dated 26.07.2019, Revenue filed appeal No.E/52536/2019. The appellant had filed cross objection no.51330 of 2019. 17. The grounds of appeal of Revenue are more or less on the aforementioned lines as defence taken by Revenue in the appeal by the appellant /assessee. It is urged that Revenue had filed appeal before the Hon'ble Supreme Court, which has been admitted in the matter of Renuka Sugar Ltd. Evidently, the CEC has been imposed on coal/peat, which is a kind of carbon tax in order to finance and promote clean environment initiatives. The Clean Energy Cess, Assessment pr....
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.... credit of Clean Energy Cess is not available to the assessee. 20. Opposing the appeal of the Revenue, Shri Ajay Prasad, Counsel for the assessee urged that Clean Energy Cess is levied and collected as duty of excise and hence, covered under the purview of Rule 3 of Cenvat Credit Rules. Section 83 (3) of the Finance Act, 2010 stipulates that Clean Energy Cess shall be levied and collected as duty of excise on the goods produced and consumed in India for the purpose of financing and promoting Clean Energy initiatives. 21. Sub-section (7) of Section 83 provides that the Central Government, by notification in the Official Gazette declares that any provision of Central Excise Act relating to levy and exemption from duty of excise, refund, offences and prosecution, etc. with such modifications and alternations, as it may consider necessary, be applicable in respect of Clean Energy Cess. 22. Sub section (4) of Section 83 provides that the Clean Energy Cess shall first be credited to the consolidated fund of India and the Government, after due appropriation made by Parliament in this behalf, utilized the fund for the specified purpose. 23. Further, vide notification No.1/2015-CEC date....
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....ing in force, which would be leviable on a like article if produced or manufactured in India. The 'Clean Energy Cess' was thus collected by Revenue on imported inputs/goods as 'Additional Duty' specified under Section 3 ibid, believing it to be the duty of excise leviable on like goods on the event of manufacture or production in India. From the very methodology adopted by the Revenue for the assessment of additional duty on imported goods, it is evident that stipulated cess fundamentally and radically falls under the ambit of duty of excise levied under the Act of 1944, on the goods specified in the Central Excise Tariff Act, 1985. 26. Further, reliance is placed on 2 A of the Central Excise Act, which provides for, "reference to certain expression - in this Act, save as otherwise expressly provided and unless the context otherwise requires, references to the expressions "duty", "duties", "duty of excise" and "duties of excise" shall be construed to include a reference to "Central Value Added Tax (CENVAT)". 27. It is explicit from the foregoing provision that, the expression, 'duty, duties, duty of excise, and duties of excise' shall be construed to include a reference to Cenvat....
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....e of 'Clean Energy Cess' levied and collected as 'Duty of Excise' on the episode of production and consumption in India, then there would have been utterly no requirement for the communication pertaining to exclusion of the same from the purview of sub-rule (4) by legislating the Sixth proviso expressly disallowing utilization of Cenvat Account for discharge of the liability of 'Clean Energy Cess'. Because, if 'Clean Energy Cess' does not qualified and counted under Clause (a), the contemplation for exclusion would be a futile exercise as it would then have been automatically as a matter of course fallen out of the premise of sub-rule (4). It for the reason that 'Clean Energy Cess' is the duty of excise administered and enforced under the sovereign command of the Act of 1944, the incorporation of sixth proviso was a legislative necessity for the intended exclusion of the same from purview and administration of sub-rule (4). For the similar reasons, for the exclusion of 'Clean Energy Cess' from the scope and purview of sub-Rule (1), the contemplation in respect thereof in the body, the very sub-Rule (1) was a prerequisite. There is no denying that, if legislature would have intended....
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.... was to allow credit of all forms of duties of excise and cesses, the Rule would have said so. Instead, it only listed some forms of duties of excise, additional duties of customs and cesses on which credit will be admissible, and CEC is not one of them. 36. Although it is now settled that taxing statutes must be literally interpreted, we have also examined the spirit and purpose of levying the CEC. It is evident from Section 83 of Finance Act, 2010, that CEC has been levied on coal etc. to discourage use of the polluting forms of energy and encourage use of cleaner forms of energy. This is based on the principle of 'Polluter pays'. If the CEC collected by the Government is returned to the assessee through the backdoor in the form of Credit under CCR, 2004, we will be doing a great disservice to the country by replacing the principle of 'Polluter pays'. We will be encouraging use of polluting forms of energy by undoing the very purpose for which CEC has been levied. 37. It may be seen that the scope of this Tribunal may extend to testing the vires of rules, regulations, etc., but certainly does not extend to making the rules or modifying them. In the absence of any explicit provi....