TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 1551
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.... 2016 has been filed against the Order-in-Original No. 02/Commr./KolI/C.Ex./2016-17 dated 27.05.2016 passed by the Pr. Commissioner of Central Excise, Kolkata-I Commissionerate, 180, Shantipally, Rajdanga Main Rd., Kolkata - 700 107. 1.3. Considering the fact that all the Impugned Orders deal with identical facts, raise common questions of law, and relate to different but consecutive periods, all these appeals are taken up together for decision by a common order. 2. The facts of the case are that M/s Integrated Coal Mining Limited [hereinafter referred to as the "appellant"] was formed to develop and operate the Sarshatali Coal Block for the captive supply of coal to CESC Ltd and its associate companies. The appellant has been a manufacturer/producer of coal from the said Coal Mine, throughout the relevant period i.e. April 2008 to June 2017. The mining lease in respect of the said Coal Block was held by the appellant from the government of West Bengal in its own name up to March 2015 and thereafter by CESC pursuant to an auction by the government of India, consequent to the Hon'ble Supreme Court ruling in Manohar Lal Sharma vs. The Principal Secretary & Ors. [WP (CRL) No. 12....
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....riginal No. 11/Commr/KolI/C.Ex./2015-16 dated 14.10.2015. (iii) Order-in-Original No. 02/Commr/KolI/C.Ex./2016-17 dated 27.05.2016. 2.6. Through the Impugned Orders-in-Original, the Ld. adjudicating authority has confirmed a demand of Rs. 13,97,08,774/- (after appropriating the duty already deposited under protest) along with recovery of applicable interest and penalty under Section 11AA and 11AC of the Central Excise Act, 1944. 2.7. Aggrieved against the confirmation of the demands of central excise duty in the impugned orders, the appellant has filed these appeals. 3. The appellant submitted a detailed tabular statement indicating the break-up of duty demanded and duty deposited under protest for each of the period, which is reproduced below: I. For the Period from March 2011 to December 2013 Type of Impost Total Duty Demanded (in Rs.) Duty Paid under Protest (in Rs.) Interest Paid (in Rs.) Differential Duty Demanded (in Rs.) Royalty 47,20,197/- 47,20,197/- 7,95,390/- - Stowing Excise Duty 22,27,687/- 22,27,687/- - - CESS (PE +RE+ PW+ Road+ ....
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....CMCD Act"), read with the Coal Mines (Conservation and Development) Rules, 1975. Section 6 of the CMCD Act clearly mandates the levy of an excise duty on coal and coke dispatched from collieries in India: (iii) Further, Section 7 of the CMCD Act authorises the imposition of a duty of customs equivalent to the excise duty imposed under Section 6, on coal imported into India. Section 8 provides for the manner of collection of excise duty under the Act. These provisions, read together, demonstrate that Stowing Excise Duty is a "duty of excise" in substance and form, levied and collected under a central statute. (iv) On a plain reading of these statutory provisions, it is evident that the legislature intended to treat SED on par with central excise duty for all practical purposes. The reference to "excise duty" in Section 6, and its equivalence with customs duty in Section 7, make it abundantly clear that the character of the levy is that of a tax, and not part of the commercial consideration for sale of goods. In support of this claim, the appellant cited the reference drawn to various judgements such as: • Mahanadi Coalfields Ltd. v Commr. of Central Excise, Custom....
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....e Act, 1944. (iv) The following table outlines the types of levies imposed, along with the applicable statutes and relevant charging provisions: Nature of levies Regulating Act Charging Section Stowing Excise Duty Coal Mines (Conservation and Development) Act, 1947 Section 6 Primary Education Cess West Bengal Primary Education Act, 1973 Section 78 Rural Employment Cess West Bengal Rural Employment and Production Act, 1976 Section 4 Public Works Cess West Bengal Cess Act, 1880 Section 6 Road Cess West Bengal Cess Act, 1880 Section 6 AMBH Fees West Bengal Mining Settlement (Health and Welfare) Act, 1964 Section 23 (v) That the Rural Employment Cess, Primary Education Cess, Public Works Cess, and Road Cess are State levies legislated by the Government of West Bengal under the taxing powers conferred by Entry 49 and Entry 50 of the State List under Schedule VII of the Constitution of India. Consequently, these cesses are in the nature of "taxes" and thus are not includable in the transaction value for the purpose of excise duty assessment. Similarly, ....
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....nce the demand for differential excise duty arising therefrom deserves to be set aside in its entirety. 4.3. Since the demand for Stowing Excise Duty and the impugned cesses is inherently unsustainable and devoid of legal merit, the imposition of any penalty or interest is unwarranted and does not arise. (i) The appellant submits that, since the demand for excise duty on Stowing Excise Duty and Cess is unsustainable and without merit, no interest or penalty ought to be imposed. Reliance in this regard is placed on the judgment of the Hon'ble Supreme Court in the case of Pratibha Processors vs. Union of India [1996 (88) ELT 12 (SC)], wherein it has been held that interest and penalty cannot be levied where the principal demand is not valid. 4.4 No penalty should be imposed on the appellant for the confirmed demand for Royalty as the issue was sub judice and Payments were made under Protest (i) The appellant submits that no penalty is liable to be imposed in respect of the confirmed demand of Excise Duty on the component of Royalty, as the entire amount of duty along with interest for the period of 24 March 2011 to 30 December 2013 was duly deposited under protest, thereb....
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.... Duty for the relevant period, as well as royalty paid beyond the normal period of limitation, along with applicable interest. 6. The Ld. Authorized Representative of the Revenue reiterated the findings in the impugned orders. He submits that the appellant has paid the Central Excise duty by including the value of Royalty and Stowing Excise Duty paid in the assessable value on their own. Thus, it is respondent's contention that refund if any, has to pass the test of unjust enrichment. 7. Heard both sides and perused the appeal records. 8. We observe that in the landmark judgement of the Constitutional Bench of the Hon'ble Supreme Court in the case of Mineral Area Development Authority v Steel Authority of India [(2024) 21 Centax 378 (SC) (Para 310)], it has been categorically held that Royalty is not a tax. Section 4(3)(d) of the Central Excise Act only excludes the 'tax paid' from the 'assessable value' for the purpose of computation of Central Excise duty. Since 'Royalty' is not a tax as held by the Hon'ble Apex Court, the royalty paid by the appellant in this case is includable in the 'assessable value'. We observe that the appellant has also not contested this issu....
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....as a divergent view of the various High Courts whether crushing of bigger stones or boulders into smaller pieces amounts to manufacture. In view of the divergent views, of the various High Courts, there was a bona fide doubt as to whether or not such an activity amounted to manufacture. This being the position, it cannot be said that merely because the Appellants did not take out a licence and did not pay the duty the provisions of Section 11A got attracted. There is no evidence or proof that the licence was not taken out and/or duty not paid on account of any fraud, collusion, wilful mis-statement or suppression of fact. We, therefore, set aside the demand under the show cause notice dated 3rd May, 1993." 8.3. Thus, by relying on the decisions cited supra, we set aside the demand of central excise duty confirmed on Royalty in the impugned orders, which has been confirmed by invoking the extended period of limitation. 8.4. We take note of the appellant's submission that they have already paid the duty on Royalty for the extended period also, under protest. Thus, we hold that the appellant is eligible for the refund of the duty paid on Royalty, pertaining to the extended perio....
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...., make it abundantly clear that the character of the levy is that of a tax, and not part of the commercial consideration for sale of goods. Accordingly, we hold that SED paid is not includable in the transaction value for the purpose of computation of central excise duty. 9.4. We find that the above view has been held in the case of Mahanadi Coalfields Ltd. v Commr. of Central Excise, Customs & Service Tax, Rourkela [Final Order No. 75699 of 2025 dated 11.03.2025 in Excise Appeal No. 75808 of 2016 - CESTAT, Kolkata] wherein this Tribunal has set aside the confirmed demands on account of Stowing Excise Duty. 9.5. The same view has been held by this Tribunal in the case of M/s. Eastern Coalfields Ltd. v Commissioner of Central Excise, Bolpur vide Final Order no. 75656-75666 of 2025 dated 11.03.2025 in Excise Appeal No. 75694 of 2015 & ors. (CESTAT, Kolkata), wherein it has been held as under: - "36. Now we come to the component of the Stowing Excise Duty. The appellant has claimed that it is a 'Duty of Excise'. The relevant portion of the The Coal Mines (Conservation and Development) Act, 1974 [CMD Act for short] 6. Imposition of excise duties - ....
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....o not disputed that in the case of the goods in question, the Stowing Excise Duty is being paid by the appellant. The Revenue cannot take a contorted and narrow view that only when the Duty of Excise is paid as Central Excise Duty, such exclusion is available. It is to be noted that the word used is 'duty of excise' along with 'sales tax' and 'other taxes', which would clarify that if these are paid to State Govt or to any other agency also, the transaction value should exclude the same. Considering these provisions, we set aside the confirmed demand in respect of the Stowing Excise Duty and allow the Appeals.9.5. In view of the decisions cited supra, we hold that SED paid is not includable in the transaction value for the purpose of computation of central excise duty and hence we set aside the demand confirmed in the impugned order on this count." 9.6. We take note of the appellant's submission that they have already paid the duty on SED, under protest. As SED paid is not includable in the transaction value, we hold that the Central Excise Duty paid by the appellant in this regard is liable to be refunded along with interest, subject to passing the test ....
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....es." 10.3. Further, reliance is placed in the landmark nineJudge Constitutional Bench of the Hon'ble Supreme Court in the case of Mineral Area Development Authority v Steel Authority of India [(2024) 21 Centax 378 (SC)] wherein the Hon'ble Apex Court has categorically held that while Royalty is not a tax, any "cess on Royalty" is indeed a tax. The Hon'ble Court clarified that such cesses are statutory imposts imposed by the State in exercise of its taxing powers under Entries 49 and 50 of List II (State List) of the Seventh Schedule to the Constitution of India. 10.4. We also take note of the decision in the case of M/s. Eastern Coalfields Ltd. (supra), wherein it has been held that the other taxes mentioned above are not includable in the assessable value. The relevant part of the said decision is reproduced below: "39.3 In the 9 Member Supreme Court judgement, it has finally been clarified that the Royalty is not a Tax. 40. As per the decision of the 9 Member Bench seen above, there is no case on merits for the appellants for not including the Royalty component for arriving at the Assessable Value. But this judgement also comes to the rescue of the appella....
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....rein it has been held that interest and penalty cannot be levied where the principal demand is not valid. 11.2. We also hold that no penalty is liable to be imposed in respect of the confirmed demand of Excise Duty on the component of Royalty, as the entire amount of duty along with interest for the period of 24 March 2011 to 30 December 2013 was duly deposited by the appellant under protest, thereby evidencing the absence of any intention to evade tax or cause revenue loss. It is pertinent to note that the very issue of whether Royalty constitutes a "Tax" or is liable to be included in the assessable value for excise purposes was under active and protracted litigation, with divergent judicial views across forums. The matter attained finality only upon the pronouncement by the Nine-Judge Constitution Bench of the Hon'ble Supreme Court in Mineral Area Development Authority v. Steel Authority of India Ltd. cited supra which conclusively settled the legal position. Thus, under these facts and circumstances, no penalty is imposable on the appellant. A similar view has been taken by this Tribunal in the cases of Mahanadi Coalfields Ltd. (supra) and Eastern Coalfield Ltd. (supra). ....