2017 (11) TMI 1613 - AT - Central Excise

Clean energy Cess on shale rejects - shale rejects (carbonaceous shale) got extracted, during the extraction of Coal - Held that - as per the definition given in Rule 2(h), the Specified Goods means raw coal . Shale rejects is also part of the raw coal. When it is so, then the Clean Energy Cess is leviable on the raw coal. Penalty - Held that - since the issue has come up for adjudication for the first time before the Tribunal and both sides have failed to produce any case law on the issue, and, more particularly, when there is no malafide intention on the part of the assessee-Appellants, the imposition of penalty is uncalled for - penalty set aside. Appeal allowed in part.

Summary

Issues:
1. Clean Energy Cess applicability on shale rejects extracted during coal mining.
2. Interpretation of 'Specified Goods' under Rule 2(h) of the Clean Energy Cess Rules, 2010.
3. Imposition of penalty on the assessee-Appellants.

Analysis:
1. The appeal was filed against the Order-in-Original passed by the Commissioner of Customs & Central Excise, Bilaspur, regarding the Clean Energy Cess applicability on shale rejects extracted during coal mining in the period from July to October, 2010. The assessee-Appellants argued that Clean Energy Cess should only apply to power coal, not on shale rejects, as the rejects were never removed from the mines. The Tribunal heard both parties and examined the definition of 'Removal' under Rule 2(g) of the Clean Energy Cess Rules, 2010. The counsel for the appellant contended that shale rejects had no market value and were generated only when the plate in the mines was changed. However, the Department insisted that shale rejects were part of the raw coal, making them liable for Clean Energy Cess.

2. The Tribunal analyzed Rule 2(h) of the Clean Energy Cess Rules, 2010, which defines 'Specified Goods' as "raw coal, raw lignite, and raw peat." The Department argued that shale rejects were essentially part of raw coal, thus falling under the category of 'Specified Goods' subject to Clean Energy Cess. After considering the arguments and examining the definition, the Tribunal concluded that shale rejects indeed constituted part of raw coal, making them liable for Clean Energy Cess. Consequently, the Tribunal upheld the impugned order, citing the definition provided in Rule 2(h) as the basis for their decision.

3. In terms of penalty imposition, the Tribunal noted that this issue was being adjudicated for the first time before them, with no case law presented by either side. Additionally, there was no evidence of malafide intention on the part of the assessee-Appellants. Considering these factors, the Tribunal deemed the imposition of a penalty unwarranted and set it aside. Ultimately, the appeal filed by the assessee-Appellants was partly allowed, with the Clean Energy Cess upheld on shale rejects as part of raw coal, but the penalty was revoked due to the lack of precedent and absence of malicious intent.