2018 (1) TMI 1579 - AT - Central Excise

Captive consumption of Coal in mines - benefit of N/N. 67/1995, dated 16-3-1995 - HELD THAT - The coal captively used by the appellant and captured in detail in their records will show that they are rightly eligible for exemption as claimed under Notification No. 67/95 for duty as well as cess. Here the Clean Energy Cess Rules, 2010 defines Removal as dispatch of specified goods from a mine and shall include dispatch of such goods for captive consumption within that mine for any purpose other than for raising of such goods . The lower Authorities otherwise indicated that the appellant shall be eligible for coal if shown to have been used for raising of such coal captively. As such, no excise duty as well as cess on such captively consumed coal are liable to be demanded and paid. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Dispute over appellant's eligibility for exemption under Notification No. 67/1995 for coal consumed captively within mines. Failure to declare captive consumption details in statutory records leading to duty demand, cess recovery, and penalty imposition.

Analysis:
The appeals before the Appellate Tribunal CESTAT NEW DELHI revolved around the appellant's entitlement to exemption under Notification No. 67/1995 for coal consumed captively within their mines. The dispute arose due to the appellant's failure to declare the details of captive consumption in their statutory records and returns, resulting in the Revenue demanding duty, recovering cess, and imposing penalties. The appellant contended that they were indeed eligible for exemption but had not specifically indicated captive consumption details in their records. The appellant argued that their day-to-day production and clearance particulars could adequately demonstrate the captive consumption, thus challenging the sustainability of the duty demand and penalty.

The appellant's counsel highlighted that the statutory returns must specify both duty-paid clearances and captive consumption, emphasizing the necessity of such declarations for claiming exemption under Notification No. 67/95. The appellant's failure to segregate duty-paid and captive consumption quantities in their ER-1 returns was cited as a reason for denying the exemption. The Appellate Tribunal examined the sample copies of the Daily Monetary Report from the appellant's mines, revealing that the details of captive consumption were indeed captured in their records, aligning with the non-duty paid portion of their ER-1 return. Despite the absence of segregation in the ER-1 returns, the Tribunal was convinced by the records and submissions that the appellant was rightfully eligible for the claimed exemption under Notification No. 67/95 for both duty and cess.

The Tribunal's analysis emphasized that the coal captively used and documented in detail by the appellant demonstrated their eligibility for the exemption. Referring to the Clean Energy Cess Rules, 2010, which defines "Removal" as dispatch of goods from a mine, including dispatch for captive consumption, the Tribunal clarified that no excise duty or cess was liable on coal consumed captively for purposes other than raising within the mine. Consequently, the Tribunal set aside the impugned order, allowing the appeals in favor of the appellant.