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2016 (8) TMI 1112 - AT - Central ExciseWhether exemption extended under Notifications 28/2010-CE and 29/2010-CE are applicable only with regard to Clean Energy Cess levied on coal as contended by department or whether the said exemption will also be applicable with regard to Central Excise Duty levied on coal as contended by the appellant - quantity of Coal removed during periods under Section 11A of the Central Excise Act 1944 on payment of 5% Excise Duty. Held that - we find ourselves in agreement with the submission of the Revenue that Section 83(5) of Finance Act 2010 clearly lays down that Clean Energy Cess shall be in addition to any Cess or Duty leviable on the goods specified in the Tenth Schedule or under any other law for the time being in force which shows that Clean Energy Cess is only one of the duties of Excise leviable on coal limited to the said Tenth Schedule. Hence an exemption from E. Cess and S.H.E. Cess on Clean Energy Cess does not mean exemption from E. Cess and S.H.E. Cess on Central Excise Duty. Substance is also find in the argument that since Basic Excise Duty on coal was introduced only w.e.f 2011 it is incongruous that a notification issued in 2010 can exempt E. Cess and S.H.E. Cess on Basic Excise Duty for the simple reason that E. Cess and S.H.E. Cess has to be calculated on the aggregate of Central Excise Duty. The Government found it necessary to issue a separate Notification No. 17/2015-CE to rescind erstwhile Notification No. 28 and 29/2010-CE in our opinion vindicates the conclusion that the impugned exemption from E. Cess and S.H.E. Cess was initially available only to Clean Energy Cess w.e.f. 22.06.2010 and that E. Cess and S.H.E. Cess was very much imposable on Central Excise Duty till the amending Notification 14 & 15/2015-CE dated 01.03.2015. Even the CBEC had clarified vide Circular 354/42/2014-TRU 22nd September 2015 that the exemption from Education Cess and S.H.E. Cess under Notifications No. 28/2010-CE and 29/2010-CE both dated 22.06.2010 (prior to 01.03.2015) is applicable only in respect of Clean Energy Cess leviable on Coal under Tenth schedule to Finance Act 2010 hence Education Cess and S.H.E. Cess shall be leviable on Excise Duty on Coal. The exemption of E. Cess and S.H.E. Cess vide Notifications No.28/2010-Central Excise and No. 29/2010Central Excise both dated 22nd June 2010 also meant that the Notification simultaneously exempted E. Cess and S.H.E. Cess on duty of excise. If this was the case there would have been no need for the Government to issue after four years Notification No. 15/2015-CentraI Excise dated 1st March 2015 specifically exempting duty of excise from E. Cess and S.H.E. Cess on all excisable goods. Only because all excisable goods now stood exempted from E. Cess and S.H.E. Cess w.e.f 1st March 2015 there arose the necessity for the Government to issue Notification No. 17/2015-Central Excise dated 1st March 2015 rescinding Notifications No. 28/2010-Central Excise and No. 29/2010-Central Excise which had already exempted the levy of Education Cess and Secondary & Higher Education Cess on the Clean Energy Cess leviable on coal much earlier on 22nd June 2010. Therefore we have no difficulty in concluding that exemption from E. Cess and S.H.E. Cess under Notifications No. 28 and 29/2010 both dated 22.06.2010 is applicable only with respect to Clean Energy Cess levied under the Finance Act 2010 but will not be applicable with respect to Central Excise duty levied on coal w.e.f 01.03.2011. - Decided against the appellant
Issues Involved:
1. Applicability of exemption under Notifications 28/2010-CE and 29/2010-CE to Clean Energy Cess and Central Excise Duty on coal. 2. Nature and scope of Clean Energy Cess. 3. Interpretation of legislation by reference versus legislation by incorporation. 4. Validity of exemption notifications issued prior to the imposition of Central Excise Duty on coal. Detailed Analysis: 1. Applicability of exemption under Notifications 28/2010-CE and 29/2010-CE to Clean Energy Cess and Central Excise Duty on coal: The core issue is whether the exemptions provided under Notifications 28/2010-CE and 29/2010-CE apply solely to the Clean Energy Cess or also extend to the Central Excise Duty imposed on coal from March 1, 2011. The appellant argued that these notifications exempted goods specified in the Tenth Schedule (including coal) from Education Cess (E. Cess) and Secondary and Higher Education Cess (S.H.E. Cess), thus covering the Central Excise Duty as well. However, the department contended that these exemptions were only applicable to the Clean Energy Cess and not to the Central Excise Duty, which was introduced later. 2. Nature and scope of Clean Energy Cess: Clean Energy Cess, introduced by the Finance Act, 2010, is a duty of excise levied on coal, lignite, and peat to fund clean energy initiatives. It was later expanded to include clean environment initiatives. This cess is distinct from the Central Excise Duty, which is a tax on goods manufactured or produced in India. The Clean Energy Cess is in the form of a surcharge for the Union, while Central Excise Duty is distributed between the Union and the States. 3. Interpretation of legislation by reference versus legislation by incorporation: The appellant argued that the Tenth Schedule of the Finance Act, 2010, required continuous reference to the First Schedule of the Central Excise Tariff Act, 1985, making it legislation by reference. This would mean that any amendments to the Central Excise Tariff Act would automatically apply to the Tenth Schedule. However, the tribunal held that Section 83 of the Finance Act, 2010, and the Tenth Schedule constituted legislation by incorporation, meaning only specific provisions of the Central Excise Act and Tariff Act were incorporated for limited purposes, such as procedural modalities and classification of coal. Thus, changes in the Central Excise Tariff Act do not affect the applicability of exemptions under the Tenth Schedule. 4. Validity of exemption notifications issued prior to the imposition of Central Excise Duty on coal: The tribunal agreed with the department that a notification issued in 2010 could not exempt a duty (Central Excise Duty) that was not in existence at that time. This principle was supported by several judgments, including the Supreme Court's decision in UOI vs. Modi Rubber Ltd., which held that exemption from a duty of excise does not imply exemption from future duties unless explicitly stated. The tribunal also noted that subsequent notifications in 2015 explicitly exempted all excisable goods from E. Cess and S.H.E. Cess, further clarifying that the 2010 notifications only applied to Clean Energy Cess. Conclusion: The tribunal concluded that the exemptions under Notifications 28/2010-CE and 29/2010-CE applied only to the Clean Energy Cess and not to the Central Excise Duty on coal. The appeals were dismissed, upholding the department's position that E. Cess and S.H.E. Cess were leviable on the Central Excise Duty imposed on coal from March 1, 2011. This decision was pronounced on July 26, 2016, in open court.
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