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2019 (6) TMI 1192 - AT - Central ExciseCENVAT Credit - clean energy cess levied on coal, peat and lignite vide Finance Act, 2010 - Department was of the opinion that this is not the amount permissible under Rule 3 of Cenvat Credit Rules, 2004 - HELD THAT - The cess was collected, irrespective of being nomenclated as excise duty, but for the specific purpose of funding the clean energy initiatives and for any other purpose in relation thereto. Thus, it becomes clear that the cess was not for the use of general public as such irrespective it was deposited into the Consolidated Fund of India. Also, it was not to be distributed to the States but was to be utilised by the Union Government for a particular section and a particular purpose. Thus, it becomes clear that the impugned cess, irrespective of its nomenclature, was not at all the duty of excise or tax but was a fee. Rule 3 of CCR, 2004 is applicable only when it is established that what is paid is excise duty or in other words a tax and it is in that case only that the assessee is entitled to cenvat credit. Clean Energy Cess in the present case is not actually a duty, it is an additional amount as that of a fee for a specific purpose that Section 3, CCR,2004 will not be applicable. Otherwise also, Section 3 applies only to the duty of excise specified either in First Schedule to Excise Tariff Act or the Second Schedule thereto. In addition to other additional duties, as mentioned in Clause (iii) to (vii) as discussed. CEC does not fall in any of those sub-Clauses. Thus, the clean energy cess being actually in the nature of fee and not tax/ excise duty that the appellant is not entitled for availing cenvat credit thereupon - appeal dismissed - decided against appellant.
Issues Involved:
1. Eligibility for cenvat credit on clean energy cess levied on coal. 2. Classification of clean energy cess as excise duty, tax, or fee. 3. Applicability of Rule 3 of Cenvat Credit Rules, 2004 to clean energy cess. Detailed Analysis: 1. Eligibility for Cenvat Credit on Clean Energy Cess Levied on Coal: The appellant, engaged in manufacturing excisable goods like cement and clinker, availed cenvat credit on clean energy cess paid on coal. The Department contested this, arguing it was not permissible under Rule 3 of Cenvat Credit Rules, 2004 (CCR, 2004). The Order-in-Original confirmed the recovery of ?54,43,40,872/- availed as cenvat credit along with interest and an equivalent penalty. 2. Classification of Clean Energy Cess as Excise Duty, Tax, or Fee: The core issue was whether clean energy cess qualifies as excise duty or tax, or is merely a fee. Section 83 of the Finance Act, 2010, which imposes the clean energy cess, was scrutinized. The relevant clauses indicate that the cess is collected as a duty of excise but is intended for specific purposes like financing clean energy initiatives. The Tribunal referred to several Supreme Court judgments to distinguish between tax, fee, and cess. The judgments highlighted that a fee must have a quid pro quo relationship with the services rendered, whereas a tax is a compulsory exaction for public purposes without direct service linkage. 3. Applicability of Rule 3 of Cenvat Credit Rules, 2004 to Clean Energy Cess: The Tribunal concluded that despite being collected as a duty of excise, the clean energy cess is essentially a fee due to its specific purpose and utilization. Rule 3 of CCR, 2004, applies only to duties of excise or taxes specified in the First and Second Schedules of the Excise Tariff Act or other specified additional duties. The clean energy cess does not fall under these categories. Furthermore, Notification No. 26/2010-CE dated 29.06.2010 explicitly states that cenvat credit cannot be used to pay clean energy cess, reinforcing that it should be paid in cash. Conclusion: The Tribunal held that the clean energy cess is a fee, not a duty of excise or tax, and thus not eligible for cenvat credit under Rule 3 of CCR, 2004. The Order-in-Original was upheld, and the appeal was dismissed. The Tribunal clarified that the clean energy cess must be paid in cash, corroborating the legislative intent for its specific use in clean energy initiatives. Order: The appeal is dismissed, and the Order-in-Original is confirmed. The appellant is not entitled to avail cenvat credit on the clean energy cess.
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