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2024 (5) TMI 931 - AT - Central ExciseCenvat Credit - Clean Energy Cess (CEC) paid on the coal imported as well as purchased in DTA for use in their factory - levy of interest and penalties - HELD THAT - The issue in this appeal had come up earlier before Coordinate Bench of this Tribunal and in appellant s own case 2019 (7) TMI 764 - CESTAT HYDERABAD where it was held that held The CENVAT Credit Rules have been made on exercise of powers conferred by Section 37 of Central Excise Act 1944. However Section 37 has not been made applicable to Clean Energy Cess. Thus it can be seen that there was no intention to allow credit on the clean energy cess levied. - the denial of Cenvat Credit on CEC upheld. Interest and penalty - HELD THAT - It is found that no interest have been demanded in the Adjudication Order. The penalty imposed is also set aside. Appeal partly allowed.
Issues Involved:
1. Admissibility of Cenvat Credit on Clean Energy Cess (CEC). 2. Imposition of interest on availed but unutilized Cenvat Credit. 3. Imposition of penalty for availing Cenvat Credit on CEC. Summary: 1. Admissibility of Cenvat Credit on Clean Energy Cess (CEC): The primary issue was whether the appellant was entitled to take Cenvat Credit of Clean Energy Cess (CEC) paid on coal. The Tribunal referred to Rule 3 of CCR, 2004, which does not explicitly list CEC as eligible for Cenvat Credit. The appellant argued that CEC, being a duty of excise, should be eligible for credit under Rule 3 of CCR, 2004, citing precedents like Shree Renuka Sugars and The Ramco Cements Ltd. However, the Tribunal noted that fiscal statutes must be interpreted strictly, and since Rule 3 does not include CEC, credit cannot be allowed. The Tribunal also emphasized that allowing Cenvat Credit on CEC would defeat the purpose of the cess, which is based on the "Polluter pays" principle. Consequently, the Tribunal held that Cenvat Credit on CEC is not admissible. 2. Imposition of Interest: The Tribunal referred to the judgment of the Hon'ble High Court of Karnataka in Bill Forge Pvt Ltd, which held that interest is not payable if Cenvat Credit is availed but not utilized. The Tribunal agreed with this view, stating that no interest is chargeable if the credit has been reversed before utilization. 3. Imposition of Penalty: Regarding the penalty, the Tribunal found that the issue was interpretational and that the appellant could have held a genuine belief that they were entitled to Cenvat Credit on CEC. Therefore, the imposition of penalty under Rule 15 of CCR, 2004, was not justified and needed to be set aside. Conclusion: The Tribunal upheld the denial of Cenvat Credit on Clean Energy Cess. It ruled that no interest is payable where Cenvat Credit has been availed but not utilized and set aside all penalties imposed. The appeal was partly allowed by setting aside the penalty and dismissing the appeal on merits. Separate Assenting Order: Ms. SulekhaBeevi C.S. agreed with the conclusion that credit on Clean Energy Cess is not eligible but did not concur with the entire discussion of the brother Member. She emphasized that Rule 3 of CCR, 2004, does not expressly provide for availing credit on CEC and noted the inapplicability of Section 37 of the Central Excise Act to CEC. She also agreed with the conclusions regarding interest and penalties. The appeals were partly allowed as above.
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