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2025 (4) TMI 366 - AT - Central ExciseCENVAT credit on the Clean Energy Cess (CEC) paid on coal both imported and indigenously procured during the period from September 2014 to June 2017 availed beyond time limit of more than one year - HELD THAT - The learned Commissioner referring to various provisions of CEC and the Notifications issued relating to CEC with effect from 01.07.2010 reasoned that since CEC is not among the specified duties and excise available to credit mentioned under Rule 3(1) of CCR 2004 notified under Section 37 of the Central Excise Act 1994 therefore cenvat credit on CEC is inadmissible. The appellant on the other hand heavily relied on the judgment in the case of Shree Renuka Sugars case 2014 (1) TMI 1469 - KARNATAKA HIGH COURT in which the Hon ble High Court of Karnataka allowed cenvat credit on sugar cess.The said judgment of the Hon ble High Court has been distinguished by the Tribunal in Deccan Cements Ltd. 2019 (7) TMI 764 - CESTAT HYDERABAD and held that the sugar cess and CEC stands on a different footing therefore the judgment of the Hon ble High Court of Karnataka cannot be made applicable to CEC. The learned Commissioner has already dropped levy of interest and as far as penalty is concerned following judgment in Deccan Cements Ltd no penalty is imposable since the issue involved is interpretation of law. Consequently the impugned order is modified to the extent of confirming the demand of cenvat credit on CEC and penalty imposed is set aside. Conclusion - The denial of cenvat credit on Clean Energy Cess emphasizing the strict interpretation of Rule 3 of CCR 2004 upheld. Appeal disposed off.
ISSUES PRESENTED and CONSIDERED
The core legal issue in these appeals is whether the appellants are entitled to avail cenvat credit on the Clean Energy Cess (CEC) paid on coal, both imported and indigenously procured, during the period from September 2014 to June 2017. The Tribunal also considered whether the imposition of penalties and interest in cases of availed but unutilized cenvat credit was justified. ISSUE-WISE DETAILED ANALYSIS 1. Admissibility of Cenvat Credit on Clean Energy Cess (CEC) Relevant Legal Framework and Precedents: The appellants argued that CEC should be considered a duty of excise under Section 83 of the Finance Act, 2010, and thus eligible for cenvat credit under Rule 3 of the Cenvat Credit Rules (CCR), 2004. They relied on the Karnataka High Court's decision in the Shree Renuka Sugars case, which allowed cenvat credit on sugar cess. The Tribunal also considered conflicting decisions from different benches, such as the favorable decision in Ramco Cement Ltd. and the contrary decision in Deccan Cement Ltd. Court's Interpretation and Reasoning: The Tribunal concluded that Rule 3 of CCR, 2004, explicitly lists the duties and cesses eligible for cenvat credit, and CEC is not included. The Tribunal emphasized the need for strict interpretation of fiscal statutes and noted that the Finance Act, 2010, did not make the Cenvat Credit Rules applicable to CEC. The Tribunal distinguished the Shree Renuka Sugars case by noting that the entire Central Excise Act and Rules applied to sugar cess, unlike CEC, where only some provisions were applicable. Key Evidence and Findings: The Tribunal found no ambiguity in Rule 3 of CCR, 2004, which did not include CEC as eligible for cenvat credit. It also noted that allowing cenvat credit on CEC would contradict the purpose of the cess, which is to promote clean energy initiatives. Application of Law to Facts: The Tribunal applied the strict interpretation principle to conclude that CEC was not eligible for cenvat credit under the existing legal framework. The absence of an explicit provision in Rule 3 of CCR, 2004, and the non-applicability of Section 37 of the Central Excise Act to CEC were decisive factors. Treatment of Competing Arguments: The Tribunal acknowledged the appellant's reliance on favorable precedents but found them distinguishable or not applicable. It disagreed with the Ramco Cement Ltd. decision and aligned with the Deccan Cement Ltd. ruling, emphasizing the non-inclusion of CEC in the eligible list under Rule 3. Conclusions: The Tribunal concluded that cenvat credit on CEC is inadmissible under Rule 3 of CCR, 2004, as CEC is not listed as an eligible duty or cess. 2. Imposition of Interest and Penalties Relevant Legal Framework: The Tribunal considered the provisions of Rule 15 of CCR, 2004, regarding penalties and the Karnataka High Court's decision in Bill Forge Pvt. Ltd. concerning interest on unutilized cenvat credit. Court's Interpretation and Reasoning: The Tribunal held that interest is not payable on cenvat credit that was availed but not utilized. It also found that penalties were unjustified as the issue involved was interpretational, and the appellants could have genuinely believed in their entitlement to cenvat credit on CEC. Conclusions: The Tribunal set aside the penalties and ruled that interest is only payable on cenvat credit that was both availed and utilized. SIGNIFICANT HOLDINGS The Tribunal upheld the denial of cenvat credit on Clean Energy Cess, emphasizing the strict interpretation of Rule 3 of CCR, 2004. It found no provision allowing cenvat credit for CEC and highlighted that the Finance Act, 2010, did not apply the Cenvat Credit Rules to CEC. The Tribunal set aside penalties due to the interpretational nature of the issue and ruled that interest is not payable on unutilized cenvat credit. Key principles established include the strict interpretation of fiscal statutes and the non-eligibility of CEC for cenvat credit under the current legal framework.
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