CLEAN ENERGY CESS

[Mr. M. GOVINDARAJAN]

The Hon'ble Finance Minister in this year introduced a new cess called as 'Clean Energy Cess'. In his budget speech the Finance Minister told that harnessing renewable energy sources to reduce dependence on fossil fuels is now recognized as a credible strategy for combating global warming and climate change. To build the corpus of the National Clean Energy Fund announced earlier, he proposed to levy a clean energy cess on coal produced in India at a nominal rate of Rs.50 per tone. This cess will also apply to imported coal.

Chapter VII of the Finance Bill, 2010 deals with Clean Energy Cess. Clause 82 of the Finance Bill seeks to levy a cess to be called the Clean Energy Cess as duty of excise for the purposes of the Union on coal, lignite and peat produced in India.  Chapter VII is applicable to the whole of India. The provisions under Chapter VII shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.

Clause 82(3) provides that there shall be levied and collected in accordance with the provisions of Chapter VII, a cess to be called the Clean Energy Cess, as duty of excise, on goods specified in the Tenth Schedule, being goods produced in India, at the rates set forth in the said schedule for the purposes of financing and promoting clean energy initiatives, funding research in the area of clean energy or for any other purpose relating thereto. 

The tenth schedule to Finance Bill gives the rates of the specified goods for levying Clean Energy Cess as below:

Sl.No.	Chapter, heading, sub heading or tariff item	Description of goods	Rate
1	2701	Coal; briquettes, ovoids and similar solid fuels manufactured from coal	Rs.100 per ton
2	2702	Lignite, whether or not agglomerated excluding jet	Rs.100 per ton
3	2703	Peat (including peat litter), whether or not agglomerated	Rs.100 per ton

The proceeds of the cess levied shall first be credited to the Consolidated Fund of India. Then the Central Government may, after due appropriation made by Parliament by law in this behalf, utilize such sums of the money of the cess for the purposes specified under clause 82(3), as it may consider necessary. This cess shall be in addition to any cess or duty leviable on the goods specified in the tenth schedule under any other law for the time being in force.

Clause 82(6) provides that the cess levied shall be for the purposes of the Union and the proceeds thereof shall not be distributed among the States and the manner of assessment, collection, utilization and any other matter relating to cess shall be such as may be prescribed by rules. 

Clause 82(7) gives power to the Central Government to declare by notification in the Official Gazette, that any of the provisions of the Central Excise Act, 1944 relating to levy of and exemption from duty of excise, refund, offences and penalties, confiscation and procedure relating to offences and appeals shall, with such modifications and alterations as it may consider necessary, be applicable in respect of cess levied under Clause 82(3).

Clause 83 gives power to the Central Government by notification in the official gazette to make rules for carrying out the provisions of this chapter.  Such rules may provide for-

* the manner of assessment, collection and utilization of the cess under clause 82(6);

* any other matter relating to the cess under clause 82(6)

Clause 83(3) provides that every rule made and every notification issued under Chapter VII shall be laid as soon as may be after it is made or issued, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session, or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or notification, or both Houses agree that the rule or notification should not be issued, the rule or notification shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or notification.