2018 (10) TMI 10 - AT - Central Excise

CENVAT credit - Clean Energy Cess paid on imported / indigenous coal, Lignite - Demand of Interest and penalty - Held that - Clean Energy Cess contains the reference to the provision of Central Excise Act, 1944 and even if the CCRs, 2004 do not specifically mention in Section 3 but still the appellants are entitled to CENVAT credit because the Cess has been paid as duty of excise and the same has been levied under Section 83 of the Finance Act, 2010. Sugar Cess levied under Sugar Cess Act, 1982 is similar to Clean Energy Cess levied under Section 83 of the Finance Act, 2010 and therefore the ratio laid down by the Hon ble High Court of Karnataka in the case of Sri Renuka Sugars Ltd. 2014 (1) TMI 1469 - KARNATAKA HIGH COURT is squarely applicable in the facts and circumstances of the case, because the Clean Energy Cess has been levied and collected as duty of excise by virtue of Section 3(1) of Customs Tariff Act. CENVAT credit of Clean Energy Cess is allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Admissibility of CENVAT credit for Clean Energy Cess paid on imported/indigenous coal.

Analysis:
The appeals were against an order confirming the denial of CENVAT credit on Clean Energy Cess paid on coal by the appellant. The Commissioner(Appeals) upheld the denial, leading to the present appeals. The appellant contended that Clean Energy Cess is akin to excise duty, entitling them to CENVAT credit. They cited legal provisions and judicial precedents, including the case of Sri Renuka Sugars Ltd., where the High Court held that CENVAT credit was allowable for Sugar Cess. The appellant argued that the Clean Energy Cess was levied as excise duty, making them eligible for credit. They also challenged the penalty imposed under Rule 15(1) of CCR, supported by relevant case laws.

The respondent defended the impugned order, asserting that the appellant was not entitled to CENVAT credit as the Cess was not paid as excise duty. They argued that the Commissioner(Appeals) thoroughly considered all aspects and legal provisions, concluding against the appellant's claim. The respondent contended that the decision in Sri Renuka Sugars Ltd. was distinguishable from the present case.

Upon review, the Tribunal analyzed the statutory provisions and legal framework concerning Clean Energy Cess. They noted that the Cess was levied as excise duty under the Finance Act, 2010, with references to the Central Excise Act, 1944. Drawing parallels with the case of Sri Renuka Sugars Ltd., the Tribunal found that the Clean Energy Cess was akin to the Sugar Cess, allowing for CENVAT credit. Relying on the High Court's decision, the Tribunal held that the denial of CENVAT credit on Clean Energy Cess was unsustainable in law. Consequently, the impugned order was set aside, and the appeals of the appellant were allowed with appropriate reliefs.

In conclusion, the Tribunal's detailed analysis emphasized the applicability of CENVAT credit for Clean Energy Cess, aligning with legal provisions and judicial precedents. The decision highlighted the similarities between Clean Energy Cess and Sugar Cess, establishing the appellant's entitlement to credit. The judgment provided a thorough examination of the legal intricacies, ultimately ruling in favor of the appellant and overturning the denial of CENVAT credit.