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TMI Blog2019 (7) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... we will be doing a great disservice to the country by replacing the principle of Polluter pays with Pollution pays . We will be encouraging use of polluting forms of energy by undoing the very purpose for which CEC has been levied. Where there is a conflict between the constitutional provisions and the laws made or the parent act and the subordinate legislations vires of such act and rules are tested and decided by the Hon ble Supreme Court and Hon ble High Courts under Article 32 and 226 of the Constitution of India. The Tribunals (including this Tribunal) are created under Article 323B of the Constitution of India which was inserted by the 42nd amendment to the Constitution - this Tribunal can also examine the vires of the Act and Rules with the condition that the Statute under which this Tribunal was created (Customs Act, 1962) cannot be questioned by this Tribunal. Further, the power of this Tribunal to decide on the vires of the Act or Rules is subject to scrutiny by Division Bench of the High Courts. Thus, the assessees are not entitled to Cenvat credit under Rule 3 of CCR, 2004. Demand of Interest - HELD THAT:- Wherever Cenvat credit has been availed but not uti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,38,05,371 - 10,00,000 E/31076/2016 Penna Cement Industries Ltd 3,22,34,230 - 30,00,000 E/30037/2017 Rain Cements Ltd 4,94,86,230 - 10,00,000 E/30634/2017 Penna Cement Industries Ltd 2,28,14,148 - 10,00,000 E/30220/2018 Deccan Cements Ltd 17,55,97,455 - 5,000 2. The appellants in all these cases have taken Cenvat credit of the Clean Energy Cess (CEC) which they paid on the coal imported by them for use in their factory. It is the case of the appellants that they are entitled to the Cenvat credit on the CEC paid by them while it is the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss which is also not indicated in Rule 3 of CCR, 2004 as a duty eligible for Cenvat credit. 4. With respect to imposition of interest, it is their contention that credit of CEC and interest cannot be imposed because credit has been availed after 01.04.2012 and interest can therefore be imposed only if the credit has been availed as well as utilized and not otherwise. In this regard they place reliance on the judgment of the Hon ble High Court of Karnataka in the case of Bill Forge Pvt Ltd [2011-TIOL-799] in which it was held that if the assessee has reversed wrongly availed Cenvat credit without utilizing, it will amount to not taking credit at all. Therefore, if Cenvat credit is availed by the party but is unutilized and subsequently reversed, it amounts to nonavailment of Cenvat credit and no interest accrues. 5. On the question of penalty, it is submitted on behalf of the appellants that a plain reading of Rule 15(1) of CCR shows that penalty has to be levied in cases where Cenvat credit is availed or utilized. However, the Hon ble High Court of Madras in the case of Strategic Engineering Pvt Ltd [2014 (310) ELT 509] held that mere taking of Cenva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 95 of the Finance (No.2) Act, 2004 (23 of 2004); and xa. the Secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007); and xi. the additional duty of excise leviable under section 85 of Finance Act, 2005 (18 of 2005) paid on- (i) any input or capital goods received in the factory of manufacture of final product or premises of the provider of output service on or after the 10th day of September, 2004; and (ii) any input service received by the manufacturer of final product or by the provider of output services on or after the 10th day of September, 2004 including the said duties, or tax, or cess paid on any input or input service, as the case may be, used in the manufacture of intermediate products, by a job-worker availing the benefit of exemption specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 214/86- Central Excise, dated the 25th March, 1986, published in the Gazette of India vide number G.S.R. 547 (E), dated the 25th March, 1986, and received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra) with respect to sugar cess for which the entire Central Excise Act and Rules were made applicable, will not apply to the present case. 8. They further argued that the CEC has been levied by the Parliament for a specific purpose. It is based on the principle Polluter pays which is a well established principle in the field of environment and has been emphasized by the Hon ble Apex Court in several cases related to the environment. This principle states that if any activity is causing pollution, the polluter has to pay for the cleanup. Coal is a cheaper but a polluting form of energy. Therefore, cess has been levied on it so as to increase the cost of such form of energy. The amounts so collected from the CEC are to be used for development of cleaner forms of energy. Thus, it is a case of environment protection and those who are using dirty forms of energy such as coal have to pay for it. If the assessees are allowed Cenvat credit of CEC, it would amount to returning with one hand what has been collected from them with the other to discourage use of dirty polluting fossil fuels. This defeats the purpose of levying CEC. Therefore, no Cenvat credit should be giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g research in the area of clean energy or for any other purpose relating thereto. ................................................ The purpose of levying the CEC is evidently to promote and finance clean energy initiatives by taxing the coal. 12. A plain reading of Rule 3 of CCR, 2004 shows that it did not provide for Cenvat credit of every duty of excise and cess but only of some and this list does not include CEC imposed in Finance Act, 2010. It is the case of the assessees that since CEC is also a form of excise, they are entitled to Cenvat credit even in the absence of an explicit provision under Rule 3 of CCR, 2004. It is also their assertion that following the ratio of the decision of the Hon ble High Court of Karnataka in the case of Shree Renuka Sugars (supra) with respect to sugar cess, Single Member Bench of Tribunal-Bangalore in the case of The Ramco Cements Ltd (supra) allowed credit of CEC. Therefore, the ratio may be followed and they may be allowed Cenvat credit. We proceed to decide this issue on merits. It is undisputed that a plain reading of Rule 3 of CCR, 2004 shows that Cenvat credit is admissible only in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the CEC. It is evident from Section 83 of Finance Act, 2010 that CEC has been levied on coal to discourage use of the polluting forms of energy and encourage use of cleaner forms of energy. This is based on the principle of Polluter pays . If the CEC collected by the Government is returned to the assessee through the backdoor in the form of CCR, 2004, we will be doing a great disservice to the country by replacing the principle of Polluter pays with Pollution pays . We will be encouraging use of polluting forms of energy by undoing the very purpose for which CEC has been levied. 16. We also proceed to examine the matter in the larger context of our legal system. The Constitution of India has divided the powers between Legislature, Executive and Judiciary. The law making power has been given to the Legislature which frames the Acts. Subordinate legislations in the form of rules, regulations, notifications (including CCR, 2004) are notified by the Government and are then placed before the Parliament whose Committee of subordinate legislation examines them to see whether they reflect the intent of the Act and get modifications made, if necessary. Thus the legis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, continue to act as the only courts of first instance in respect of the areas of law for which they have been constituted. By this, we mean that it will not be open for litigants to directly approach the High Courts even in cases where they question the vires of statutory legislations (except, as mentioned, where the legislation which creates the particular Tribunal is challenged) by overlooking the jurisdiction of the concerned Tribunal. ............... 100. In view of the reasoning adopted by us, we hold that Clause 2(d) of Article 323A and Clause 3(d) of Article 323B, to the extent they exclude the jurisdiction of the High Courts and the Supreme Court under Articles 226/227 and 32 of the Constitution, are unconstitutional. Section 28 of the Act and the exclusion of jurisdiction clauses in all other legislations enacted under the aegis of Articles 323A and 323B would, to the same extent, be unconstitutional. The jurisdiction conferred upon the High Courts under Articles 226/227 and upon the Supreme Court under Article 32 of the Constitution is part of the inviolable basic structure of our Constitution. While this jurisdiction cannot be o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tio of the judgment of the Hon ble High Court of Karnataka in the case of Shree Renuka Sugars (supra) does not apply to CEC. Hence, we find that the assessees are not entitled to Cenvat credit under Rule 3 of CCR, 2004. We respectfully disagree with the Order of the Hon ble Single Member in the case of The Ramco Cements Ltd (supra) in view of the above, especially the inapplicability of Section 37 and by implication, the CCR, 2004 framed thereunder to the Clean Energy Cess. 20. Insofar as the interest on Cenvat credit taken is concerned, wherever Cenvat credit has been availed but not utilized, the interest need not be paid but it has to be paid in cases where the Cenvat credit has been taken as well as utilized as has been held by the Hon ble High Court of Karnataka in the case of Bill Forge Pvt Ltd (supra). 21. As far as the imposition of penalties are concerned, we find that this is an interpretational issue and it is possible for the assessees to have held a genuine belief that they are entitled for Cenvat credit of CEC and hence have taken Cenvat credit. Therefore, we find that the imposition of penalty under Rule 15 of CCR, 2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on C.E.C so as to utilize it for making payment of any other duty. 26. The argument put forward by the Revenue pointing out that facts in the case of M/s. Shree Renuka Sugars Ltd. (supra) cannot be applied to the facts of these appeals also merits consideration. In Shree Renuka Sugars (supra), the question was with regard to the eligibility of credit on sugar cess paid by the assessee therein. The Hon'ble High Court of Karnataka held the issue in favour of assessee observing that the entire provisions of Central Excise Act / Rules are made applicable to sugar cess. In respect of Clean Energy Cess, only certain provisions of Central Excise Act are made applicable. 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. For these reasons, I concur with the conclusion arrived by Member (Technical) that credit on Clean Energy Cess is not eligible. 27. I agree with para 20 and 21 with regard to demand of interest and penalties ..... X X X X Extracts X X X X X X X X Extracts X X X X
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