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TMI Blog2019 (7) TMI 1477X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 - The assessee is not entitled to Cenvat credit under Rule 3 of CCR, 2004. Penalty - HELD THAT:- The dispute is an interpretational one and it is perfectly possible for the assessee to have entertained a belief that they are entitled to Cenvat credit of CEC and therefore, there is no justification for imposition of penalty under Rule 15 of CCR, 2004 - Further, they have also, on being pointed out, reversed the credit availed by them under protest. Therefore, the penalty is liable to be set aside. Appeal allowed in part. - Appeal No. E/31292/2018 - Final Order No. 30642/2019 - Dated:- 12-7-2019 - MR. P. VENKATA SUBBA RAO, MEMBER (TECHNICAL) Shri A.V.L.N. Chary, AR for the Appellant. Ms Aparajitha, Advocate for the Respondent. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to Cenvat credit of the CEC on coal paid by them as sugar cess which was also not listed in Rule 3 of CCR, 2004 was allowed by the Hon ble High Court of Karnataka. She also submits that in the case of Ramco Cements Ltd [2018 (10) TMI 10 (CESTAT-Bangalore)] Cenvat credit of Clean Energy Cess was allowed. Hence, they should also be allowed credit of Clean Energy Cess. 6. Learned departmental representative forcefully argued that no Cenvat credit is admissible with respect to CEC under CCR, 2004 for the following reasons: (1) A plain reading of Rule 3 of CCR, 2004 shows that the manufacturer or producer of final products or a provider of output service shall be allowed to take credit only of the following duties and cesses: i. the duty of excise specified in the First Schedule to the Excise Tariff Act, leviable under the Excise Act; ii. the duty of excise specified in the Second Schedule to the Excise Tariff Act, leviable under the Excise Act; iii. the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act,1978 (40 of 1978); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), 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 by the manufacturer for use in, or in relation to, the manufacture of final product, on or after the 10th day of September, 2004. 7. Therefore, every form of cess or tax paid by the assessee is not admissible for Cenvat credit under CCR, 2004. He conceded that CEC is collected as a duty of excise. However, he pointed out that various other forms of cesses are also collected by the Government and all Cesses are collected as if they are a form of duty of excise. If the intention of the Legislature/ Government was to provide credit of any duty of excise or any cess paid by the assessee, Rule 3 would have been worded so, instead of listing a few specific forms of duty of excise and cesses as eligible for credit. Therefore, simply because a particular tax is collected as a duty of excise, it does not automatically entitle the assessee to avail Cenvat credit on such duty. He further argued that the case of Shree Renuka Sugars (supra) does not apply to present case as that was in the context of sugar cess and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 given for the CEC paid by the respondent. 9. He, further argued that Cenvat credit, the erstwhile Modvat credit and the present day GST input tax credit system are all based on the principle of avoiding cascading effect of taxes. The tax is levied at several stages and the tax paid at each stage is given as credit to the next stage payer. Thus, the tax paid gets set off against the tax paid at the next stage. Ultimately, the consumer bears the full burden of tax on the full value. Therefore, where there is only levy of one tax at one point, no Cenvat credit is given. If Cenvat credit or any other form of refund of the tax is given with respect to taxes levied at single point, there is no point in collecting taxes at all. In the present case, the CEC is levied at one and only one stage. There is no CEC again on the sugar or other products manufactured by the assessee. This is similar to the basic customs duty which is also levied at one point and no Cenvat credit is given on such duty. 10. I have consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m a plain reading of Rule 3 of CCR, 2004, I do not find any ambiguity. If the intention was to allow credit of all forms of duties of excise and cesses, the Rule would have said so. Instead, it only listed some forms of duties of excise, additional duties of customs and cesses on which credit will be admissible and CEC is not one of them. 14. I have also considered the argument of the respondent that the ratio of judgment of Hon ble High Court of Karnataka in the case of Shree Renuka Sugars (supra) not being overturned by any superior judicial forum, must apply. On going through the judgment of the Hon ble High Court of Karnataka, I find that in that case the entire Central Excise Act and Rules were applicable to sugar cess but in the case of CEC, only some provisions of Central Excise Act have been made applicable. Section 37 of the Central Excise Act under which the CCR, 2004 as well as other Rules are framed are not made applicable to the CEC. Therefore, the Finance Act itself does not conceive of applying Cenvat Credit Rules to the CEC. In the absence of any explicit provision, they cannot be made applicable to the CEC. In other words, neither does Rule 3 of CCR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examined by the Five Member Constitutional Bench of the Supreme Court in the case of L. Chandra Kumar Vs Union of India in Civil Petition No. 481/1980 vide judgment dated 18.03.1997. Paras 94 and 100 of which are reproduced below: 94. Before moving on to other aspects, we may summarise our conclusions on the jurisdictional powers of these Tribunals. The Tribunals are competent to hear matters where the vires of statutory provisions are questioned. However, in discharging this duty, they cannot act as substitutes for the High Courts and the Supreme Court which have, under our constitutional setup, been specifically entrusted with such an obligation. Their function in this respect is only supplementary and all such decisions of the Tribunals will be subject to scrutiny before a Division Bench of the respective High Courts. The Tribunals will consequently also have the power to test the vires of subordinate legislations and rules. However, this power of the Tribunals will be subject to one important exception. The Tribunals shall not entertain any question regarding the vires of their parent statutes following the settled principle that a Tribunal which is a creature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utory legislations (except where the legislation which creates the particular Tribunal is challenged) by overlooking the jurisdiction of the concerned Tribunal. Section 5(6) of the Act is valid and constitutional and is to be interpreted in the manner we have indicated. 18. From the above, it is evident that 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. 19. It may be seen that the scope of this Tribunal may extend to testing the vires of rules, regulations etc., but certainly does not extend to making the rules or modifying them. In the absence of any explicit provision to give Cenvat credit of CEC under Rule 3 of CCR, 2004, it is not for this Tribunal to enlarge its scope. To sum up: a) Rule 3 of CCR, 2004 does not provide for Cenvat credit of CEC. b) Rules under Central Excise Act including CCR, 2004 or Section 37 under which they ..... X X X X Extracts X X X X X X X X Extracts X X X X
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