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TMI Blog2022 (10) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... in taxation. However, in the event of ambiguity in taxation liability, statute, the benefit should go to the assessee. From a plain reading of Rule 3 of CCR, 2004, there are no ambiguity. Although it is now settled that taxing statutes must be literally interpreted, we have also examined the spirit and purpose of levying the CEC. It is evident from Section 83 of Finance Act, 2010, that CEC has been levied on coal etc. 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 Credit under CCR, 2004, we will be doing a great disservice to the country by replacing the principle of Polluter pays . Under Clean Energy Cess Rules, the cess has to be deposited through cash /PLA and cannot be deposited through debit to cenvat credit account. Further, proviso to Rule 3(4) of Cenvat Credit Rules specifically debars the payment of Clean Energy Cess by use of cenvat credit taken under Rule 3(1) of Cenvat Credit Rules. Thus, intent of legislature is evident that the Clean Energy Cess has been impose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004, credit could be availed only in respect of those Duties, Taxes or Cesses as were specified in Rule 3 (1) of the Cenvat Credit Rules, 2004. Since Clean Energy Cess was not specified in the Rules, the Department was of the view that the Cenvat Credit was not available. 7. Accordingly, the show cause notice dated 05.04.2018 was issued seeking reversal/recovery of Rs.2,92,98,910/- taken as Cenvat Credit in respect of Clean Energy Cess during the period April, 2016 to June, 2017. Penal provisions were also invoked under Rule 15(1) of the CEnvat Credit Rules, 2004, read with Section 11 AC (1)(a) of the Central Excise Act, 1944. 8. In the reply to the show cause notice, the appellants raised a number of issues including the fact that the dispute related to imported coal only and not for domestically procured coal. The appellant had also relied on the rulings in the case of M/s.TVS Motor Co. Ltd. Vs. Union of India Others -2015-TIOL-1478-HC-KAR-CX, CCE, Belgau Vs. M/s. Shree Renuka Sugars Ltd. 2014 TIOL-98-HC-KAR-CX. 9. Ld. Commissioner distinguishing the judgments relied upon by the assessee confirmed the disallowance of cenvat credit of Clean Energy Cess holding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, there was no infirmity in the appellants taking Cenvat Credit in respect of Clean Energy Cess paid by the appellants in the form of additional duty of customs on the imported coal. (iii) A similar matter had come up before the Hon ble Karnataka High Court in connection with availment of Cenvat Credit in respect of Sugar Cess levied as duty of excise under the Sugar Cess Act of 1982. In the case of CC Belgaun Vs. Shree Renuka Sugar Ltd. 2014 (302) ELT 33 (Kar.), the Karnataka High Court has held that Sugar Cess paid on imported sugar would be available as Cenvat Credit under the Cenvat Credit Rules, 2004. (iv) In the case of Ramco Cements Limited [2018(362) ELT 841 (T-Bang.)], which was specifically related to Clean Energy Cess paid on imported coal, it was held that Cenvat Credit would be available under Rule 3(1) of the Cenvat Credit Rules, 2004. (v) The show cause notice proposed to disallow Cenvat Credit on Clean Energy Cess on the imported coal on the following grounds, namely :- (a) that Clean Energy Cess is not one of the duties or cesses specified in Rule 3(1) of the Cenvat Credit Rules, 2004; (b) that utilization of credit of any duty or cess availe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ix) The demand in this case is in respect of Clean Energy Cess. However, as per Section 235 of the Finance Act, 2016 (effective from 14.05.2016) Clean Energy Cess no longer exists and has been substituted /replaced by Clean Environment Cess . The Cess paid on the Bills of Entry from 14.05.2016 was Clean Environment Cess and not Clean Energy Cess. Hence, demanding reversal of Cenvat Credit in respect of Clean Energy Cess which was not paid from 14.05.2016 onwards is in any case not legally correct. Thus, the Commissioner s order directing recovery of Cenvat credit in respect of Cess for the whole period has gone beyond the show cause notice since the show cause notice refers to Clean Energy Cess only. (x) In view of the above, not only is there no question of denying the Cenvat Credit but also there is no case for attributing any malafides to the appellant so as to invoke the penal provisions. 13. Opposing the appeals in support of the Revenue, ld. Authorised Representative makes the following submissions relying on the impugned order:- (i) The eligibility of the appellant to avail Cenvat Credit is entirely based on the provisions of Rule 3 of the Cenvat Credit Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. It is urged that Revenue had filed appeal before the Hon ble Supreme Court, which has been admitted in the matter of Renuka Sugar Ltd. Evidently, the CEC has been imposed on coal/peat, which is a kind of carbon tax in order to finance and promote clean environment initiatives. The Clean Energy Cess, Assessment procedure has been notified by the Government being Clean Energy Cess Rules, 2009 vide notification no.6/2010 dated 22.02.2010. Rule 4 provides - every producer shall pay the cess leviable on the removal of the specified goods in the manner provided in Rule 6. Specified goods have been defined as raw coal, peat and lignite. Removal has been defined as despatch of specified goods from mines and shall include such goods for captive consumption within that mine for any purpose, other than for raising of such goods. Further Rule 6 (6) provides that provision of Section 11 of the Central Excise Act shall be applicable for recovery of the cess as assessed under Rule 5 along with interest in the same manner as is applicable for recovery of the sum payable to the Central Government. 18. Further Explanation to Rule 6 (6) provides that the cess liability shall be deemed to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of Clean Energy Cess. 22. Sub section (4) of Section 83 provides that the Clean Energy Cess shall first be credited to the consolidated fund of India and the Government, after due appropriation made by Parliament in this behalf, utilized the fund for the specified purpose. 23. Further, vide notification No.1/2015-CEC dated 1.3.2015 exemption has been granted from Clean Energy Cess by the Central Government. 24. There is no denying that Clean Energy Cess was levied as duty of excise. Thus, without authority of the Central Excise Act, levy cannot be enforced. It is further urged that (a) That the stipulated Clean Energy Cess is being levied and collected as duty of excise. (b) That the said levy was on the stipulated goods specified in First Schedule to the Central Excise Tariff Act, 1985 and produced in India. (c) That goods subjected to the stipulated levy referred to in the Tenth Schedule to the Act of 2010 were specified with reference to their classification in the First Schedule to the Central Excise Tariff Act, 1985. (d) That the Notes appended with the said Tenth Schedule very categorically directs the usage/invocation/application of the rules of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rences to the expressions duty , duties , duty of excise and duties of excise shall be construed to include a reference to Central Value Added Tax (CENVAT) . 27. It is explicit from the foregoing provision that, the expression, duty, duties, duty of excise, and duties of excise shall be construed to include a reference to Cenvat, i.e. Central Value Added Tax. Thus, levy of any cess whatsoever as a duty of excise is duly covered under the ambit of the Act of 1944. 28. Further, reliance is placed on the following rulings:- (i) In Barnagore Jute Factory Co. Vs. Inspector of Central Excise (ii) In Collector of Central Excise, Patna Vs. Tata Engineering and Locomotive Co. (iii) Banswara Syntex Ltd. VS. Union of India (iv) CCE, Belgaun Vs. M/s. Shree Renuka Sugars Ltd. (v) M/s.TVS Motors Co. Ltd. Vs. Union of India Ors. 29. Statutory constraint pertaining to the payment of Clean Energy Cess using Cenvat credit account, cannot be extended to ascertain its eligibility for cenvat credit on any eligible input used in the process integrated with the manufacture of final product : It is used that, Proviso to Rule 3 (4) of Cenvat Credit Rules, 2004 has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecessity for the intended exclusion of the same from purview and administration of sub-rule (4). For the similar reasons, for the exclusion of Clean Energy Cess from the scope and purview of sub-Rule (1), the contemplation in respect thereof in the body, the very sub-Rule (1) was a prerequisite. There is no denying that, if legislature would have intended to exclude Clean Energy Cess from scope and purview of sub-rule (1),it would have expressly done so, as it was done in the case of sub-rule (4) by making very specific contemplation by introducing a proviso to this effect. Since there is such contemplation identical to sixth proviso of sub-rule (4), in the text of sub-rule (1), therefore, Clean Energy Cess rationally and legitimately falls in the range of the said sub-rule (1). 33. Having considered the rival contentions, we find that the levy of Clean Energy Cess is evidently to promote and finance measures for Clean Energy initiatives by taxing coal, lignite and peat. 34. 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 vide Finance Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the principle of Polluter pays . We will be encouraging use of polluting forms of energy by undoing the very purpose for which CEC has been levied. 37. 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 are framed are not made applicable to CEC under the Finance Act, 2010. (c) It is not open for this Tribunal to enlarge or modify the scope of Act or rules and they should be interpreted as they are drafted without any intendment. (d) If Cenvat credit of CEC is allowed, it will undo the very purpose for which it is levied and vitiate polluter pays principle. (e) The ratio of the judgment of the Hon ble High Court of Karnataka in the case of Shree Renuka Sugars (supra) does not apply to CEC. 38. Hence, we find that the assessees ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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