Custom, Excise & Service Tax Tribunal
Deccan Cements Ltd vs Rangareddy - G S T on 16 July, 2019
(1)
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Division Bench
Court - I
Appeal No. E/30305/2016
(Arising out of Order-in-Original No. HYD-EXCUS-003-COM-012-15-16 dt.31.12.2015
passed by CCCE & ST (Appeals), Hyderabad)
Deccan Cements Ltd
Bhavanipuram Village, Janpahad Mandal,
Nalgonda, Telangana - 508 218 ......Appellant
VERSUS
Commissioner of Central Tax, Rangareddy
- GST, Posnett Bhavan, Ramkoti,
Hyderabad, Telangana - 500 001
......Respondent
with
Appeal No. E/30532/2016
(Arising out of Order-in-Original No. VIZ-EXCUS-003-COM-002-2016-17 dt.04.05.2016
passed by CCCE & ST (Appeals), Nellore)
M/s Bharathi Cement Corporation Pvt Ltd
Nallanlingayapalli, Daspalla Hills,
Kadapa, Andhra Pradesh - 380 100 ......Appellant
VERSUS
Commissioner of Customs, Central Excise
& Service Tax, Nellore
D.No.24/1628, SM Towers, Dargamitta,
......Respondent
Nellore, Andhra Pradesh - 524 003
with
Appeal No. E/30704/2016
(Arising out of Order-in-Original No. HYD-EXCUS-003-COM-040-16-17 dt.31.05.2016
passed by CCCE & ST (Appeals), Hyderabad-III)
Deccan Cements Ltd
Bhavanipuram Village, Janpahad Mandal,
Nalgonda, Telangana - 508 218 ......Appellant
VERSUS
Commissioner of Central Tax, Rangareddy
- GST, Posnett Bhavan, Ramkoti,
Hyderabad, Telangana - 500 001
......Respondent
(2)
with
Appeal No. E/30731/2016
(Arising out of Order-in-Original No. VIZ-EXCUS-003-COM-003-16-17 dt.11.05.2016 passed
by CCCE & ST (Appeals), Nellore)
M/s Zuari Cement Ltd
Krishna Nagar, Yerraguntla, Kadapa,
Andhra Pradesh - 522 004 ......Appellant
VERSUS
Commissioner of Central Tax, Tirupati-GST
West Church Compound, MR Palli Road,
Chitthoor, AP - 517 507 ......Respondent
with
Appeal No. E/31072/2016
(Arising out of Order-in-Original No. TTD-EXCUS-000-COM-13-16-17 dt.15.09.2016 passed
by CCCE & ST (Appeals), Tirupati)
M/s Penna Cement Industries Ltd Unit IV
Boyareddypalli Village, Yadiki Mandal,
Anantapur, AP - 515 408 ......Appellant
VERSUS
Commissioner of Central Excise, Customs
& Service Tax - Tirupati
9/86-A, Behind West Church Compound,
......Respondent
Amaravathi Nagar, MR Palli, AP - 517 502
with
Appeal No. E/31076/2016
(Arising out of Order-in-Original No. TTD-EXCUS-000-COM-12-16-17 dt.01.09.2016 passed
by CCCE & ST (Appeals), Tirupati)
M/s Penna Cement Industries Ltd Unit I
Talaricheruvu, Tadipatri,
Anatapur, AP - 515 411 ......Appellant
VERSUS
Commissioner of Central Excise, Customs
& Service Tax - Tirupati
9/86-A, Behind West Church Compound,
......Respondent
Amaravathi Nagar, MR Palli, AP - 517 502
(3)
with
Appeal No. E/30037/2017
(Arising out of Order-in-Original No. TTD-EXCUS-000-COM-14-16-17 dt.15.09.2016 passed
by CCCE & ST (Appeals), Tirupati)
M/s Rain Cements Ltd
Boincheruvupalli Village, Peapully Mandal,
Kurnool District, AP - 518 220 ......Appellant
VERSUS
Commissioner of Central Excise, Customs
& Service Tax - Tirupati
9/86-A, Behind West Church Compound,
......Respondent
Amaravathi Nagar, MR Palli, AP - 517 502
with
Appeal No. E/30634/2017
(Arising out of Order-in-Original No. TTD-EXCUS-000-COM-030-16-17 dt.15.02.2017
passed by CCCE & ST (Appeals), Tirupati)
M/s Penna Cement Industries Ltd
Talaricheruvu, Tadipatri,
Anatapur, AP - 515 411 ......Appellant
VERSUS
Commissioner of Central Excise, Customs
& Service Tax - Tirupati
9/86-A, Behind West Church Compound,
......Respondent
Amaravathi Nagar, MR Palli, AP - 517 502
and
Appeal No. E/30220/2018
(Arising out of Order-in-Original No. HYD-EXCUS-003-COM-018-17-18 dt.31.10.2017
passed by CCT, Rangareddy - GST)
Deccan Cements Ltd
Bhavanipuram Village, Janpahad Mandal,
Nalgonda, Telangana - 508 218 ......Appellant
VERSUS
Commissioner of Central Tax, Rangareddy
- GST, Posnett Bhavan, Ramkoti,
Hyderabad, Telangana - 500 001
......Respondent
(4)
Appearance
Present for the Appellant: Shri Y. Sreenivasa Reddy, Shri B. Venugopal & Shri G.
Prahlad, Advocates.
Present for the Respondent: Shri Gautam Mukherjee, Shri D. Nagesh, Y. Srinivasa
Murthy & Shri Juvvala Srinivasa, Authorized Representatives.
Coram:
HON'BLE MS. SULEKHA BEEVI C.S, MEMBER (JUDICIAL)
HON'BLE MR. P. VENKATA SUBBA RAO, MEMBER (TECHNICAL)
FINAL ORDER No. A/30684-30692/2019
Date of Hearing: 17.06.2019
Date of Decision: 16.07.2019
[Order per: P. VENKATA SUBBA RAO]
1. All these 9 appeals are on the same issue and hence are being
disposed of together. The details of these appeals are as follows:
CENVAT credit Interest (in Penalty (in
Appeal No. Appellant
availed (in Rs) Rs) Rs)
Deccan
E/30305/2016 5,09,24,537 As applicable -
Cements Ltd
Bharathi
Cement
E/30532/2016 4,12,85,200 - 41,28,520
Corporation
Pvt Ltd
Deccan
E/30704/2016 1,72,76,172 - 2,000
Cements Ltd
Zuari Cement
E/30731/2016 10,42,51,048 33,68,209 1,04,25,106
Ltd
Penna Cement
E/31072/2016 3,38,05,371 - 10,00,000
Industries Ltd
Penna Cement
E/31076/2016 3,22,34,230 - 30,00,000
Industries Ltd
Rain Cements
E/30037/2017 4,94,86,230 - 10,00,000
Ltd
Penna Cement
E/30634/2017 2,28,14,148 - 10,00,000
Industries Ltd
Deccan
E/30220/2018 17,55,97,455 - 5,000
Cements Ltd
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
(5)
Cenvat credit on the CEC paid by them while it is the case of the revenue
that no Cenvat credit can be granted for the Clean Energy Cess as it is not
covered under Rule 3 of Cenvat Credit Rules (CCR), 2004. Show cause
notices have been issued and demands have been confirmed proposing
recovery of the allegedly wrongly availed Cenvat credit along with interest
and penalties have been imposed as indicated in the table above. Aggrieved
by the impugned orders, the present appeals have been filed.
3. We have heard the learned Counsels for the appellants as well as the
learned Departmental Representatives at length. It is the case of the
appellants that the CEC is levied as per Section 83 of the Finance Act, 2010
which specifically states that "they shall be levied and collected in
accordance with the provisions of this Chapter, a Cess to be called, Clean
Energy Cess, as a duty of excise on goods specified in Tenth Schedule being
goods produced in India at the rate set forth in the said Schedule for the
purposes of financing and promoting clean energy initiatives, fund the
research in the area of clean energy or for any other purpose relating
thereto." They argued that the CEC is nothing but a duty of excise and is
collected by the Central Excise officers and therefore there is no reason to
deny them the credit of Cenvat under Rule 3 of CCR, 2004. While agreeing
that the CEC is not explicitly listed in Rule 3 of CCR as one of the taxes on
which credit can be taken, it is the argument of the appellants that this
should not be the reason for denying them the Cenvat credit because CEC is
also a form of excise duty. They rely on the case law of Shree Renuka
Sugars [2014 (302) ELT 33 (Kar.)] in which the Hon'ble High Court of
Karnataka held that with reference to sugar cess which was also in the
nature of duty of excise that Cenvat credit is admissible even though it is
not explicitly mentioned in Rule 3 of CCR, 2004. They would also place
(6)
reliance in the order of CESTAT-Bangalore in the case of The Ramco
Cements Ltd [2018 (10) TMI 10 (CESTAT-Bang.)] in which the Tribunal held
that the assessee is entitled to the Cenvat credit of CEC relying on the
aforesaid judgment of Hon'ble High Court of Karnataka in the case of Shree
Renuka Sugars. They also placed reliance on the decision of State Street
Syntel Services Pvt Ltd [2019-TIOL-1468-CESTAT-Mumbai] in which the
Tribunal allowed Cenvat credit of Swachh Bharat Cess 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 non-
availment 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 Cenvat credit is not sufficient for
imposition of interest as well as penalty. In view of the above, they pleaded
that the impugned orders may be set aside and their appeals may be
allowed.
(7)
6. On behalf of the revenue, learned departmental representatives
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);
iv. the additional duty of excise leviable under section 3 of the
Additional Duties of Excise (Goods of Special Importance) Act,
1957 ( 58 of 1957);
v. the National Calamity Contingent duty leviable under section
136 of the Finance Act, 2001 (14 of 2001);
vi. the Education Cess on excisable goods leviable under section 91
read with section 93 of the Finance (No.2) Act, 2004 (23 of
2004);
via. the Secondary and Higher Education Cess on excisable goods
leviable under section 136 read with section 138 of the Finance
Act, 2007 (22 of 2007);
vii. the additional duty leviable under section 3 of the Customs Tariff
Act, equivalent to the duty of excise specified under clauses (i),
(ii), (iii), (iv), (v) (vi) and (via);
viia. the additional duty leviable under sub-section (5) of section 3 of
the Customs Tariff Act,
(8)
viii. the additional duty of excise leviable under section 157 of the
Finance Act, 2003 (32 of 2003);
ix. the service tax leviable under section 66 of the Finance Act;
ixa. the service tax leviable under section 66A of the Finance Act;
ixb. the service tax leviable under section 66 of the Finance Act;
x. the Education Cess on taxable services leviable under section 91
read with 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 by the
(9)
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 appellant is not
admissible for Cenvat credit under CCR, 2004. They concede that CEC is
collected as a duty of excise. However, they point 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. They further argue 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 in
respect of CEC. Although sugar cess was also not explicitly covered in CCR,
2004, the Hon'ble High Court of Karnataka had allowed such credit against
which they filed an SLP which is pending before the Hon'ble Apex Court as
reported in 2015 (319) ELT A.119 (SC). Even the reasoning given by the
Hon'ble High Court of Karnataka for allowing Cenvat credit of sugar cess
does apply to this case. In the case of sugar cess, all provisions of Central
Excise Act and Rules were made applicable to sugar cess as well. However,
with respect to the CEC, Notification No. 02/2010 has been issued making
some provisions of the Central Excise Act, 1944 applicable to the CEC. These
Sections are 5A, 6, 9, 9A, 9AA, 9C, 9D, 9E, 11, 11A, 11AA, 11AB, 11AC,
11B, 11BB, 11C, 11D, 11DD, 11DDA, 12A, 12B, 12C and 12D; Chapters III,
VI, VIA and VIB. From the above, it is evident that other provisions of
Central Excise Act do not apply to the CEC. The CCR, 2004 have been
(10)
framed under Section 37 (Chapter VII) of the Central Excise Act, 1944.
Neither Chapter VII nor Section 37 has been made applicable for CEC at all.
Therefore, any rule that has been framed under Section 37 including CCR,
2004 cannot, by any stretch of imagination, be made applicable to CEC.
Therefore, the ratio of the judgment of the Hon'ble High Court of Karnataka
in the case of Shree Renuka Sugars (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
given for the CEC paid by the appellants.
9. They, futher argued that Cenvat credit or erstwhile Modvat credit or
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,
(11)
the tax paid gets sets 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 admissible. 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 cement or other products manufactured by the assessees. 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. With respect to interest they would assert that once the assessee has
availed or utilized Cenvat credit, interest is payable. On the question of
penalty also they would assert that penalty is imposable on all the
appellants for wrongly availing Cenvat credit in clear violation of CCR, 2004.
They relied on the order of this Bench in the case of Singareni Collieries Co.
Ltd [2016 (341) ELT 378 (Tri-Hyd)] to assert that the CEC was imposed on
the principle of 'Polluter pays' and therefore it stands on a different footing
than other Cesses.
11. We have considered the arguments on both sides and perused the
records. The short point to be decided is whether the appellants are entitled
to Cenvat credit of the CEC paid on the coal imported by them or otherwise.
The CEC was levied under Section 83 of the Finance Act, 2010 which reads
as follows:
"83. (1) This Chapter extends to the whole of India.
(2) ...........................................
(3) There shall be levied and collected in accordance with the provisions of
this Chapter, 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
(12)
promoting clean energy initiatives, funding 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 respect of some cesses and not in respect of all the cesses and duties of
excise. The Hon'ble High Court of Karnataka gave benefit of credit of sugar
cess in respect of Shree Renuka Sugars (supra) expanding the scope of
Cenvat Credit Rules by taking a broader view and holding that sugar cess
also being duty of excise Cenvat credit may not be denied.
13. It is, however, now a well settled legal position laid down, after the
aforesaid decision of Hon'ble High Court of Karnataka that fiscal statutes
must be interpreted strictly as per the letter of word and not the spirit of the
law, ignoring any amount of hardship and eschewing any equity 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, we
(13)
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. We have also considered the argument of the appellants 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, we 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 provide for credit of CEC nor do the
provisions of CEC make CCR and any other Rules under Central Excise Act
applicable to it. Therefore, this is clearly distinguishable from the case of the
Hon'ble High Court of Karnataka in the case of Shree Renuka Sugars
(supra).
15. 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 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
(14)
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 legislative power delegated to the Government is again subject to
control of the legislature. It is for this reason the rule making power is not
delegated to any other arm of State but only to Government which is
answerable to the legislature.
17. However, 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. The Jurisdiction of the Tribunals and
their powers have been 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:
(15)
"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 of an Act cannot declare that very Act to be unconstitutional. In such
cases alone, the concerned High Court may be approached directly. All other
decisions of these Tribunals, rendered in cases that they are specifically
empowered to adjudicate upon by virtue of their parent statutes, will also be
subject to scrutiny before a Division Bench of their respective High Courts. We
may add that the Tribunals will, however, 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 ousted, other courts and Tribunals may perform a supplemental role in discharging the powers conferred by Articles 226/227 and 32 of the Constitution. The Tribunals created under Article 323A and Article 323B of the Constitution are possessed of the competence to test the constitutional validity of statutory provisions and rules. All decisions of these Tribunals will, however, be subject to scrutiny before a Division Bench of the High Court within whose jurisdiction the concerned Tribunal falls. The Tribunals will, nevertheless, continue to act like Courts of first instance in respect of the areas of law for which they have been constituted. It will not, therefore, be open for litigants to directly approach the High Courts even in cases where they question the vires of statutory 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.
(16)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 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.
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 (17) 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 is not justified and needs to be set aside. In conclusion, the impugned orders are modified as follows:
A. The denial of Cenvat credit on Clean Energy Cess is upheld. B. In all cases where Cenvat credit has been availed but not utilized, no interest is payable and in cases where Cenvat credit has been availed and utilized, appropriate amount of interest is payable. C. All penalties are set aside.
22. The appeals are partly allowed as herein above.
(Order Pronounced in the open court on 16.07.2019) (SULEKHA BEEVI C.S) MEMBER (JUDICIAL) (P.VENKATA SUBBA RAO) MEMBER (TECHNICAL) Veda (18) Separate assenting order - Per Ms. SulekhaBeevi C.S.
23. I have gone through the order recorded by brother Member (Technical) in these appeals. I agree with the conclusion arrived by my brother Member as to the issue whether credit is eligible on Clean Energy Cess paid by the appellant. However, I do not concur with the entire discussions recorded by my brother Member for reaching such conclusion. I therefore record separate order as under:-
24. Clean Energy Cess is levied as duty of excise on goods specified in Tenth Schedule. Thus, it is a cess in the nature of excise duty on the 'production' of coal and is collected at the time of removal of raw coal, raw ignite and raw peat from the mines of the factory. The intention of the levy of this cess is for the purposes of financing and promoting clean energy initiatives, fund the research in the area of clean energy or for any other purposes relating thereto. It is specifically stated in the notification that this cess has to be paid by cash. The liability to pay cess cannot be discharged using CENVAT credit.
25. As already discussed by brother Member, Rule 3 of CENVAT Credit Rules, 2004 does not expressly provide for availing credit on Clean Energy Cess. The sixth proviso introduced in Rule 3(4) of CENVAT Credit Rules, with effect from 29.6.2010, provides that CENVAT credit on any duty specified in sub-rule (1) shall not be utilized for payment of Clean Energy Cess leviable under section 83 of the Finance Act, 2010 (14 of 2010). Thus, CEC has to be paid using cash only. This consequently implies that no credit can be availed 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 (19) 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 imposed. Further, wherever refund of the unutilized credit on cess is sought, the refund is not eligible since the credit itself is wrongly availed and ineligible.
28. The appeals are partly allowed as above.
(Pronounced in open court on 16.07.2019) (MS. SULEKHA BEEVI C.S) MEMBER (JUDICIAL) Rex