Madras High Court
M/S.Nlc India Limited vs The Commissioner Of Gst & Central Excise on 16 February, 2026
Author: G.R.Swaminathan
Bench: G.R.Swaminathan
1 W.P.(MD)NO.8140 OF 2020
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 16.02.2026
CORAM
THE HONOURABLE MR.JUSTICE G.R.SWAMINATHAN
AND
THE HON'BLE MRS.JUSTICE R.KALAIMATHI
W.P.(MD)No.8140 of 2020
M/s.NLC India Limited,
Rep. by its General Manager Finance,
JN Salai, Neyveli, Tamil Nadu. ... Petitioner
Vs.
1.The Commissioner of GST & Central Excise,
1, Williams Road, Cantonment, Tiruchirappalli – 620 001.
2.Union of India,
Through its Revenue Secretary,
Department of Revenue, Ministry of Finance,
128-A/North Block, New Delhi. ... Respondents
Prayer: Writ petition filed under Article 226 of the Constitution of India,
to issue a Writ of Declaration, declaring that part of the notification No.
02/2010-CEC dated 22.06.2010 declaring application of Section 11A of
the Central Excise Act, 1944 for recovery of Clean Environmental Cess,
as ultra vires the powers conferred under Section 83(7) of the Finance
Act, 2010.
For Petitioner : Mr.Raghavan Ramabadran,
for M/s.Lakshmi Kumaran and Sridharan.
For Respondents : Mr.AR.L.Sundaresan,
Additional Solicitor General,
assisted by Mr.K.Govindarajan,
Deputy Solicitor General for R-2.
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2 W.P.(MD)NO.8140 OF 2020
Mr.N.Dilipkumar,
Standing counsel for R-1.
***
ORDER
(By G.R.SWAMINATHAN, J.) Heard both sides.
2.The writ petitioner is a Central Government undertaking. It is one of the Navaratnas. It is a producer of lignite and peat. Section 83 of the Finance Act, 2010 provided for levy of “Clean Environment Cess” (CEC) on certain goods for the purpose of financing and promoting clean environment and energy initiatives, funding research in that area and for related purposes. Chapter VII of the said Act dealing with CEC is as follows :
“Clean Environment Cess
83. (1) This Chapter extends to the whole of India.
(2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.
(3) There shall be levied and collected in accordance with the provisions of this Chapter, a cess to be called the [Clean Environment 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 1[for the 2/13 https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/02/2026 04:46:31 pm ) 3 W.P.(MD)NO.8140 OF 2020 purposes of financing and promoting clean environment and energy initiatives, funding research in the area of clean environment or clean energy, or for any other purpose relating thereto].
(4) The proceeds of the cess levied under sub-
section (3) shall first be credited to the Consolidated Fund of India and the Central Government may, after due appropriation made by Parliament by law in this behalf, utilise such sums of the money of the cess for the purposes specified in sub-section (3), as it may consider necessary.
(5) The cess leviable under sub-section (3) shall be in addition to any cess or duty leviable on the goods specified in the Tenth Schedule under any other law for the time being in force.
(6) The cess leviable under sub-section (3) shall be for the purposes of the Union and the proceeds thereof shall not be distributed among the States and the manner of assessment, collection, utilization and any other matter relating to cess shall be such as may be prescribed by rules.
(7) The Central Government may, by notification in the Official Gazette, declare that any of the provisions of the Central Excise Act, 1944[1 of 1944.], relating to levy of and exemption from duty of excise, refund, offences and penalties, confiscation and procedure relating to offences and appeals shall, with such modifications and alterations 3/13 https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/02/2026 04:46:31 pm ) 4 W.P.(MD)NO.8140 OF 2020 as it may consider necessary, be applicable in respect of cess levied under sub-section (3).
Power of Central Government to make rules.
84. (1) The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Chapter.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for —
(a) the manner of assessment, collection and utilisation of the cess under sub-section (6) of section 82;
(b) any other matter relating to the cess under sub- section (6) of section 82.
(3) Every rule made and every notification issued under this Chapter shall be laid as soon as may be after it is made or issued, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session, or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or notification, or both Houses agree that the rule or notification should not be made or issued, the rule or notification shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or 4/13 https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/02/2026 04:46:31 pm ) 5 W.P.(MD)NO.8140 OF 2020 annulment shall be without prejudice to the validity of anything previously done under that rule or notification.” The goods produced by the writ petitioner attracted Clean Environment Cess.
3.Pursuant to the rule-making power conferred under Section 84 of the Act, Clean Environment Cess Rules, 2010 were issued by the Central Government to deal with collection and assessment of CEC, the manner of its payment, maintenance of records and imposition of penalty. In terms of the power conferred under Section 83(7) of the Act, the impugned notification dated 22.06.2010 was issued. It reads as follows :
“In exercise of the powers conferred by sub section (7) of section 83 of the Finance Act, 2010 (14 of 2010), the Central Government hereby declares that the following provisions of the Central Excise Act, 1944 (1 of 1944) relating to the matters specified therein, shall be applicable in regard to like matters in respect of cess imposed under section 83 of the said Finance Act, namely:-
Sections 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.5/13
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4.The petitioner is particularly aggrieved by the application of Section 11A of the Central Excise Act, 1944 for recovery of Clean Environment Cess. The challenge raised in this writ petition has ceased to be relevant post introduction of GST regime. However, the issue is very much alive in respect of the pre-GST period in respect of goods excavated from the mine and for which gate passes had not been issued for despatch outside. The learned counsel for the petitioner took us through the statutory scheme. He developed his attack point by point on the impugned notification in the following manner :
• Section 84 of the Act specifically deals with assessment and collection of the Cess • Section 83(6) of the Act states that the manner of assessment, collection or any other matter relating to Cess shall be such as may be prescribed by rules • Central Environment Cess Rules, 2010 envisage only self assessment. The rules are silent on the consequences of the self assessment turning out to be incorrect leading to non-payment or short-payment of the Cess.
6/13 https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/02/2026 04:46:31 pm ) 7 W.P.(MD)NO.8140 OF 2020 • Section 83(7) empowers the Central Government to notify the applicability of any of the provisions of the Central Excise Act, 1944 relating to levy of and exemption from excise duty, refund, offences and penalties, confiscation and procedure relating to offences and appeals to CEC with appropriate modifications and alterations. • Section 11A of the Central Excise Act, 1944 deals with recovery of duties not levied or not paid or short-levied or short-paid • Sub-section 6 of Section 83 is to the effect that the manner of assessment and collection shall be in accordance with the rules. Section 84(2)(a) confers power to make rules regarding the manner of collection of the Cess. Sub-section 7 of Section 83 which confers the power to issue notification is silent on assessment and collection of the Cess.
• Collection is nothing but recovery. Therefore, Section 11A can be made applicable to recovery of Cess only through rules issued under Section 84 of the Act and not by way of notification issued under sub-section 7 of Section 83.
In support of his contentions, the learned counsel relied on a catena of case-laws.
5.Per contra, the learned Additional Solicitor General pointed out that the rule-making power as well as the power to notify have both 7/13 https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/02/2026 04:46:31 pm ) 8 W.P.(MD)NO.8140 OF 2020 been conferred only on the Central Government. He submitted that the tracing of the power to Section 83(7) or 84 of the Act amounts to making distinction without difference. He called upon us to read Section 83(3) of the Act which is the charging Section, Section 83(6) & (7) of the Act together. He pressed for adoption of the rule of harmonious construction.
6.We carefully considered the rival contentions and went through the entire statutory scheme. It is true that Section 84(3) of the Finance Act, 2010 obliges the Central Government to place the Notifications issued under Section 83(7) as well as the rules made under Section 84 before both the Houses of Parliament. In other words, the laying procedure has to be adopted in both cases. But, on that score, we cannot treat the rule making power under Section 84 and the power to notify under Section 83(7) on the same footing. This is because while Section 84 deals with rule making power, Section 83(7) embodies the well known legislative device of incorporation by reference. The manner of exercising the power under Section 83(7) is different from the scope of the power under Section 84 of the Act. The fact that it is the Central Government that has the power to notify as well as the power to make rules would not by itself immunize the impugned 8/13 https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/02/2026 04:46:31 pm ) 9 W.P.(MD)NO.8140 OF 2020 notification from challenge. The impugned notification has been issued under Section 83(7) and not under Section 84 of the Act. The respondents have to justify that the Central Government had the power to issue the impugned notification under Section 83(7) of the Act.
7.The question that calls for consideration is whether by virtue of Section 83(7) of the Finance Act, 2010, certain provisions of the Central Excise Act, 1944 could have been made applicable to assessment and recovery of CEC. It is true that the expression “assessment and collection” are mentioned in Section 83(6) and Section 84(2)(a) of the Act but they are conspicuously absent in Section 83(7) of the Act. Section 83(7) talks about “levy” alone. We hold that the expression “levy” occurring in Section 83(7) of the Finance Act, 2010 would encompass the manner of assessment and collection also. The Hon'ble Supreme Court in CCE v. National Tobacco Company (1972) 2 SCC 560 held that the expression “levy” has a wider connotation. It includes both the imposition of tax as well as assessment. In Rai Ram Krishna v. State of Bihar (1963 SCC OnLine SC 31), it was held that the quantum of tax levied by a taxing statute, the conditions subject to which it is levied, and how it is sought to be recovered are all matters within the competence of the legislature. P.Ramanatha 9/13 https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/02/2026 04:46:31 pm ) 10 W.P.(MD)NO.8140 OF 2020 Aiyar's Advanced Law Lexicon says that “levy” is a term frequently used in more than one sense. As applied to taxation, as a noun, it means assessment, computation and the taking and seizure of property on a warrant. In other words, assessment, collection and imposition of tax fall within the meaning of term “levy”. It is used both as noun and as a verb.
8.It is true that Section 84 is widely worded. It is also residuary in character as the Central Government is empowered to lay down rules in respect of any other matters relating to Section 82(6) of the Act. On the other hand, Section 83(7) talks only about levy and exemption. Section 83(6) states that the manner of assessment, collection and any other matter relating to Cess shall be such as may be prescribed by rules. Rules belong to the realm of subordinate legislation and do not carry the same degree of immunity which is enjoyed by a statute passed by a competent legislature. Subordinate legislation may be questioned on the ground that it does not conform to the statute under which it is made. Whenever a rule is challenged as ultra vires, courts enquire if the impugned rule is within the scope of the authority conferred on the rule-maker by the parent statute (M.P.Jain and S.N.Jain on the Principles of Administrative Law). Therefore, the 10/13 https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/02/2026 04:46:31 pm ) 11 W.P.(MD)NO.8140 OF 2020 lawmakers invariably couch the empowering provision in rather wide terms. Otherwise, the rule may be assailed on the ground that it is beyond the scope of the rule makers' authority. On the other hand, if the legislature had decided to employ the device of incorporation by reference, there is no need for elaboration. In Raja Ram Pal v. Lok Sabha (2007) 3 SCC 184, it was observed that the legislative device of incorporation by reference is a well known device where the legislature, instead of repeating the provisions of a particular statute in another statute, incorporates such provisions in the latter statute by reference to the earlier statute. It is adopted for the sake of convenience in order to avoid verbatim reproduction of the provisions of the earlier statute into the latter. Unlike Rules which must lay down a detailed scheme, when an existing regime is extended as such, their applicability will simply have to be notified and nothing more requires to be done.
9.Chapter VII of the Finance Act, 2010 enabled the Central Government to adopt the notification route under Section 83(7) or the rule making route under Section 84 of the Act to deal with cases of non-payment or short-payment of CEC. The Central Government thus had the option of making detailed rules relating to assessment and 11/13 https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/02/2026 04:46:31 pm ) 12 W.P.(MD)NO.8140 OF 2020 collection of Clean Environment Cess. The other option was to extend the applicability of already existing statutory provisions of the Central Excise Act to assessment and recovery of CEC. Dealing this subject matter through the medium of rules would have entailed laying down an elaborate procedure. But instead the Central Government chose to borrow wholesale the procedure already laid down in the Central Excise Act. It is not for the writ court to question the wisdom of the Central Government. What we have to see is whether the impugned notification will fall within the sweep of Section 83(7) of the Act. Once we hold that the expression “levy” would include assessment and collection also, the conclusion can only be that the impugned notification is intra vires the parent Act.
10.For the foregoing reasons, this writ petition stands dismissed. No costs.
(G.R.S, J.) & (R.K.M, J.)
16th February 2026
NCC : Yes / No
Index : Yes / No
Internet : Yes / No
PMU/skm
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13 W.P.(MD)NO.8140 OF 2020
G.R.SWAMINATHAN, J.
AND
R.KALAIMATHI, J.
PMU/skm
W.P.(MD)No.8140 of 2020
16.02.2026
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