Custom, Excise & Service Tax Tribunal
South Eastern Coalfields Limited vs Raipur on 6 February, 2026
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. - I
Excise Appeal No. 56177 of 2013
[Arising out of Order-in-Original No. Commissioner-RPR-CEX-114-2012 dated
14.12.2012 passed by the Commissioner of Central Excise, Raipur]
M/s. South Eastern Coalfields Limited ...Appellant
Baikunthpur Area, CGM Office,
Baikunthpur, Korba,
Chhattisgarh
VERSUS
Commissioner of Central Excise and
Service Tax, Raipur ...Respondent
Central Excise Building, Dhamtari Road,
Tikrapara, Raipur, Chattishgarh - 492001
WITH
E/56176/2013 E/56178/2013 E/56179/2013
E/56180/2013 E/56181/2013 E/56544/2013
E/56545/2013 E/56546/2013 E/56547/2013
E/56548/2013 E/56549/2013 E/56550/2013
E/56551/2013 E/60630/2013 E/60688/2013
E/60690/2013 E/60691/2013 E/60692/2013
E/60693/2013 E/60694/2013 E/60695/2013
E/60696/2013 E/60697/2013 E/52023/2014
E/52024/2014 E/52025/2014 E/52026/2014
E/50149/2015 and E/50150/2015
APPEARANCE:
Shri Rajeev Agarwal and Shri Sanjay Dixit, Advocates for the Appellant
Mr. Bhagwat Dayal, Authorized Representative for the Respondent
CORAM:
HON‟BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL)
DATE OF HEARING: 19.01.2026
DATE OF DECISION: 06.02.2026
FINAL ORDER NO‟s. 50227-50256/2026
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JUSTICE DILIP GUPTA:
South Eastern Coalfields Limited 1 is a Government of India
undertaking and a subsidiary company of Coal India Limited. It is
engaged in the business of mining and selling of coal at the mines
located in the State of Madhya Pradesh and Chhattisgarh. Central excise
duty at the rate of 5% ad-valorem was introduced on coal w.e.f.
01.03.2011 by the Finance Act, 20112. It was subsequently enhanced to
6% ad-valorem by the Finance Act, 2012. The various units/areas of the
appellant were separately registered under Central Excise Act prior to
01.10.2013. The period in dispute in all the appeals pertains to periods
prior to 01.10.2013.
2. The issue that arises for consideration in these thirty appeals is
basically with respect to the deduction or otherwise from the
‗transaction value' defined under section 4(3)(d) of the Central Excise
Act, 19443 under the exclusion of ‗other taxes' on the following amount
received by the appellant in the sale cum excise invoices.
a. Royalty
b. Stowing Excise Duty,
c. Forest Transit Fees
d. Madhya Pradesh Rural Infrastructure and Road
Tax,
e. Entry Tax,
f. Terminal Tax,
g. CG Development and Environment Cess
3. One more issue that arises for consideration is whether excise
duty is leviable on captive consumption of coal.
1. the appellant
2. the Finance Act
3. the Central Excise Act
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4. The thirty appeals have been divided into three parts. Part-A
comprises of appeals where the show cause notices proposed demand
of excise duty only on the issue of royalty. Part-B consists of appeals
where the show cause notices proposed demand of excise duty on the
issue of royalty and all or some of the components from ‗b' to ‗g'
specified above. Part-C consists of the appeal where the show cause
notice proposed demand of excise duty only on all or some of the
components specified from ‗b' to ‗g' and not on royalty. Details of the
thirty appeals are as follows:
PART A- Duty demand solely on royalty
Sl. SECL Excise Period SCN Date Order Remarks
No. Unit/Area Appeal date
No.
1. Baikunthpur 56177/2013 Mar 2011 04.04.2012 14.12.2012 Proceedings
to initiated under
Feb 2012 erstwhile Section
11A
2. Bhatgaon 56178/2013 Mar 2011 04.04.2012 14.12.2012 Proceedings
to initiated under
Jan 2012 erstwhile Section
11A
3. Kusmunda 56179/2013 Mar 2011 04.04.2012 14.12.2012 Proceedings
to initiated under
Feb 2012 erstwhile Section
11A
4. Dipka 56180/2013 Mar 2011 04.04.2012 14.12.2012 Proceedings
to initiated under
Jan 2012 erstwhile Section
11A
5. Chirimiri 56181/2013 Mar 2011 04.04.2012 14.12.2012 Proceedings
to initiated under
Feb 2012 erstwhile Section
11A
5. Raigarh 56545/2013 Mar 2011 03.04.2012 14.12.2012 Proceedings
to initiated under
Feb 2012 erstwhile Section
11A
6. Gevra 56546/2013 Mar 2011 04.04.2012 14.12.2012 Proceedings
to initiated under
Feb 2012 erstwhile Section
11A
7. Hasdeo 56547/2013 Mar 2011 04.04.2012 14.12.2012 Proceedings
to initiated under
Feb 2012 erstwhile Section
11A
8. Bisrampur 56548/2013 Mar 2011 04.04.2012 14.12.2012 Proceedings
to initiated under
Feb 2012 erstwhile Section
11A
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9. Korba 56549/2013 Mar 2011 04.04.2012 14.12.2012 Proceedings
to initiated under
Jan 2012 erstwhile Section
11A
10. Hasdeo 60630/2013 Mar 2011 02.04.2013 29.08.2013
to
Feb 2013
11. Raigarh 60688/2013 Mar 2011 05.04.2013 29.08.2013
to
Feb 2013
12. Kusmunda 60690/2013 Feb 2012 05.04.2013 29.08.2013
to
Jan 2013
13. Korba 60691/2013 Feb 2012 05.04.2013 29.08.2013
to
Jan 2013
14. Chirimiri 60692/2013 Feb 2012 05.04.2013 29.08.2013
to
Jan 2013
15. Gevra 60693/2013 Mar 2012 05.04.2013 29.08.2013
to
Jan 2013
16. Baikunthpur 60694/2013 Mar 2012 28.03.2013 29.08.2013
to
Jan 2013
17. Bhatgaon 60695/2013 Mar 2012 28.03.2013 29.08.2013
to
Jan 2013
18. Bisrampur 60696/2013 Mar 2012 28.03.2013 29.08.2013
to
Jan 2013
19. Dipka 60697/2013 Mar 2012 28.03.2013 29.08.2013
to
Jan 2013
20. HQ 50149/2015 Feb 2013 05.03.2014 29.09.2014
PART- B Duty demand on royalty & other levies
Sl. SECL Excise Period SCN Date Order Remarks
No. Unit/Area Appeal No. date
1. Sohagpur 56176/2013 Mar 2011 02.05.2012 14.12.2012 Time barred for
to March, 2011
Mar 2012
2. Hasdeo 56544/2013 Mar 2011 04.05.2012 27.11.2012 (1) Time barred for
to March, 2011 &
Mar 2012
(2) Includes Duty
Demand on Captive
Consumption
3. Johilla 56550/2013 Mar 2011 02.05.2012 14.12.2012 (1) Time barred for
to March, 2011 &
Mar 2012
(2) Includes Duty
Demand on Captive
Consumption
4. Jamuna & 56551/2013 Mar 2011 02.05.2012 14.12.2012 Time barred for
Kotma to March, 2011
Mar 2012
5. Jamuna & 52023/2014 Apr 2012 19.03.2013 31.12.2013
Kotma to
Jan 2013
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6. Johilla 52024/2014 Apr 2012 20.03.2013 31.12.2013 Includes Duty
to Demand on Captive
Jan 2013 Consumption
7. Hasdeo 52025/2014 Apr 2012 19.03.2013 31.12.2013
to
Jan 2013
8. Sohagpur 52026/2014 Apr 2012 19.03.2013 31.12.2013
to
Jan 2013
PART- C Demand solely on other levies
Sl. SECL Excise Period SCN Date Order Remarks
No. Unit/Area Appeal No. date
1. HQ 50150/2015 Mar 2011 06.06.2014 29.09.2014 Time barred from
to March, 2011 to
Sep 2013 April 2013
5. The Commissioner has observed in the adjudication orders that
royalty and other levies are not ‗taxes' and, therefore, includible in the
‗transaction value' under section 4(3)(d) of the Central Excise Act. With
respect royalty the Commissioner placed reliance upon the judgment of
the Supreme Court rendered by five Hon'ble Judges of the Supreme
Court in State of West Bengal vs. Kesoram Industries4 wherein it
was held that royalty is not a tax. With respect to the other amount
shown from ‗b' to ‗g' in the aforesaid Chart, the Commissioner held that
they do not qualify for deduction from ‗transaction value' and shall form
part of the assessable value for levy of excise duty on coal in terms of
section 4(1) of the Central Excise Act. The Commissioner also rejected
the contention of the appellant that the extended period of limitation
under section 11(4) of the Central Excise Act could not have been
invoked. The Commissioner has also imposed penalty equal to the
amount of duty in terms of section 11AC of the Central Excise Act.
6. Shri Rajeev Agarwal, learned counsel for the appellant assisted by
Shri Sanjay Dixit made the following submissions:
4. (2004) 10 SCC 201
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(i) The Commissioner ignored the binding decision
rendered by seven Hon'ble Judges of the Supreme
Court in India Cement Limited vs. State of Tamil
Nadu 5 , wherein it was held that royalty is in the
nature of tax and on the other hand relied upon the
decision of the Supreme rendered by five Hon'ble
Judges in Kesoram Industries;
(ii) The judgment of the Supreme Court in India
Cement had not been stayed and, therefore, it was
obligatory on the part of the Commissioner to have
followed this decision of the Supreme Court in India
Cement and by not doing so the Commissioner
breached judicial discipline;
(iii) The recovery provisions of section 11A of the Central
Excise Act have been invoked on the allegation that
the appellant had undervalued the excisable goods
and, therefore, short paid duty. On the date of
manufacture as well as the removal of goods there
was no short payment of duty in view of the decision
of the Supreme Court in India Cement and,
therefore, proceedings could not have been initiated;
(iv) The show cause notice is the foundation and if the
show cause notice could not have been be issued, the
entire confirmation of demand by the impugned order
cannot be sustained;
(v) The judgment of the Supreme Court in Mineral Area
Development Authority vs. Steel Authority of
India 6 rendered by nine Hon'ble Judges is not
5. (1990) 1 SCC 12
6. (2024) 21 Centax 378 (S.C.)
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applicable to the facts of the present case. The issue
under consideration before the Supreme Court was
not an issue under the Central Excise Act but was
regarding the true nature of royalty determined under
section 9 read with section 15(1) of the Mines and
Minerals (Development and Regulation) Act, 19577;
(vi) In ten show cause notices the demand has been
proposed under the erstwhile proviso to section
11A(1) of the Central Excise Act. Section 11A was
substituted w.e.f. 08.04.2011 and so the show cause
notices could have been issued only under the
provisions of the amended section 11A;
(vii) The demand of central excise duty with applicable
interest and penalty on the other charges mentioned
from ‗b' to ‗g' in the Chart could not have been
confirmed as they are in the nature of ‗other taxes'
referred to in section 4(3)(d) of the Central Excise
Act;
(viii) The central excise duty demand on captive
consumption is not sustainable;
(ix) In four Excise Appeal Bearing No's. 56176 of 2013,
56544 of 2013, 56550 of 2013 and 56551 of 2013
the demand is beyond the normal period and the
extended period of limitation could not have been
invoked. In Excise Appeal No. 50150 of 2015, the
demand for the period from March 2011 to April 2013
is covered by the extended period of limitation, which
could not have been invoked in the facts and
circumstances of the case; and
7. MMDR Act
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(x) Neither penalty could be imposed nor interest could
be charged.
7. Shri Bhagwat Dayal, learned authorized representative appearing
for the department, however, supported the impugned order and
submitted that they do not call for any interference in these appeals.
Learned authorized representative pointed out that in view of the
judgment of nine Hon'ble Judges of the Supreme Court in Mineral Area
Development Authority holding that royalty in the nature of a tax,
the amount of royalty received by the appellant would be includible in
the transaction value under section 4(3)(d) of the Customs Act. Learned
authorised representative also submitted that the amount received by
the appellant under Serial No. ‗b' to ‗g' in the Chart are not in the
nature of taxes and, therefore, includible in the transaction value under
section 4(3)(d) of the Customs Act. Learned authorised representative
also submitted that excise duty is leviable on captive consumption of
court.
8. The submissions advanced by the learned counsel for the
appellant and the learned authorized representative appearing for the
department have been considered.
9. Section 4 of the Central Excise Act deals with valuation of
excisable goods for purposes of charging of duty of excise. Sub-section
(1) is as follow:
"Section 4(1) Where under this Act, the duty of
excise is chargeable on any excisable goods with
reference to their value, then, on each removal of the
goods, such value shall-
(a) in a case where the goods are sold by the
assessee, for delivery at the time and place
of the removal, the assessee and the buyer
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of the goods are not related and the price is
the sole consideration for the sale, be the
transaction value;
(b) in any other case, including the case where
the goods are not sold, be the value
determined in such manner as may be
prescribed.‖
10. Section 4(3)(d) defines ‗transaction value' in the following
manner:
―Section 4(3)(d) ―transaction value‖ means the
price actually paid or payable for the goods, when sold,
and includes in addition to the amount charged as price,
any amount that the buyer is liable to pay to, or on
behalf of, the assessee, by reason of, or in connection
with the sale, whether payable at the time of the sale or
at any other time, including, but not limited to, any
amount charged for, or to make provision for,
advertising or publicity, marketing and selling
organization expenses, storage, outward handling,
servicing, warranty, commission or any other matter;
but does not include the amount of duty of excise, sales
tax and other taxes, if any, actually paid or actually
payable on such goods.‖
11. It would, therefore, be seen that where the duty of excise is
chargeable on any excisable goods with reference to their value, then,
on each removal of the goods, such value shall in a case where the
goods are sold by the assessee for the delivery at the time and place of
the removal and the assessee and buyer of the goods are not related
and the price is the sole consideration for the sale, be the transaction
value. ‗Transaction value' has been defined to mean the price actually
paid or payable for the goods when sold but does not include the
amount of duty of excise, sales tax and other taxes, if any, actually paid
or actually payable on such goods.
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12. What has, therefore, to be seen is whether the amount received
by the appellant towards Royalty, Stowing Excise Duty, Forest Transit
Fees, Madhya Pradesh Rural Infrastructure and Road Tax Entry Tax,
Terminal Tax and CG Development and Environment Cess are covered
under the ‗other taxes'.
13. The Commissioner has held that royalty is not a tax in view of the
decision of the Supreme Court in Kesoram Industries rendered by
five Hon'ble Judges.
14. A Constitution Bench of the Supreme Court in Mineral Area
Development Authority consisting of nine Hon'ble Judges has laid
down that royalty is not in the nature of a tax.
15. The contention advanced by the learned counsel for the appellant
is that the Commissioner has placed reliance upon the judgment of the
Supreme Court in Kesoram Industries rendered by five Hon'ble
Judges of the Supreme Court, though at the relevant time the judgment
of the Constitution Bench of the Supreme Court consisting of seven
Hon'ble Judges in India Cement had held that royalty is in the nature
of tax. The submission advanced by learned counsel for the appellant is
that the Commissioner was bound to follow the decision of the Supreme
Court in India Cement and, therefore, the amount received by the
appellant towards royalty cannot be included in the transaction value.
16. The law, as it stands today, is that royalty is not in the nature of
tax in view of the Constitution Bench judgment of the Supreme Court
rendered by nine Hon'ble Judges in Mineral Area Development
Authority. The artificial distinction sought to be made by the learned
counsel for the appellant that the Supreme Court was examining the
provisions of the MMDR Act and not the Central Excise Act for the
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purpose of determining whether royalties in the nature of tax is not
justified. It needs to be noted that royalty was paid by the appellant
under the provisions of MMDR Act. This is the same Act which was
considered by the Supreme Court in Mineral Area Development
Authority to examine whether royalty is in the nature of tax or not.
The Supreme Court in Mineral Area Development Authority took
into consideration the earlier judgments rendered by the Supreme Court
in Kesoram Industries and India Cement. The Supreme Court did
not agree with the view earlier taken in India Cement and held that
royalty is not a tax for it is a contractual consideration paid by the
mining lessee to the lessor for the enjoyment of mineral rights.
17. It has, therefore, to be held that as royalty is not in the nature of
tax and it would be includible in the transaction value.
18. The Commissioner, therefore, committed no illegality in holding
that the amount collected towards royalty would be includible in the
transaction value, though on the basis of the judgment of the Supreme
Court in Kesoram Industries.
19. The issue that now arises for consideration is whether the amount
received by the appellant under ‗b' to ‗g' of the chart is also includible in
the definition of ‗other taxes' under section 4(3)(d) of the Central Excise
Act. Each of these heads would be considered separately.
Stowing Excise Duty
20. Stowing Excise Duty is levied under the Coal Mines (Conservation
and Development) Act, 1974 read with the Coal Mines (Conservation
and Development) Amendment Rules 2011. The Preamble to the said
Act states that it has been enacted to provide for the conservation of
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coal and development of coal mines and for matters connected
therewith or incidental thereto.
21. Section 6 deals with imposition of excise duties and sub-section
(1) provides that:
―Section 6(1) With effect from the appointed day
there shall be levied and collected on all coke raised and
dispatched, and on all the coal manufactured and
dispatched, from the collieries in India, such duty of
excise, not exceeding rupees ten per tonne, as may be
fixed from time to time by the Central Government by
notification, and different rates of duty may be levied on
different grades or description or coal or coke.
Provided that the Central Government may, by general
or special order, exempt any special grade or grades or
description of coal or coke from the levy of such duty of
excise.‖
22. Section 8 of the Act provides that the duty of excise levied under
section 6 shall be collected by such agencies and in such manner as
may be prescribed. Section 9 of the Act deals with utilization of
proceeds of duties levied and collected under section 6 and section 7 of
the Act. Chapter III of the Coal Mines (Conservation and Development)
Amendment Rules 2011 deals with collection of excise duty. Rule 8
provides for collection and assessment of excise duty while rule 9
provides for the review of assessment of excise duty.
23. This issue was examined by the Tribunal in Eastern Coalfields
Ltd. vs. Commr. of Central Excise8. It was held that stowing excise
duty is a duty of excise and, therefore, has to be excluded from the
transaction value under the exclusion clause of ‗other taxes' as
contemplated under section 4(3)(d) of the Central Excise Act. The
relevant portion of the decision is reproduced below:
8. Excise Appeal No. 75694 of 2015 decided on 11.03.2025
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―38. We have seen the earlier paragraphs that the
levy is being termed as ―Duty of Excise‟ and also being
treated as such. It is also not disputed that in the case
of the goods in question, the Stowing Excise Duty is
being paid by the appellant. The Revenue cannot take a
contorted and narrow view that only when the Duty of
Excise is paid as Central Excise Duty, such exclusion is
available. It is to be noted that the word used is ―duty of
excise‟ along with ―sales tax‟ and ―other taxes‟, which
would clarify that if these are paid to State Govt or to
any other agency also, the transaction value should
exclude the same. Considering these provisions, we set
aside the confirmed demand in respect of the Stowing
Excise Duty and allow the Appeals.‖
24. It has, therefore, to be held, in view of the aforesaid decision of
the Tribunal, that the amount received by the appellant towards the
stowing excise duty has to be excluded from the transaction value. The
Commissioner, therefore, committed an error in holding that it would be
includible in the transaction value.
Forest Transit Fees
25. This fee is charged under the provision of the Chhattisgarh Transit
(Forest Produce) Rules 2001. The recovery of transit fee under the said
Rules is in pursuance of the Forest Act 1927.
26. Though the expression ‗other taxes' has not been defined in the
Central Excise Act or the Rules made thereunder but it would be
pertinent to refer to the judgment of the Supreme Court in
Commissioner of Central Excise, Lucknow vs. Chhata Sugar Co.
Ltd.9 wherein it was held that a broad meaning should be attributed to
the word ‗tax' and a regulatory fee may be in effect and substance be a
tax. It was also held that if the burden of fees is borne by the buyers
9. 2004 (165) E.L.T. 369 (S.C.)
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and the sellers are merely collecting agents, the impost is not a fee but
a tax. The relevant paragraphs are reproduced below:
―18. The definition of ‗tax' in terms of Clause (28) of
Article 366 of the Constitution is wide in nature. The
said definition may be for the purpose of the
Constitution; but it must be borne in mind that the
legislative competence conferred upon the State
Legislature or the Parliament to impose „tax‟ or
„fee‟ having been enumerated in different entries
in the three lists contained in the Seventh
Schedule of the Constitution of India, the same
meaning of the expression "tax" unless the
context otherwise requires, should be assigned.
xxxxxxxxxxx
21. The expression ‗regulatory fee' is not defined.
Fee, therefore, may be held to be a tax if no service is
rendered. While imposing a regulatory fee,
although the element of quid pro quo, as
understood in common parlance, may not exist
but it is trite that regulatory fee may be in effect
and substance a tax. [See The Corporation of Calcutta
and Another v. Liberty Cinema, AIR 1965 SC 1107].
xxxxxxxxxxx
36. In any event regulatory fee imposed for the
purpose of regulating the industry producing molasses,
in my opinion, cannot be passed on to the buyers as
they are not subjected to any regulation under the Act.
The nature of impost is such that burden thereof is
to be borne by the buyers and the respondents
herein are merely the agents for collecting the
same on behalf of the State. The impost,
therefore, cannot be termed as a „fee‟ so as to
deprive the respondents of the benefit of
deduction of the tax for the purpose of Section
4(4)(d)(ii) of the Central Excise Act, 1944.
(emphasis supplied)
27. In the present case, the burden of the regulatory forest transit fee
is passed on to the buyers on actual basis. Such regulatory fee charged
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under the provisions of the Rules and Indian Forest Act, 1927 would,
therefore, be in nature of a ‗tax' and so cannot be included in the
assessable value in terms of section 4(3)(1) of the Central Excise Act.
Madhya Pradesh Rural Infrastructure and Road Tax
28. The Madhya Pradesh High Court in Neogy & Sons vs. The State
of M.P. and Another 10 examined the constitutional validity of the
Madhya Pradesh Rural Infrastructure and Road Development Act, 2005.
The petitioners had challenged the constitutional validity of the Act
conferring power on the State Government to levy Rural Infrastructure
and Road Development tax upto 20% of the annual value of the annual
value of mineral bearing land leased for carrying out mining operation.
29. The annual value of mineral bearing land has been defined in
section 2(a) of the Act in the following manner:
―2. In this Act, unless the context otherwise
requires,
(a) "annual value of mineral bearing land" in relation
to a financial year, means one-half of the value of
mineral produced from mineral bearing land during the
two years immediately preceding that financial year, the
value of mineral being that as could have been fetched
by the entire production of mineral during the said two
immediately preceding years, had the owner of such
mineral bearing land sold such mineral at the price or
prices excluding the amount of tax, fee, duty, royalty,
crushing charge, washing charge, transport charge or
any other amount as may be prescribed, that prevailed
on the date immediately preceding the first day of that
financial year.‖
30. Section 3 of the said Act deals with levy and collection of rural
infrastructure and roads development tax and is reproduced below:
10. 2006 SCC OnLine MP 912
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3.(1) On and from commencement of this Act there
shall be levied and collected a rural infrastructure and
roads development tax on all mineral bearing land in the
manner hereinafter provided.
(2) The rural infrastructure and roads development
tax shall be levied annually on all mineral bearing land
at such rate, not exceeding twenty percentum of the
annual value of such mineral bearing land, as the State
Government may, be notification, fix in that behalf, and
different rates may be fixed for different mineral bearing
land:
Provided that where in case of any mineral bearing land,
there is no production of mineral for two consecutive
year or more, such land shall be liable for levy of tax at
such rate, as may be prescribed;
Provided further that the State Government shall not
enhance the rate of tax in respect of any such mineral
bearing land more than once during any period of three
years.
The State Government, before fixing the rate of tax
under subsection (2), shall appoint a committee, in such
manner as may be prescribed who shall recommend to
the State Government the rate at which the tax may be
levied.
(4) Every notification issued under sub-section (2)
shall be laid on the table of the Legislative Assembly.
Section 4 deals with the payment and recovery of tax.
Section 7 provides for separate head of account for tax
proceeds. Section 8 provides for utilization of tax
proceeds, Section 8 is quoted below:-
31. Section 8 of the said Act deals with utilization of the proceeds of
tax and is reproduced below:
―8. The proceeds of the tax shall be utilized by the
State Government for improvement and development of
infrastructure and roads in rural areas, with special
emphasis to backward areas and mining areas, for
which the State Government shall take appropriate
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measures by drawing up suitable infrastructure
development programmes.‖
32. The Madhya Pradesh High Court, while examining the
constitutional validity of the Act held as follows:
―It is clear from the aforesaid provisions of the Act
that tax has been imposed for the purpose of
development of rural infrastructure and for road
development. It. is clearly a tax on the land which
bears mineral. Merely because of the definition of
annual value of mineral bearing land in Section 2(a),
there is reference to one half value of mineral produce
during preceding two years which is made basis to
realize tax in question in financial year, it cannot be said
that it is a tax on the mineral. It remains essentially
a tax on the land. Method of on mineral produced,
method of computation of tax is based computation of
tax may be on mineral but it is tax on land, method of
calculation does not encroach on MMRD Act. When we
consider the entry 4, 9 of list IInd of VIIth Schedule, it
is clear that tax on the lands and buildings can be
imposed by the State Government. Thus it is open to
State to levy tax on development of rural
infrastructure and road development for the
purpose of which the legislation has been enacted
under Entry 49 of List IInd of VIIth Schedule.‖
(emphasis supplied)
33. It is seen that the High Court has held that the levy imposed
under the said act is a tax on land bearing mineral. Thus, the amount
collected under this head would not be included in the transaction value
in terms of section 4(3)(d) of the Central Excise Act.
Entry Tax
34. Section 3(1) of the Chhattisgarh Sthaniya Kshetra Me Mal ke
Pravesh Par Kar Adhiniyam, 1988 provides that there shall be levied an
entry tax on the entry in the course of business of a dealer of goods
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specified in Schedule II, into each local area for consumption, use or
sale therein.
35. A bare perusal of the Preamble to the said Act provides that the
enactment has been legislated for leving tax on the entry of goods into
a local area in Chhattisgarh for consumption, use or sale therein.
36. The department had initiated proceedings against the appellant in
respect of levy of entry tax for the subsequent period from June 2014 to
January 2015 alleging that the appellant was not discharging central
excise duty on entry tax by issuing a show cause notice dated
01.07.2015. This show cause notice was adjudicated by the Principal
Commissioner, Raipur by order dated 24.05.2016. The Principal
Commissioner held that entry tax is a statutory tax levied under
constitutional authority and so it cannot form part of the transaction
value and excise duty is not payable on entry tax.
37. As the demand of excise duty on entry tax has been dropped for
the subsequent period by order dated 24.05.2016 and this order has
attained finality as the order dated 24.05.2016 has not been challenged
by the department, the demand of excise duty confirmed in the
impugned order is liable to be set aside.
Terminal Tax
38. The authority to levy tax in India is derived from the Constitution
of India which not only empowers the Central and the State
Governments to levy various taxes but also the local authorities such as
the Municipalities/Municipal Corporations. The amount paid by the
appellant to the Municipalities/Municipal Corporations as Terminal Tax
has been disputed on the ground that the same is not in the nature of a
tax.
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39. Terminal Tax is a tax imposed by the Municipality/Municipal
Corporation under the Statute on goods or animal exported from the
limits of the Corporation/Municipal Council.
40. The Madhya Pradesh High Court in South Eastern Coalfields
Ltd. vs. State of Madhya Pradesh & Ors.11 held that the Municipal
Corporation has the authority to levy terminal tax under the Municipal
Corporation Act and such power is derived from Entry 56 of List II of the
Seventh Schedule of the Constitution.
41. The judgment of the Madhya Pradesh High Court was challenged
before the Supreme Court and is reported in 2023 SCC Online SC 1238.
The Supreme Court held that section 132 of the Madhya Pradesh
Municipal Corporation Act, 1956 provides for ‗taxes to be imposed under
the Act' and that sub-section 6(n) of section 132 empowers the
Corporation to levy a ‗terminal tax' on goods and animals exported from
the limits of the Corporation.
42. Thus, the levy of ‗terminal tax' is a compulsory levy in the nature
of ‗tax' and, therefore, cannot be included in the assessable value in
terms of section 4(3)(d) of the Central Excise Act.
CG Development and Environment Cess
43. The Preamble to the Chhattisgarh (Adhosanrachna Vikas Evam
Paryavaran) Upkar Adhiniyam, 2005 states:
―An Act to provide for levy of cess on land for raising
funds to implement infrastructure development projects
and environment improvement projects.
Whereas it is expedient to provide for additional
resources for augmenting the development activities
and improvement of environment in the State.
11. Writ Petition No. 1340 of 2005 decided on 21.02.2010
20
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44. The Preamble to the Act states that the Cess levied under this Act
is a Cess on land for raising funds to implement infrastructure
development projects and environment improvement projects. Section
3(1) provides for the levy and collection of infrastructure development
Cess on all lands on which land revenue or rent, by whatever name
called is, levied. Sub-section (2) provides that such Cess shall be levied
at the rates prescribed in Schedule-I. Section 4(1) provides for the levy
and collection of environment Cess on all lands on which land revenue
or rent, by whatever name called, is levied. Sub-section (2) of section 4
provides that such Cess shall be levied at the rates prescribed in
Schedule-II. Section 7 of the Act provides for assessment and collection
of Cess levied under section 3 and section 4. Sub-section (2) of section
7 provides that the Cess levied under this Act shall be collected as an
arrear of land revenue and provisions of the Chhattisgarh Land Revenue
Code, 1959 shall apply mutatis mutandis for such collection and
recovery.
45. Rule 4 of the Chhattisgarh (Adhosanrachna Vikas Evam
Paryavaran) Upkar Adhiniyam, Rules deals with levy of tax where there
is no production of mineral for two consecutive years or more and
provides that such land shall be liable to levy of tax at the rate fixed in
Schedule I and II. Rule 5 provides for the manner of payment of tax.
Rule 7 deals with the assessment of tax. Rule 8 deals with the manner
of submissions of returns and revised return. Rule 9 deals with appeals
and rule 10 deals with recovery of tax.
46. It is, therefore, evident that the Cess levied is in the nature of
compulsory extraction of money by public authority for public purposes
21
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enforceable by law. Further, the Rules provide for a complete machinery
for collection, assessment and recovery of tax.
47. The infrastructure development Cess and environment Cess are,
therefore, in nature of tax and, therefore, not liable to be included in
the assessable value in terms of section 4(3)(d) of the Central Excise
Act.
Duty demand on captive consumption
48. In respect of three Excise Appeal No's. 52024 of 2014, 56544 of
2013 and 56550 of 2013, duty demand has been raised on the quantity
of coal which has been captively consumed in boiler within the mining
premises in the underground mines. The Commissioner, after noticing
that coal was captively used in boiler, disallowed exemption under
Notification No. 67/95-C.E. dated 16.03.1995.
49. This issue has been decided by the Tribunal in favour of the
appellant in South Eastern Coalfields Ltd. vs. CCE, Raipur12. The
entitlement of exemption under the Notification has been held to be
justified in respect of coal captively consumed within the mines for use
in further production of coal. The said decision has also been followed
by the Commissioner (Appeals), Ranchi in Order-in-Appeal No.
286/RAN/2018 dated 03.07.2018 in the appeal filed by the sister
company M/s. Bharat Coking Coal Ltd. Thus, the demand of duty of coal
captively consumed in the aforesaid three Excise Appeals cannot be
sustained.
Extended Period of Limited
50. Section 11A of the Central Excise Act deals with recovery of duties
not levied or not paid or short-paid.
12. 2018 (364) E.L.T. 404 (Tri.- Del)
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51. Sections 11A(1) and 11A (4) of the Central Excise Act, as it stood
at the relevant time, which deal with issuance of notices for recovery of
date not paid or levied are reproduced below:
"SECTION 11A. Recovery of duties not levied or
not paid or short-levied or short-paid or
erroneously refunded.--
(1) Where any duty of excise has not been levied or
paid or has been short-levied or short-paid or
erroneously refunded, for any reason, other than the
reason of fraud or collusion or any wilful mis-statement
or suppression of facts or contravention of any of the
provisions of this Act or of the rules made thereunder
with intent to evade payment of duty,--
(a) the Central Excise Officer shall, within one year
from the relevant date, serve notice on the
person chargeable with the duty which has not
been so levied or paid or which has been so
short-levied or short-paid or to whom the
refund has erroneously been made, requiring
him to show cause why he should not pay the
amount specified in the notice;
(b) the person chargeable with duty may, before
service of notice under clause (a), pay on the
basis of,--
(i) his own ascertainment of such duty; or
(ii) duty ascertained by the Central Excise
Officer, the amount of duty along with
interest payable thereon under section
11AA.
(2) *****
(3) *****
(4) Where any duty of excise has not been levied or
paid or has been short levied or short-paid or
erroneously refunded, by the reason of -
(a) fraud; or
(b) collusion; or
(c) any wilful mis-statement; or
(d) suppression of facts; or
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(e) contravention of any of the provisions of this
Act or of the rules made thereunder with
intent to evade payment of duty,
by any person chargeable with the duty, the Central
Excise Officer shall, within five years from the relevant
date, serve notice on such person requiring him to
show cause why he should not pay the amount
specified in the notice along with interest payable
thereon under section 11AA and a penalty equivalent to
the duty specified in the notice‖.
52. It would be seen from a perusal of sub-section (4) of section 11A
of the Central Excise Act that where any excise duty has not been levied
or paid, the Central Excise Officer may, within one year from the
relevant date, serve a notice to the person chargeable with the duty
requiring him to show cause why he should not pay the amount specify
in the notice. Sub-section (4) of section 11A, however, provides that
where any duty of excise has not been levied or paid or has been short
levied or short paid or erroneously refunded, by reason for fraud; or
collusion; or any wilful mis-statement; or suppression facts; or
contravention of any of the provisions of the Act or Rules made
thereunder with intent to evade payment of duty, the Central Excise
Officer shall, within five years from the relevant date service notice on
such person requiring into show cause why he should not pay the
amount specified in notice with interest and penalty.
53. Learned counsel for the appellant submitted that appellant had
not suppressed any material facts from the department and in any view
of the matter as the ingredients of fraud or suppression with intent to
evade payment of duty were absent, the demand pertaining to the
month of March 2011 which falls outside the normal period of limitation
cannot be sustained.
24
E/56177/2013 & 29 others
54. Learned authorised representative appearing for the department,
however, supported the impugned order.
55. The relevant allegation made against the appellant for invocation
of the extended period of limitation are contained in paragraph 9 of the
show cause notice and they are reproduced below:
―9. The fact that the Noticee was collecting amounts
over and above assessable value was never disclosed to
the department at any given point of time. The fact of
collection of such additional consideration from buyers
has neither been shown in the ER-1 returns nor
disclosed or declared to the department otherwise. The
Noticee claims to have considered such charges as
taxes eligible for deduction but has failed to provide
basis of such assumption or belief for treating the said
charges as tax. The Noticee did not seek any
clarification from the department on this issue. The
Noticee's claim of treating such charges as taxes
appears to be arbitrary and devoid of any substantial
basis. The Noticee has suppressed the fact and details
of charging and collecting money in the name of
various charges over and above assessable value. The
Noticee has thus failed to pay appropriate excise duty
by excluding some portions of price charged from buyer
while calculating and paying excise duty. In view of the
suppression of material facts pertaining to transaction
value with intent to evade payment of duty, extended
period of limitation in terms of section 11A of the
Central Excise Act, 1944 and penal provisions of section
11AC of the Central Excise Act, 1944 are attracted
aforementioned contraventions and evasion of excise
duty.‖
56. The appellant submitted a reply to the show cause notice and
contended that the extended period of limitation could not have been
invoked. The relevant portion of the reply as contained in paragraphs
6.1 and 6.2 of the order are reproduced below:
―6.1 In the impugned SCN, the extended period of
limitation in terms of section 11A of the Act has been
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E/56177/2013 & 29 others
invoked on SECL with the allegation that there has been
suppression of fact by SECL with the intent to evade
payment of duty. It is submitted that there has been no
willful suppression, as explained hereinbefore, since
SECL is with the bonafide belief that no Central Excise
duty is payable on the aforesaid elements recovered
from the buyers in as much as the said elements are in
nature of statutory levies excludible from the assessable
value.
6.2 Furthermore, it is submitted that it is a settled
position of law that there is a presumption that PSUs do
not have any intention to evade the payment of tax as
held by the Hon'ble Tribunal in the case of Burn
Standard Co. Ltd. vs. CCE [2007 (216) E.L.T. 77 (Tri.)]
and earlier upheld by the Hon'ble Supreme Court in the
case of CCE vs. Chennai Petroleum Corpn. Limited
[2007 (211) E.L.T. 193 (SC)]. In view of the fact that
SECL is a PSU, it is submitted that an allegation of
evasion and suppression of fact may not be leveled
against the same.‖
57. The Commissioner did not accept the contention advanced by the
appellant and held that the extended period of limitation was correctly
invoked. The relevant portion of the order of the Commissioner is
reproduced below:
―27. The Noticee has canvassed that demand is time
barred as extended period of limitation would not
apply. I note that the show cause notice has been
issued on 01.05.2012 and pertains to the period March
2011 to March 2012. It is clear that the demand for the
period April 2011 to March 2012 is within the normal
period of limitation i.e. one year. The demand for only
one month i.e. March 2011 lies in the zone of extended
period of limitation. The Noticee has failed to
demonstrate through cogent documentary evidence as
whether such collection of additional consideration was
declared or brought to the notice of the department.
The Noticee has failed to show basis of its belief
on the issue of eligibility for deduction from
transaction value. It is settled law that a belief
must be based on reason and law. It cannot be
26
E/56177/2013 & 29 others
something in the nature of a wish or desire. I find that
the Noticee has failed to demonstrate the basis of claim
of a bona fide belief. In the facts and circumstances, I
hold that there was suppression of facts and extended
period of limitation is rightly applicable in the case in
hand. Accordingly, an amount of Rs.7,67,10,533/- is
determined as central excise duty dues for recovery
under the provisions of section 11A of the Central
Excise Act, 1944. The Noticee shall also be liable to pay
interest on the said duty amount in terms of section
11AA of the Central Excise Act, 1944.‖
58. The contention of the learned counsel for the appellant is that the
appellant bonafide believed that it is not liable to pay duty on the
amount of royalty in view of the decision of the Supreme Court in India
Cement which held that royalty was in the nature of tax. In respect of
the other amounts mention from ‗b' to ‗g' of the Chart, the appellant
contends that it also believed that they were in the nature of tax.
59. The Commissioner has, however, held that the appellant had
failed to show the basis of its belief for deduction from the transaction
value and, therefore, there was suppression of facts and the extended
period of limitation was correctly invoked.
60. In the first instance, there was no suppression of facts, but even if
it assumed that there was suppression, it has to be examined whether
suppression of facts by the appellant was wilful and with an intent to
evade payment of central excise duty. The Supreme Court and the Delhi
High Court have held that suppression of facts has to be ―wilful‟ and
there should also be an intent to evade payment of duty.
61. In Pushpam Pharmaceutical Co. vs. Commissioner of
Central Excise, Bombay13, the Supreme Court examined whether the
department was justified in initiating proceedings for short levy after
13. 1995 (78) E.L.T. 401 (SC)
27
E/56177/2013 & 29 others
the expiry of the normal period of six months by invoking the proviso to
section 11A of the Central Excise Act. The proviso to section 11A of the
Central Excise Act which was considered by the Supreme Court carved
out an exception to the provisions that permitted the department to
reopen proceedings if the levy was short within six months of the
relevant date and permitted the Authority to exercise this power within
five years from the relevant date under the circumstances mentioned in
the proviso, one of which was suppression of facts. It is in this context
that the Supreme Court observed that since ―suppression of facts‟ has
been used in the company of strong words such as fraud, collusion, or
wilful default, suppression of facts must be deliberate and with an intent
to escape payment of duty. The observations of the Supreme Court are
as follows:
―4. Section 11A empowers the Department to re-
open proceedings if the levy has been short-levied or
not levied within six months from the relevant date.
But the proviso carves out an exception and
permits the authority to exercise this power
within five years from the relevant date in the
circumstances mentioned in the proviso, one of it
being suppression of facts. The meaning of the word
both in law and even otherwise is well known. In
normal understanding it is not different that what is
explained in various dictionaries unless of court the
context in which it has been used indicates otherwise.
A perusal of the proviso indicates that it has been
used in company of such strong words as fraud,
collusion or wilful default. In fact it is the mildest
expression used in the proviso. Yet the
surroundings in which it has been used it has to
be construed strictly. It does not mean any
omission. The act must be deliberate. In taxation,
it can have only one meaning that the correct
information was not disclosed deliberately to
escape from payment of duty. Where facts are
known to both the parties the omission by one to do
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E/56177/2013 & 29 others
what he might have done and not that he must have
done, does not render it suppression.‖
(emphasis supplied)
62. This decision was referred to by the Supreme Court in Anand
Nishikawa Company Ltd. vs. Commissioner of Central Excise 14
and the observations are as follows:
―26. ***** This Court in the case of Pushpam
Pharmaceutical Company v. Collector of Central Excise,
Bombay, while dealing with the meaning of the
expression ―suppression of facts‖ in proviso to Section
11A of the Act held that the term must be construed
strictly. It does not mean any omission and the act
must be deliberate and willful to evade payment
of duty. The Court, further, held :-
―In taxation, it (―suppression of facts‖) can
have only one meaning that the correct
information was not disclosed deliberately to
escape payment of duty. Where facts are
known to both the parties the omission by one
to do what he might have done and not that he
must have done, does not render it
suppression.‖
27. Relying on the aforesaid observations of this
Court in the case of Pushpam Pharmaceutical Co. v.
Collector of Central Excise, Bombay [1995 Suppl. (3)
SCC 462], we find that "suppression of facts" can
have only one meaning that the correct
information was not disclosed deliberately to
evade payment of duty. When facts were known to
both the parties, the omission by one to do what he
might have done not that he must have done would not
render it suppression. It is settled law that mere failure
to declare does not amount to willful suppression.
There must be some positive act from the side of the
assessee to find willful suppression. Therefore, in view
of our findings made herein above that there was no
deliberate intention on the part of the appellant not to
disclose the correct information or to evade payment of
14. 2005 (188) E.L.T. 149 (SC)
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E/56177/2013 & 29 others
duty, it was not open to the Central Excise Officer to
proceed to recover duties in the manner indicated in
proviso to Section 11A of the Act.‖
(emphasis supplied)
63. The Supreme Court in Continental Foundation Joint Venture
Holding vs. Commissioner of Central Excise, Chandigarh-I15 also held:
―10. The expression ―suppression" has been used in
the proviso to Section 11A of the Act accompanied
by very strong words as 'fraud' or "collusion" and,
therefore, has to be construed strictly. Mere
omission to give correct information is not
suppression of facts unless it was deliberate to stop
the payment of duty. Suppression means failure
to disclose full information with the intent to
evade payment of duty. When the facts are known
to both the parties, omission by one party to do
what he might have done would not render it
suppression. When the Revenue invokes the
extended period of limitation under Section 11-A the
burden is cast upon it to prove suppression of fact.
An incorrect statement cannot be equated with a
willful misstatement. The latter implies making of an
incorrect statement with the knowledge that the
statement was not correct.‖
(emphasis supplied)
64. In Mahanagar Telephone Nigam Ltd. vs. Union of India and
others16, the Delhi High Court also observed as follows:
―28. In terms of the proviso to Section 73(1) of the
Act, the extended period of limitation is applicable
only in cases where service tax has not been levied
or paid or has been short-levied or short-paid or
erroneously refunded by reason of fraud, or
collusion, or wilful misstatement, or suppression of
facts, or contravention of any provisions of the Act
or the Rules made thereunder with an intent to
evade payment of service tax. However, the
impugned show cause notice does not contain any
15. 2007 (216) E.L.T. 177 (SC)
16. W.P. (C) 7542 of 2018 decided on 06.04.2023
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E/56177/2013 & 29 others
allegation of fraud, collusion, or wilful misstatement
on the part of MTNL. The impugned show cause
notice alleges that the extended period of
limitation is applicable as MTNL had
suppressed the material facts and had
contravened the provisions of the Act with an
intent to evade service tax. Thus, the main
question to be addressed is whether the allegation
that MTNL had suppressed material facts for evading
its tax liability, is sustainable.
*****
41. In the facts of this case, the impugned show cause notice does not disclose any material that could suggest that MTNL had knowingly and with a deliberate intent to evade the service tax, which it was aware would be leviable, suppressed the fact of receipt of consideration for rendering any taxable service. On the contrary, the statements of the officials of MTNL, relied upon by the respondents, clearly indicate that they were under the belief that the receipt of compensation/financial support from the Government of India was not taxable. Absent any intention to evade tax, which may be evident from any material on record or from the conduct of an assessee, the extended period of limitation under the proviso to Section 73(1) of the Act is not applicable. The facts of the present case indicate that MTNL had made the receipt of compensation public by reflecting it in its final accounts as income. As stated above, merely because MTNL had not declared the receipt of compensation as payment for taxable service does not establish that it had willfully suppressed any material fact. MTNL's contention that the receipt is not taxable under the Act is a substantial one. No intent to evade tax can be inferred by non-disclosure of the receipt in the service tax return."
(emphasis supplied) 31 E/56177/2013 & 29 others
65. Commissioner of C. Ex. & Customs vs. Reliance Industries Ltd 17 , the Supreme Court held that if an assessee bonafide believes that it was correctly discharging duty, then merely because the belief is ultimately found to be wrong by a judgment would not render such a belief of the assessee to be malafide. If a dispute relates to interpretation of legal provisions, it would be totally unjustified to invoke the extended period of limitation. The Supreme Court further held that in any scheme of self-assessment, it the responsibility of the assessee to determine the liability correctly and this determination is required to be made on the basis of his own judgment and in a bonafide manner. The relevant portion of the judgment is reproduced below:
―23. We are in full agreement with the finding of the Tribunal that during the period in dispute it was holding a bona fide belief that it was correctly discharging its duty liability. The mere fact that the belief was ultimately found to be wrong by the judgment of this Court does not render such belief of the assessee a mala fide belief particularly when such a belief was emanating from the view taken by a Division Bench of Tribunal. We note that the issue of valuation involved in this particular matter is indeed one were two plausible views could co- exist. In such cases of disputes of interpretation of legal provisions, it would be totally unjustified to invoke the extended period of limitation by considering the assessee‟s view to be lacking bona fides. In any scheme of self-assessment it becomes the responsibility of the assessee to determine his liability of duty correctly. This determination is required to be made on the basis of his own judgment and in a bona fide manner.
24. The extent of disclosure that an assessee makes is also linked to his belief as to the
17. 2023 (385) E.L.T. 481 (S.C.) 32 E/56177/2013 & 29 others requirements of law. xxxxxxxxxxx. On the question of disclosure of facts, as we have already noticed above the assessee had disclosed to the department its pricing policy by giving separate letters. It is also not disputed that the returns which were required to be filed were indeed filed. In these returns, as we noticed earlier there was no separate column for disclosing details of the deemed export clearances. Separate disclosures were required to be made only for exports under bond and not for deemed exports, which are a class of domestic clearances, entitled to certain benefits available otherwise on exports. There was therefore nothing wrong with the assessee‟s action of including the value of deemed exports within the value of domestic clearances."
(emphasis supplied)
66. The contention of the appellant that it bonafide believed that it was not liable to pay excise duty on the amount of royalty and also on the other amount mentioned from ‗b' to ‗g' of the chart deserves to be accepted. At the relevant time the judgment of the Supreme Court in India Cement did hold that royalty was in the nature of tax and, therefore, in terms of section 4(3)(d) of the Central Excise Act, the amount of royalty was not required to be included in the transaction value. It is subsequently that the judgment of the Supreme Court in India Cement was reversed by the Supreme Court in Mineral Area Development Authority and it was held that royalty is not in the nature of a tax. In respect of the amount collected from Serial No. ‗b' to ‗g' of the chart, it has been found that they are in the nature of ‗other taxes' contemplated under section 4(3)(d) of the Central Excise Act.
67. It can, therefore, safely be said that the appellant, a Government of India undertaking, could have bonafide believed that it was not liable to pay central excise duty and, therefore, there cannot be any intent to evade payment of duty.
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68. The extended period of limitation, therefore, could not have been invoked in the facts and circumstances of the case.
69. In respect four Excise Appeal No's. 56176 of 2013, 56544 of 2013, 56550 of 2013 and 56551 of 2013, the duty demand has been proposed by issuing show cause notice in May 2012 for the period March 2011 to March 2012. According to the appellant, the demand for the period March 2011 falls beyond the normal period of limitation. In Excise Appeal No. 50150 of 2015, the show cause notice was issued in June 2014 for duty demand pertaining to March 2011 to September 2013. The demand for the period March 2011 to April 2013 falls beyond the normal period of limitation.
Penalty under section 11AC
70. Penalty under section 11AC is imposed for short payment of duties by reason of fraud or collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act or the Rules made there under with an intent to evade payment of duty. This penalty is equal to the duty determined.
71. The Commissioner has confirmed the imposition of penalty in paragraph 28 of the order, which paragraph is reproduced below:
―28. The show cause notice seeks to invoke penal provisions of section 11AC of the Central Excise Act, 1944. The Noticee has submitted the ER-1 returns were duly filed and the issue is one of interpretation of law and, therefore, penal provisions of section 11AC are not attracted. The Noticee did file ER-1 returns. But the crucial point is whether true and complete transaction value was declared in the returns. Mere filing of ER-1 returns would not absolve the Noticee when the allegation is that true and complete information on transaction value was not declared. The Noticee never sought any clarification on the issue if it considered a 34 E/56177/2013 & 29 others matter of interpretation. The Noticee's claim could have force in case it sought to address its views on the claimed interpretation of law. In the facts and circumstances, I hold that true and complete information on price charged for coal was not declared and excise duty was evaded in such manner. Therefore, I hold that penal provisions of section 11AC of the Central Excise Act, 1944 are fully satisfied in the case in hand.‖ (emphasis supplied)
72. It has been found, while dealing with the extended period of limitation, that it could not be invoked in the facts and circumstances of the case. Since the ingredients for invoking the extended period of limitation and for imposing penalty under section 11AC are same, penalty could not have been imposed upon the appellant.
Interest
73. In respect of the amount of interest on payment of duty, it is seen that the amount of duty only for the amount received towards royalty has been confirmed. The amount received towards ‗b' to ‗g' of the chart has not been confirmed.
74. The Supreme Court examined the imposition of penalty in Mineral Area Development Authority vs. Steel Authority of India 18 in paragraph 22 of the judgment and held that taking into consideration the lapse of more than three decades since India Cement was decided and more than a decade since the matter was referred to a Larger Bench, equities will be balanced if the State Governments waive the outstanding interest accrued on the principal amount due from the assessee. The relevant paragraph is reproduced below:
18. (2024) 21 Centax 313 (S.C.) 35 E/56177/2013 & 29 others ―22. The total amount, that is the principal plus the interest, due by the assesses in the pending matters may be substantial in comparison to their total net worth. Steel Authority of India has stated on affidavit that retrospective application of MADA (supra) will lead to revival of cumulative demands to the tune of approximately Rupees three thousand crores from different States. The delay in the court proceedings should not be to the detriment of the assesses (See K C Ninan v. Kerala State Electricity Board, 2023 SCC OnLine SC 663 [339]). Taking into consideration the lapse of more than three decades since India Cement (supra) and more than a decade since the matter was referred to a larger Bench, equities will be balanced if the State governments waive the outstanding interest accrued on the principal due from the assesses. This direction applies to all assesses, regardless of whether they have approached this Court or the High Courts challenging the validity of the relevant statutes.‖ (emphasis supplied)
75. In this view of the aforesaid judgment of the Supreme Court in Mineral Area Development Authority, the demand of interest upon the appellant deserves to be set aside.
76. The contention of the learned counsel for the appellant that the show cause notice could not have been issued under the erstwhile proviso to section 11A (1) of the Central Excise Act as it had been amended w.e.f. 08.04.2011 cannot be accepted. Learned counsel for the appellant has not been able to point out any difference and in any case mere wrong mention of the section will not be vitiate the show cause notice.
Conclusion
(i) Levy of central excise duty on the amount received towards royalty is confirmed for the normal period of 36 E/56177/2013 & 29 others limitation, as this amount is includible in the transaction value. It is set aside for the extended period of limitation. However, even for the normal period, the imposition of penalty and demand of interest is set aside; and
(ii) The demand of central excise duty on Stowing Excise Duty, Forest Transit Fees, Madhya Pradesh Rural Infrastructure and Road Tax Entry Tax, Terminal Tax and CG Development and Environment Cess and captive consumption is set aside. Accordingly, the imposition of penalty and interest are also set aside.
77. The matter is, therefore, remitted to the Adjudicating Authority only to determine the duty to be paid by the appellant in terms of this decision. This determination shall be done within four months from today.
78. All the thirty appeals are, accordingly, partly allowed to the extent indicated above.
(Order pronounced on 06.02.2026) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) Jyoti