Custom, Excise & Service Tax Tribunal
Singareni Collieries Company Ltd vs Hyderabad-Ii on 25 February, 2026
(1)
E/27439/13, E/23566/14, E/20078 & 21509/15
E/30043 & 30412/16, E/31175/17
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Division Bench - Court No. - I
Excise Appeal No. 27439 of 2013
(Arising out of Order-in-Original No. 03-04/2013-Adjn (C.Ex.)(Commr) dt.29.04.2013
passed by Commissioner of Customs, Central Excise & Service Tax, Hyderabad-II)
M/s Singareni Collieries Company Ltd
Singareni Bhavan, Red Hills, PB No.18, ......Appellant
Khairatabad PO, Hyderabad - 50 0004
VERSUS
Commissioner of Central Excise &
Service Tax, Hyderabad - II
Kendriya Shulk Bhavan, LB Stadium Road,
......Respondent
Basheerbagh, Hyderabad - 500 004 WITH Excise Appeal No. 23566 of 2014 (Arising out of Order-in-Original No. HYD-EXCUS-002-COM-021-14-15 dt.20.08.2014 passed by Commissioner of Customs, Central Excise & Service Tax, Hyderabad-II) M/s Singareni Collieries Company Ltd Singareni Bhavan, Red Hills, PB No.18, ......Appellant Khairatabad PO, Hyderabad - 50 0004 VERSUS Commissioner of Central Excise & Service Tax, Hyderabad - II Kendriya Shulk Bhavan, LB Stadium Road, ......Respondent Basheerbagh, Hyderabad - 500 004 WITH Excise Appeal No. 20073 of 2015 (Arising out of Order-in-Original No. HYD-EXCUS-002-COM-029-14-15 dt.16.09.2014 passed by Commissioner of Customs, Central Excise & Service Tax, Hyderabad-II) M/s Singareni Collieries Company Ltd Singareni Bhavan, Red Hills, PB No.18, ......Appellant Khairatabad PO, Hyderabad - 50 0004 VERSUS Commissioner of Central Excise & Service Tax, Hyderabad - II Kendriya Shulk Bhavan, LB Stadium Road, ......Respondent Basheerbagh, Hyderabad - 500 004 (2) E/27439/13, E/23566/14, E/20078 & 21509/15 E/30043 & 30412/16, E/31175/17 WITH Excise Appeal No. 21509 of 2015 (Arising out of Order-in-Original No. HYD-EXCUS-002-COM-045-14-15 dt.31.03.2015 passed by Commissioner of Customs, Central Excise & Service Tax, Hyderabad-II) M/s Singareni Collieries Company Ltd Singareni Bhavan, Red Hills, PB No.18, ......Appellant Khairatabad PO, Hyderabad - 50 0004 VERSUS Commissioner of Central Excise & Service Tax, Hyderabad - II Kendriya Shulk Bhavan, LB Stadium Road, ......Respondent Basheerbagh, Hyderabad - 500 004 WITH Excise Appeal No. 30043 of 2016 (Arising out of Order-in-Original No. HYD-EXCUS-002-COM-026-15-16 dt.30.10.2015 passed by Commissioner of Customs, Central Excise & Service Tax, Hyderabad-II) M/s Singareni Collieries Company Ltd Singareni Bhavan, Red Hills, PB No.18, ......Appellant Khairatabad PO, Hyderabad - 50 0004 VERSUS Commissioner of Central Excise & Service Tax, Hyderabad - II Kendriya Shulk Bhavan, LB Stadium Road, ......Respondent Basheerbagh, Hyderabad - 500 004 WITH Excise Appeal No. 30412 of 2016 (Arising out of Order-in-Original No. HYD-EXCUS-002-COM-056-15-16 dt.17.03.2016 passed by Commissioner of Customs, Central Excise & Service Tax, Hyderabad-II) M/s Singareni Collieries Company Ltd Singareni Bhavan, Red Hills, PB No.18, ......Appellant Khairatabad PO, Hyderabad - 50 0004 VERSUS Commissioner of Central Excise & Service Tax, Hyderabad - II Kendriya Shulk Bhavan, LB Stadium Road, ......Respondent Basheerbagh, Hyderabad - 500 004 AND Excise Appeal No. 31175 of 2017 (Arising out of Order-in-Appeal No. HYD-EXCUS-002-APP-054-17-18 dt.31.07.2017 passed by Commissioner of Customs & Central Tax (Appeals-I), Hyderabad) Commissioner of Central Tax Hyderabad - GST ......Appellant Kendriya Shulk Bhavan, LB Stadium Road, Basheerbagh, Hyderabad - 500 004 VERSUS M/s Singareni Collieries Company Ltd Singareni Bhavan, Red Hills, PB No.18, Khairatabad PO, Hyderabad - 50 0004 ......Respondent (3) E/27439/13, E/23566/14, E/20078 & 21509/15 E/30043 & 30412/16, E/31175/17 Appearance Shri S. Thirumalai, Advocate for the Appellant. Shri K. Raji Reddy, AR for the Respondent.
Coram: HON'BLE MR. A.K. JYOTISHI, MEMBER (TECHNICAL) HON'BLE MR. ANGAD PRASAD, MEMBER (JUDICIAL) FINAL ORDER No. A/30108-30114/2026 Date of Hearing: 10.11.2025 Date of Decision: 25.02.2026 [Order per: A.K. JYOTISHI] M/s Singareni Collieries Company Ltd (hereinafter referred to as appellants) are engaged in production and sale of coal. The appellants were paying Central CED (CED) on coal and they were also paying Clean Energy Cess (CEC) on coal. The Department noticed that in respect of quantities of coal removed, as reflected in ER1 returns vis-à-vis as reflected in CEC returns filed for the same month, there were certain differences and they demanded CED or CEC, as the case may be, on the said differential quantity. The SCNs issued from time to time were adjudicated by the adjudicating authority, wherein, inter alia, it was held that the explanation given by the appellant explaining the difference in quantity in ER1 returns and CEC returns has not been satisfactory and hence, the explanation is not tenable. The demands for the period March, 2011 to June, 2015 were confirmed by way of different adjudication orders and the appellants are in appeal against the said orders except for SCN OR No.07/2013-Adjn (C.Ex)(Commr) dt.03.04.2013 for the period February, 2012 to November, 2012.
2. Similarly, the department has also come in appeal against the order of the Commissioner (Appeals) dt.31.07.2017, whereby, the order passed by the adjudicating authority dt.27.03.2017 confirming the demand was set aside by Commissioner (Appeals).
3. Learned Advocate for the appellant submitted that they are paying both Central CED and CEC on coal produced in their mines. He, however, submitted that while the levy of CEC, introduced vide Finance Act, 2010, inter alia, provides for levy and collection of CEC as duty of excise under a self-contained provision, where, inter alia, Rule 4 provides that every producer of coal shall pay the cess leviable on the removal of the specified (4) E/27439/13, E/23566/14, E/20078 & 21509/15 E/30043 & 30412/16, E/31175/17 goods in the manner provided in Rule 6. Further, Rule 6 provides that cess on the specified goods removed from the mine during a month shall be paid by 5th of second month, following the month in which the removals were made. Additionally, the term 'removal' has also been defined under Rule 2(g) of CEC Rules, as despatch of specified goods from a mine and shall include despatch of such goods for captive consumption within that mine for any purpose, other than for raising of such goods. On the other hand, the CED is leviable w.e.f. 01.03.2011 on coal falling under Central Excise Tariff heading 2701 of the first schedule to the Central Excise Tariff Act. Thus, while CEC is payable on the quantity of raw coal extracted from the mines during a particular month at the time of its removal subject to certain inclusion and exclusion, CED is also leviable on the quantity of coal at the time of removal from mines. He has also clarified that the raw coal extracted is disposed of in the following manners.
a) Sold to customers as it is; or
b) Sent to the Company's power plants for captive generation of power and used for further raising of coal; or
c) Sent to the company's power plants and used for lighting staff quarters; or
d) Sent to washery to produce washed coal.
4. Insofar as sale of raw coal to customers is concerned, both CEC and CED are paid on the quantity of raw coal sold. However, in the case of dispatch of raw coal to the power plants since the coal is being used for further raising of coal i.e., power generated from coal is used in mining operation, there is no levy of CEC at the time of removal as it is clearly excluded from the very definition of 'removal' under Rule 2(g) of CEC Rules, 2010. However, the CEC is paid on the proportionate quantity of raw coal used for lighting the staff quarters. Further, in the case of CED also, they are not paying any CED on the raw coal used in captive power plants as consumption of goods produced captively for further production of taxable final products i.e., coal is exempt in terms of exemption notification for captive consumption.
5. Insofar as dispatch of raw coal to washery is concerned, while the CEC is paid on the quantity of raw coal sent to the washery, the CED is paid on the quantity of washed coal, rejects and slurry, when cleared from the (5) E/27439/13, E/23566/14, E/20078 & 21509/15 E/30043 & 30412/16, E/31175/17 washery and sold to customers. Accordingly, because of this varied mode of clearances of coal and different statutory provisions governing the manner and time of payment of duty/cess, as also, due to certain exemptions available under statutory provisions or in terms of notifications for captive consumption, there could be difference in quantity reflected in the returns filed for a particular month for CEC and Central Excise. The differences are on account of the following reasons.
a) CEC is paid on the quantity of raw coal sent to the washery, whereas, CED is paid on the quantity of washed coal removed.
b) After washing, no further CEC is paid on the washed coal, however, CED is discharged and sometimes the rejects and slurry generated in a particular month may not always be sold in the same month and therefore, there will be differences in the quantity mentioned in these two returns.
6. Insofar as the appeal filed by the department, the appellants (respondents in this appeal) has submitted that the grounds taken by the appellate authority are correct for dropping the demand as the appellate authority has rightly observed that original authority has failed to produce evidence of any unaccounted extraction and removal of coal and merely an allegation has been made based on simple comparison of quantities mentioned in the two distinct returns. The Commissioner (Appeals) has also noted that the leviability and stages of incidence of levying CED and that of CEC are obviously distinct and different from each other. He has also relied on the judgment in the appellant's own case by this Bench reported at [2016 (8) TMI 1112 - CESTAT Hyderabad]. He has also relied on various case laws, as under, in support that no demand can be made based on the discrepancy between two returns/reports.
a) Raj Mohan Vs CCGST, Panchkula [2022 (8) TMI 832 - CESTAT Chandigarh]
b) M/s Luit Developers Pvt Ltd Vs CCGST & CE, Diburgarh [2022 (3) TMI 50 - CESTAT Kolkata]
c) Kush Constructions Vs CGST NACIN, ZTI, Kanpur [2019 (5) TMI 1248
- CESTAT Allahabad]
d) Synergy Audio Visual Workshop P Ltd [2008 (1) TMI 188 - CESTAT Bangalore] (6) E/27439/13, E/23566/14, E/20078 & 21509/15 E/30043 & 30412/16, E/31175/17
7. Learned AR, insofar as the appeals filed by the appellant are concerned, has reiterated the findings of the adjudicating authority and insofar as the departmental appeal is concerned, he has relied on the grounds taken by the department.
8. Since the issues are common in all these appeals, we propose to take up all the appeals together for hearing and disposal.
9. Heard both sides and perused the records.
10. In the present appeals, the core issue is whether the quantity, as reflected in the CEC return can be taken for discharge of CED and vice versa. The department has compared these two returns, in which certain quantity of coal has been reflected and found that for the same month, sometimes quantity reflected in CEC return is higher than what has been reflected in ER1 return and in some months, it is opposite. Thus, wherever there is a difference, the higher quantity has been taken for discharge of either CEC or CED. The appellants have explained their mode of clearance of extracted coal directly to the customers and also for captive consumption in their power plants. They are also clearing extracted coal for washing in their captive washeries before selling/clearing to their customers. While admittedly, CEC has been paid on the entire quantity of coal extracted from the mines at the time of removal, except to the extent sent to their captive power plant, whereas, the CED has not been paid at the time of their clearance from the mine to washeries and in fact, the same has been paid subsequently on washed coal as well as rejected and slurry in a staggered manner. Because of the manner of payment of CEC and CED, which is regulated in terms of different statutory provisions under which these two levy/duties of excise has been imposed, the time of payment of CED and quantity on which it is paid, varies.
11. Before we proceed further, we intend to examine the statutory provisions covering payment of CEC as well as CED on coal produced by the appellant. The authority to levy CEC is under section 83(3) of the Finance Act, 2010. This provision also makes it clear that the said cess is in addition to any other cess or duty leviable on good specified in tenth schedule under any other law. Therefore, the charging section for levy of CEC is section 83(3) and the payment of CEC is at the time of removal of coal from the (7) E/27439/13, E/23566/14, E/20078 & 21509/15 E/30043 & 30412/16, E/31175/17 mine. Further, Rule 2(g) of CEC Rules defines removal as 'dispatch of specified goods from a mine and shall include dispatch of such goods for captive consumption within that mine for any purpose other than for raising of such goods'. In other words, CEC is a cess and is required to be collected in terms of section 83(3) as duty of excise but it will be payable at the time of dispatch from the mine and it will also include coal dispatched for captive consumption within that mine except to the extent used for raising of goods i.e., coal (emphasis supplied). The appellants have tried to explain that while they are not paying CEC on raw coal dispatched to CPP, as the said coal is intended for generation of power, which is further used in mines for raising of coal, except for limited extent of use for lighting the staff quarters, etc., on which they are discharging CEC. However, they are not even discharging CED on captive power plants under assumption that it is meant for captive consumption.
12. The core issue to be decided is whether department is correct in demanding the CED and CEC in the manner proposed in SCN as also whether explanation given by the appellants were sufficient to explain the discrepancies noticed by department when both the returns were compared together. Appellant has tried to explain as to why there will always be difference in quantity reflected in these two returns. Therefore, in order to understand their submission, one of the issues to be decided is whether the coal consumed in captive power plant can be considered as captive consumption within the mine and hence exempted from CED and also whether it can be considered as used for raising of such goods i.e., coal and therefore exempted from CEC. The appellants have also submitted certain additional submissions in view of liberty given by this Tribunal, wherein, inter alia, they have, apart from reiterating the earlier submissions, rebutted the reliance of the learned AR placed on the decision of this Bench in appellant's own case in Appeal Nos. E/30513/2019 & E/30237/2024. As per their submission, the issue in the appeal referred to, was relating to applicability of CEC on coal dispatched to their power plant, whereas, in the present case, the issue is demand of CED on the basis of excess quantity of coal reported in CEC returns and ER1 returns and vice versa. They have also submitted a detailed computation sheet showing reconciliation of quantities of coal reported in ER1 and CEC returns in line with their submission with regard to mode and manner as well as stage of payment of CEC and CED.
(8)E/27439/13, E/23566/14, E/20078 & 21509/15 E/30043 & 30412/16, E/31175/17 We find that as far as reliance placed by the learned AR on the Tribunal's Final Order dt.24.06.2025, it is relevant only to the extent where admittedly the appellants have not contested the payment of cess, per se, on the captive consumption. This is apparent from para 9 of the said order. We find that the appellants have claimed the benefit of exemption notification No.67/95-CE dt.16.03.1995 for not paying CED for captive consumption. We find that this notification exempts excisable goods from whole of the duty of excise manufactured within factory and used within the factory for production in or in relation to manufacture of final product. We do not find this notification would be applicable for non-payment of CED on coal cleared for captive consumption to their power plant for various reasons including the fact that this notification is applicable to a factory and not to mines, as also the fact that coal is used for generation of power, which is not a dutiable good. Thus, the claim for the benefit of exemption under notification 67/95-CE is not tenable in the facts of the case.
13. Insofar as non-payment of CEC on the coal cleared to their captive power plant, in terms of provisions under CEC Rules, we find that the appellants are essentially submitting that the coal, so cleared, is used for generation of power, which in turn is used for raising of coal. In this regard, it is to be understood as to what is the meaning of raising of coal. Essentially, raising of coal relates to extraction of coal in the mines and bringing it to the pithead or the dump yard in the mining parlance. Various equipment and machinery are used for extracting coal and bringing it to the surface at the designated spot but whether those equipment are purely running on electricity being generated by the said captive power plant, which is using the coal cleared by them without payment of CEC or otherwise, needs to be established which they have not done. Even otherwise, there is no direct correlation between the coal cleared to power plant and coal raised from the mines. It cannot be said that coal is being used indirectly in raising coal. Therefore, this exclusion, which has been adopted by the appellant for non-payment of CEC on the raw coal cleared to captive power plant, is not tenable. Once the duty has been levied in terms of section 83(3), only the payment of duty has been deferred till the time of dispatch. Therefore, we do not find that activity of generating power from coal in their power plant can be considered as used for further raising of (9) E/27439/13, E/23566/14, E/20078 & 21509/15 E/30043 & 30412/16, E/31175/17 such goods i.e., coal. The exclusion of coal produced and cleared without payment of CEC is not correct.
14. We also find that coal is an excisable commodity, where in terms of section 3 of Central Excise Act, 1944, CED is leviable on any excisable goods, which are produced or manufactured in India. Admittedly, coal has been produced in India, therefore, the authority to charge CED is under section 3. However, the duty is required to be paid in accordance with manner of payment provided under Central Excise Rules and therefore, the duty is normally required to be paid at the time of removal. The term 'place of removal' has been defined under section 4 as, inter alia, a factory or any other place or premises of production or manufacture of excisable goods. Thus, in the present case, since the production of excisable goods has taken place in the mines, the CED would be payable at the time of removal from the mines. We also note that this definition is also consistent with the provision for payment of CEC, where also, the CEC is required to be paid at the time of removal from the mines. Thus, the CED and CEC, which are levied under different statutory provisions, are required to be discharged at the time of removal from the mines in the manner provided under respective statutory provisions. This would also require factual verification as to whether washeries are within mining area from where coal has been excavated or otherwise or there being any other exemption or provision to clear raw coal to washeries without payment of CED. There is no dispute that CEC is not being paid on raw coal cleared to washeries. However, in this case, we find that department has not made any adverse observation that they had not discharged any CED on the raw coal cleared for washing apparently because the washery could be within the mines and therefore, the clearance of coal is in the washed form as well as rejects and slurry has been taken as clearance from the mines, on which, admittedly, CED has been paid, though not at the time of moving the coal from the mines to the washery. On the other hand, insofar as non-payment of CEC on washed coal is concerned, we find that since they have already discharged CEC on the entire coal cleared to the washery and therefore, it cannot be said that coal has again been produced in the washery and therefore, it is again leviable to CEC. Thus, once having discharged CEC on the entire quantity cleared from mines to the washery, apparently, within the mines, then there is no requirement for payment of CEC again thereon. All these factual matrix (10) E/27439/13, E/23566/14, E/20078 & 21509/15 E/30043 & 30412/16, E/31175/17 needs to be checked for reconciliation of the statements to establish that whatever coal has been produced in the mines, appropriate CEC and CED has been discharged at the time of removal from the mines and any removal without payment of either CEC or CED has to be covered either by way of exemption or in terms of statutory provisions warranting exclusion of said clearance for the purpose of payment of CEC.
15. Appellants have also heavily relied on the fact that the difference in two statements cannot be basis for demanding duty and have relied on catena of judgments. We find that in most of these case laws, the reliance was placed between two statutory returns under two different Acts or provisions and there was no further investigation to establish the provision of taxable service, per se. Therefore, it was held that demand would not sustain. Whereas, in the present case, the leviability of both statutory duty and cess are on the same excisable goods, which have been produced in the same mines and the payment has to be made at the time of removal from the mines. Therefore, in case there is any discrepancy between these two figures, the appellant is required to explain in order to satisfy that CED and CEC leviable on entire quantity has been paid on such coal produced in the mines except to the extent permissible. This may require reconciliation of clearances over a larger period as there could be some spillover on account of accountal as well as payment of CEC and CED due to difference in the date of removal of the coal and slurry and rejects, etc. The principal is, however, to ensure that they discharge payment of both the cess and CED on the entire quantity of coal produced in the mines and cannot claim any exclusion on account of its consumption in the power plant for raising the coal or for captive consumption in the absence of any statutory provisions or notification.
16. Insofar as the departmental appeal is concerned, in view of discussion supra, it is liable to be allowed by way of remand to the adjudicating authority to decide on the similar lines, as discussed, in respect of appeals filed by the appellant. The impugned order of Commissioner (Appeals) is set aside.
17. Therefore, in view of the discussion, supra, the matter is being remanded back for re-computation of the demand keeping in view the observations and decision regarding applicability of claims made by the (11) E/27439/13, E/23566/14, E/20078 & 21509/15 E/30043 & 30412/16, E/31175/17 appellant for exclusion or non-payment of CEC. Moreover, the issue whether the CED is being paid at the stage of washing and not at the stage of clearance from the mines is not decided as the department has not raised any issue regarding non-payment of CED at earlier stage or ex-washery. Moreover, ER1 return is considering both kinds of clearances, ex-mine and ex-washery. Therefore, both the clearances have to be taken together to arrive at non-payment of CED, if any. We, further, agree that merely because there is difference between two returns that in itself cannot be a ground for demanding either CEC or CED and the only computation, which is required to be done is whether there is short payment of CEC or CED on the entire clearances during the relevant period. Though there are several demands covering different periods, it would be necessary to take up the entire exercise in a holistic manner by computing and factoring the submissions made by them regarding non-payment of CED on certain amount of coal during month but the same gets paid during the next month. In this regard, the statement submitted by them reconciling the clearances both under CEC return and ER1 return needs to be verified by the adjudicating authority.
18. Appellant's Appeals are allowed by way of remand to the Original Adjudicating Authority.
19. Department's appeal is allowed by way of remand to Original Adjudicating Authority.
(Pronounced in the Open Court on 25.02.2026) (A.K. JYOTISHI) MEMBER (TECHNICAL) (ANGAD PRASAD) MEMBER (JUDICIAL) Veda