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2019 (7) TMI 1477 - AT - Central ExciseCENVAT Credit - clean energy cess on Coal - It is the case of the assessee that since CEC is also a form of excise, they are entitled to Cenvat credit even in the absence of an explicit provision under Rule 3 of CCR, 2004 - HELD THAT:- The purpose of levying the CEC is evidently to promote and finance clean energy initiatives by taxing the coal - A plain reading of Rule 3 of CCR, 2004 shows that it did not provide for Cenvat credit of every duty of excise and cess but only of some and this list does not include CEC imposed in Finance Act, 2010. It is undisputed that a plain reading of Rule 3 of CCR, 2004 shows that Cenvat credit is admissible only in respect of some cesses and not in respect of all the cesses and duties of excise. Although it is now settled that taxing statutes must be literally interpreted, I have also examined the spirit and purpose of levying the CEC. It is evident from Section 83 of Finance Act, 2010 that CEC has been levied on coal to discourage use of the polluting forms of energy and encourage use of cleaner forms of energy. This is based on the principle of ‘Polluter pays’. If the CEC collected by the Government is returned to the assessee through the backdoor in the form of CCR, 2004, we will be doing a great disservice to the country by replacing the principle of ‘Polluter pays’ with ‘Pollution pays’. We will be encouraging use of polluting forms of energy by undoing the very purpose for which CEC has been levied - The assessee is not entitled to Cenvat credit under Rule 3 of CCR, 2004. Penalty - HELD THAT:- The dispute is an interpretational one and it is perfectly possible for the assessee to have entertained a belief that they are entitled to Cenvat credit of CEC and therefore, there is no justification for imposition of penalty under Rule 15 of CCR, 2004 - Further, they have also, on being pointed out, reversed the credit availed by them under protest. Therefore, the penalty is liable to be set aside. Appeal allowed in part.
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