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2016 (8) TMI 1112 - CESTAT HYDERABAD

2016 (8) TMI 1112 - CESTAT HYDERABAD - 2016 (341) E.L.T. 378 (Tri. - Hyd.) - Whether exemption extended under Notifications 28/2010-CE and 29/2010-CE are applicable only with regard to Clean Energy Cess levied on coal as contended by department or whether the said exemption will also be applicable with regard to Central Excise Duty levied on coal as contended by the appellant - quantity of Coal removed during periods under Section 11A of the Central Excise Act, 1944 on payment of 5% Excise Duty. .....

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gy Cess does not mean exemption from E. Cess and S.H.E. Cess on Central Excise Duty. Substance is also find in the argument that since Basic Excise Duty on coal was introduced only w.e.f 2011, it is incongruous that a notification issued in 2010 can exempt E. Cess and S.H.E. Cess on Basic Excise Duty, for the simple reason that E. Cess and S.H.E. Cess has to be calculated on the aggregate of Central Excise Duty. - The Government found it necessary to issue a separate Notification No. 17/201 .....

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H.E. Cess under Notifications No. 28/2010-CE and 29/2010-CE both dated 22.06.2010 (prior to 01.03.2015), is applicable only in respect of Clean Energy Cess leviable on Coal under Tenth schedule to Finance Act, 2010, hence Education Cess and S.H.E. Cess shall be leviable on Excise Duty on Coal. - The exemption of E. Cess and S.H.E. Cess vide Notifications No.28/2010-Central Excise and No. 29/2010Central Excise, both dated 22nd June, 2010, also meant that the Notification simultaneously exempt .....

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d 1st March, 2015 rescinding Notifications No. 28/2010-Central Excise and No. 29/2010-Central Excise, which had already exempted the levy of Education Cess and Secondary & Higher Education Cess on the Clean Energy Cess leviable on coal much earlier on 22nd June, 2010. Therefore, we have no difficulty in concluding that exemption from E. Cess and S.H.E. Cess under Notifications No. 28 and 29/2010 both dated 22.06.2010 is applicable only with respect to Clean Energy Cess levied under the Finance A .....

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1. M/s Singareni Collieries Company Ltd., Kothagudem (hereinafter referred to as Appellant'), a joint venture between the Government of Andhra Pradesh (51%) and the Government of India (49%) is engaged in the mining and sale of coal. The Appellant undertakes mining activities across the districts of Adlabad, Karimnagar, Warangal and Khammam and supplies coal to various organizations. The Appellant has obtained Registration under the Clean Energy Cess Rules, 2010 with effect from July 01, 201 .....

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n the Tenth Schedule of the Finance Act, 2010, which, inter alia includes Coal. Coal was attracting Nil rate of duty upto Feb, 2011 in the First Schedule to CETA, 1985 with effect from March 01, 2011 the Finance Act, 2011 introduced Excise Duty on Coal, where under the manufacturer was granted an option of discharging Excise Duty either at the rate of: 1% provided CENVAT credit of inputs, input services and capital goods used for production of coal is not availed or 5% with the facility of CENVA .....

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E dated June 22, 2010 and Notification No. 29/2010-CE dated June 22, 2010. The department issued (hereinafter referred to as 'the Learned Commissioner ) show cause notices proposing to recover Education Cess and Secondary and Higher Education Cess on the quantity of Coal removed during periods under Section 11A of the Central Excise Act, 1944 along with applicable interest and penalty. 3. On adjudication the lower authority confirmed the proposals in the notices along with interest. Hence th .....

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respect of the Cess levied. In this connection Notification No. 2/2010 - Clean Energy Cess dated 22.06.2010 has made applicable the provisions of the Central Excise Act relating to levy and collection etc. to the Cess levied under sub-sec (3) of Sec 83. 2. As per the Tenth Schedule, the goods referred therein include 'coal' which is the subject matter of production by the Appellant. Pursuant to section 83, the Central Government issued Notification No. 28/2010-CE dated 22.06.2010 and 29 .....

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t it is necessary in the public interest so to do, hereby exempts all goods specified in the Tenth Schedule to the Finance Act, 2010 (14 of 2010) from the Education Cess leviable thereon under the said sections 91 and 93 of the said Finance (No.2) Act. [F. No. 354/72/2010-TRU]" NTF. No. 29/2010-CE, DT. 22/06/2010 "G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944) read with sections 136 and 138 of the Finance Ac .....

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he quantum of excise duty, since it is a flat rate of 2% of the aggregate of all duties of excise levied and collected by the Central Government. The Education Cess has a relation to the quantum of duty, since it is calculated on that basis. It has no connection, direct and proximate, or otherwise to the rate of duty payable on the manufacture of goods. Similarly, the rate of duty on the manufacture of goods, for the purposes of assessment, is not at all dependent on the levy or non-levy of the .....

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e also in the former in terms of Sec 136 the goods were specified in the Seventh Schedule. 4. A comparison of the said Seventh Schedule with the Tenth Schedule under the Finance Act, 2010 would show that the former provides description for purpose of classification up to the Tariff Item level while the latter viz. Tenth Schedule provides the description only upto the level of heading. The obvious reason is that the National Commodity Contingency duty is levied with reference to the value of the .....

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ence to the First Schedule to the Central Excise Tariff Act that the Appellants are in a position to discharge the obligation in respect of Clean Energy Cess under Section 83 of the Finance Act, 2010. 5. Notification No. 28 and 29 aforesaid regarding E. Cess and S.H.E Cess specifically exempt for purpose of levy of cess the goods specified in the Tenth Schedule which will have to be arrived at only by constant reference on a continuous basis with the First Schedule to the Central Excise Tariff A .....

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Notifications No. 28/2010-CE and 29/2010-CE both dated 22.06.2010 have remained unaltered providing exemption of E. Cess and S.H.E. Cess not only in respect of Clean Energy Cess but also the on the central excise duty under the First Schedule by way of duty of excise. 7. The exemption Notifications 28 and 29 of 2010 dated 22.06.2010 use the expression all goods specified in the Tenth Schedule to the Finance Act, 2010 . The expression in the said Notification is qua the goods specified in the Ten .....

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hing but the First Schedule to the Central Excise Tariff Act, 1985 by reference in respect of the goods specified in the Tenth Schedule. 10. The requirement of continuous reference to the Central Excise Act and First Schedule to the Central Excise Tariff Act, 1985 for the purpose of working the Tenth Schedule is clearly brought out from the following: (i) Registration under the Clean Energy Rules, 2010 in terms of Rule 3 will have to be with reference to Sec 6 of the Central Excise Act relating .....

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e item level classification is not provided in the Tenth Schedule to the Finance Act, 2010. (iii) For the purpose of payment of cess as explained above the provisions of Central Excise Act relating to payment of duty, interest and recovery have been referred to in Rule 6 of the Clean Energy Cess Rules, 2010, (iv) For the purpose of filing of the Return in Form I under the Clean Energy Cess Rules, the same cannot be completed expect by reference to the First Schedule to the Central Excise Tariff .....

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00 and 2701 19 90 (Bituminous Coal and other coal dealt with by the Appellants) will have to be read into the Tenth Schedule and so done the exemption from E. Cess and S.H.E. Cess in terms of Notf. No. 28 and 29 (supra) would continue to be available for the aggregate of duties of excise levied by the Central Government even after 01-03-2011. Therefore, there could be no levy of E. Cess and S.H.E. Cess on the Central Excise duty rate introduced from 01-03-2011. 12. The Clean Energy Cess is a Ces .....

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cause no excise duty rate was prescribed under Sec 3 of the Central Excise Act at the time when the said notifications were issued is legally unsustainable in view of the specific reference in the Tenth Schedule to the First Schedule to the Central Excise Tariff Act. 14. Department itself had clarified that Clean Energy is a duty of Central Excise and that the exemptions from E. Cess and S.H.E. Cess would be applicable on payment of Clean Energy Cess by Notification No. 28 and 29 of 2010 dated 2 .....

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nce of Statue. This is so because in the present case for the purpose of working the Tenth Schedule to the Finance Act, 2010 the Appellants are entitled to refer to the First Schedule to the Central Excise Tariff, 1985 and the amendments made from time to time. Therefore, the Notification No. 28 and 29 regarding E. Cess and S.H.E. Cess having been issued under Sec 5A of CEA read with the Tenth Schedule will be available with equal force after 01-03-2011 and there will be no E. Cess or S.H.E. Ces .....

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siery Vs Assistant Collector of C. Ex. [1989 (41) E.L.T. 35 (Cal)] (v) Bamagore Jute Factory Co. Vs Inspector of C. Ex., [1992 (57) E.L.T. 3 (S.C.)] 3. On behalf of Revenue Learned AR She Ajay Saxena vehemently opposed the appeals, with the following main submissions: 1. The case of the appellant is that Education Cess and Higher Education Cess were exempted on Coal (being specified in Tenth Schedule of the Finance Act, 2010) and therefore no Education Cess is attracted on basic excise duty even .....

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stence in 2010. Basic Excise duty on Coal was introduced from Budget 2011 and could not have been exempted by a Notification which was issued in the previous year. 3. In any case effect from April, 2013, M/s Singareni Collieries Co have been paying due Cess on BED on Coal produced on their own without any protest and without any dispute. It is further confirmed that other Coal producing Companies like M/s Neyveli Lignite Corporation Limited, M/s Bharat Cooking Coal Limited (BCCL), Dhanbad etc., .....

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and S.H.E. Cess shall be leviable on Excise duty on Coal. 5. He made the following further arguments: l) Exemption from Education Cess and S.H.E. Cess under Notifications No. 28/2010 and 29/2010 E. Cess is applicable with only respect to Clean Energy Cess levied under the Finance Act 2010 and on the goods specified under Tenth schedule thereon and is not applicable to Central Excise duty on COAL which was introduced in subsequent year i.e. 2011. II) Notifications 28 and 29/2010 specifically exem .....

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IV) Power under Section 5A of the Central Excise Act to issue Notification No. 28 & 29/2010 is derived from Notification No. 2/2010-Clean Energy Cess dated 22.06.2010, which is issued under Sub-section 7 of Section 83 of the Finance Act, 2010 and makes the Section 5A of Central Excise Act applicable to Clean Energy Cess Bothe Section 83 of Finance Act, 2010 and Notification No. 2/2010 - Clean Energy cess are limited to collection, levy and exemption related to Clean Energy Cess only and it .....

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, Cess, etc. Therefore any levy or exemption with respect to same goods in a particular Schedule has to be applied and construed with respect to that Schedule only. VII) Section 83(5) of Chapter VII of Finance Act, 2010 clearly lays down that Clean Energy Cess 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. This shows that Clean Energy Cess is only one of the duties of Excise leviable on Coal and is l .....

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s introduced from Budget 2011 and could not have been exempted by a Notification which was issued in the previous year. 6. Clean Energy Cess is required to be discharged on the quantity of coal produced, while basic Excise Duty is required to be calculated on the quantity cleared at factory gate, after washing etc., therefore the quantity at factory gate is lower than the quantity produced. Thus even the manner of calculations of Clean Energy Cess and BED are different. 7. They rely on the follo .....

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t would be worthwhile to state the details of demand, the period of dispute etc in these appeals. S. No. Particulars E/26083/2013-DB E/28177/2013 E/20090/2015-DB 1. Period of dispute April, 2011 to March, 2012 April, 2012 to February, 2013 March, 2013 2. SCN No. and Date OR No. 10/2012, dated 09.05.2012 OR No. 08/2013, dated 02.05.2013 OR No. 02/2014, dated 30.01.2014 3. OIO No. and Date OIO No. 08/2012, dated 31.12.2012 OIO No. 07/2013, dated 26.08.2013 OIO NO.HYD-EXCUS-COM-34-14-15, dated16.10 .....

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ergy Cess levied on coal as contended by department or whether the said exemption will also be applicable with regard to Central Excise Duty levied on coal as contended by the appellant. 7. Clean Energy Cess is a kind of carbon tax and is levied in India as a duty of Excise under section 83 (3) of the Finance Act, 2010 on Coal, Lignite and Peat (goods specified in the Tenth Schedule to the Finance Act, 2010) in order to finance and promote clean environment initiatives, funding research in the a .....

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Relevant portion of the Budget speech is reproduced to get the intention of the legislation: Environment 154. Harnessing renewable energy sources to reduce dependence on fossil fuels is now recognised as a credible strategy for combating global warming and climate change. To build the corpus of the National Clean Energy Fund announced earlier, I propose to levy a clean energy cess on coal produced in India at a nominal rate of ₹ 50 per tonne. This cess will also apply to imported coal. 7.2 .....

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ncing and promoting clean energy initiatives and funding research in the area of clean energy. I propose to expand the scope of purposes of levying the said cess to include financing and promoting clean environment initiatives and funding research in the area of clean environment. To finance these additional initiatives, I propose to increase the Clean Energy Cess from 50 per tonne to 100 per tonne. 7.3 Vide Finance Act, 2016 the Clean Energy Cess was renamed as Clean Environment Cess. 7.4 Thus .....

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ule of the Finance Act, 2010, reference to First Schedule of Central Excise Tariff Act, 1985 is continuously required for ascertaining classification. Hence the said Tenth Schedule needs to be considered as legislation by reference and not legislation by incorporation, therefore all amendments and modifications of the law in the referred statute, subsequent to the time the reference law was enacted will automatically be read into the adopting statute. 9. While, we have no quarrel with this estab .....

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reiterated in Nagpur Improvement Trust Vs Ampik Singh [AIR 2002 SC 3499], 'When an earlier Act or certain of its provisions are incorporated into a later Act, the provisions so incorporated become part and parcel of the later Act as if they had been bodily transposed into it . The result is to constitute the later Act which is not modified or repealed by a modification or repeal of the earlier Act . (Narottamdas Vs State of M.P. [AIR 1964 SC 1667]), reiterated in Sneh Enterprises Vs Commissi .....

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d penalties, confiscation and procedure relating to offences and appeals, with such modifications and alterations as may be considered necessary. So also, the said Tenth Schedule specifically mentions that for the purpose of the Tenth Schedule, Chapter , heading , sub heading , and tariff Item and Rules for interpretation etc., of the First Schedule of the Central Excise Tariff Act, shall apply interpretation of that Schedule. 12. When there is general reference in the Act in question to some ea .....

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s principle is generally called legislation by incorporation. General reference, ordinarily, will imply exclusion of specific reference and this is precisely the fine line of distinction between these two doctrines. Both are referential legislations, one merely by way of reference and the other by incorporation. It normally, will depend on the language used in the later law and other relevant considerations. While the principle of legislation by incorporation has well defined exceptions, the law .....

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Allahabad [1978 (2) ELT- J 393]. 14. This being the case, the Learned Counsel s mention of Clean Energy Cess Rules, 2010 and references thereof to Section 6 of Central Excise Act relating to registration, and adoption of other provisions in the said Act, relating to payment of duty, interest, filing of returns, recovery etc., are merely legislation by incorporation, only for the limited purpose of adopting procedural modalities. So also, reference to First Schedule of Central Excise Tariff Act .....

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Cess and S.H.E. Cess leviable on Central Excise duty per se. Thus we are of the considered opinion that the aforesaid relevant portions of Section 83 and Tenth Schedule are in the nature of legislation by incorporation only and not legislation by reference as vigorously argued by the Learned Counsel. 15. On the other hand, considerable merit is found in the arguments put forth by the department. We find ourselves in agreement with the submission of the Learned AR that Section 83(5) of Finance Ac .....

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gument that since Basic Excise Duty on coal was introduced only w.e.f 2011, it is incongruous that a notification issued in 2010 can exempt E. Cess and S.H.E. Cess on Basic Excise Duty, for the simple reason that E. Cess and S.H.E. Cess has to be calculated on the aggregate of Central Excise Duty. 16. These views also find sustenance from a number of judgments. In the case of UOI Vs Modi Rubber Ltd & others [1986 (25) ELT 849 SC], the Hon'ble Apex Court held that exemption from duty of e .....

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from year to year. It is therefore difficult to understand how the expression 'duty of excise' in the Notification dated 1st August, 1974 could possibly be read as comprehending special duty of excise which did not exist at the date of this notification and came to be levied almost four years later. When special duty of excise was not in existence at the date of this notification, how could the Central Government, in issuing this notification, have intended to grant exemption from paymen .....

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in respect of excise duty which may be levied in the future, without considering the nature and extent of such duty and the object and purpose for which such levy may be made and without taking into account the situation which may be prevailing then. It is only when a new duty of excise is levied, whether special duty of excise or auxiliary duty of excise or any other kind of duty of excise, that a question could arise whether any particular article should be exempted from payment of such duty .....

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ended to grant exemption not only in respect of excise duty then prevailing but also in respect of all future duties of excise which may be levied from time to time. 17. This dictum has been followed in many subsequent judgments, for example by the Hon'ble High Court of Sikkim in Unicorn Industries vs UOI [2015 (324) ELT 498 (Sikkim)] and by the Hon'ble High court of in Riba Textiles vs Cestat, New Delhi [2015 (322) ELT 74 (P&H)]. In the Unicorn Industries judgment, the Hon'ble H .....

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R, 2002 in regard to the State of Sikkim or even the exemption Notification No. 71/2003-C.E. to grant exemption from any duty which may be imposed in future. Exemption could only be granted in respect of the duties which were levied or had been imposed at the time of grant of incentives. 36. The position in the present case is no different. The respondents have placed on record various notifications regarding grant of exemption from the NCCD or Education Cess levied under the Finance Acts, in qu .....

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fit of exemption in respect to NCCD, Education Cess and Secondary and Higher Education Cess levied under the Finance Acts, 2001, 2004 and 2007 respectively without any exemption notification having been issued pursuant to these Finance Acts meaning thereby that the benefits secured by them was without any sanction of law. The respondents rightly raised demand of duties levied under the Finance Acts. 18. It is also noted that vide the Finance Bill, 2015 which subsequently was passed in Parliament .....

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ance, summarizing the Budget 2015 proposals are reproduced below: Letter D.O.F.N0.334/5/2015-TRU New Delhi the 28th February, 2015, of the Joint Secretary, TRU l, CBEC, Ministry of Finance Dear Chief Commissioner/ Principal Commissioner, The Finance Minister has introduced the Finance Bill, 2015 in Lok Sabha today, i.e., 28th February, 2015. Changes in Customs and Central Excise law and rates of duty have been proposed through the Finance Bill, 2015 (clauses 80 to 89, 163, 164 for Customs and cl .....

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xcisable goods as a duty of excise under section 91 read with section 93 of the Finance Act, 2004 is being fully exempted. In this regard, notification No. 14/2015-Central Excise dated 1st March, 2015 refers. Similarly, Secondary & Higher Education Cess leviable on excisable goods as a duty of excise under section 136 read with 138 of the Finance Act, 2007 is also being fully exempted. In this regard, notification No. 15/2015-Central Excise dated 1st March, 2015 refers. 5) S.No. 1A and 1B of .....

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1B are being omitted. Also, the entries at S.No.5A, 6 and 7A are being amended so as to substitute the rate of 12% with 12.5%. Notification No. 16/2015-Central Excise dated 1st March, 2015 refers. 6) Notifications No.28/2010-Central Excise and No.29/2010-Central Excise, both dated 22nd June, 2010 exempt the levy of Education Cess and Secondary & Higher Education Cess on the clean energy cess leviable on coal. Since Education Cess and Secondary & Higher Education Cess are being exempted .....

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itially available only to Clean Energy Cess, w.e.f. 22.06.2010, and that E. Cess and S.H.E. Cess was very much imposable on Central Excise Duty till the amending Notification 14 & 15/2015-CE dated 01 .03.2015. 18.2 Even the CBEC had clarified vide Circular 354/42/2014-TRU 22nd September, 2015 that the exemption from Education Cess and S.H.E. Cess under Notifications No. 28/2010-CE and 29/2010-CE both dated 22.06.2010 (prior to 01.03.2015), is applicable only in respect of Clean Energy Cess l .....

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