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M/s Singareni Collieries Company Ltd. Versus CCE, Hyderabad-II

2016 (8) TMI 1112 - CESTAT HYDERABAD

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. - Held that:- we find ourselves in agreement with the submission of the .....

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e 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. 17/2015-CE to rescind erstwhile Notification No. 28 and 29/2010-CE, in our opinion, .....

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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 exempted E. Cess and S.H.E. Cess on duty of excise. If this was the case, there wou .....

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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 Act, 2010, but will not be applicable with respect to Central Excise duty levi .....

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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, 2010 and has been discharging Clean Energy Cess at the rate of ₹ 50/- per .....

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l. 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 CENVAT credit. In this regard, the Appellant classified the goods under Chapter He .....

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e 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 these appeals. 2. The main contentions put forward by the Learned Counsel for a .....

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an 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 29/2010-CE dated 22.06.2010 which provided for exemption from payment of E. Ces .....

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pecified 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 Act, 2007 (22 of 2007), the Central Government, on being satisfied that it is n .....

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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 Education Cess. Similar interpretation would be applicable in respect of the .....

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nth 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 product or any other unit of measure whereas the E. Cess and S.H.E Cess is on .....

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ts 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 Act, 1985. 6. In the Finance Act, 2011 a rate of excise duty was specified aga .....

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ed 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 Tenth Schedule; that a blanket exemption has been given to the goods viz- coal; .....

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ce 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 to registration as the same has been made applicable in terms of Sec 83(7) of .....

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nce 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 Act because the CETA Heading has to be provided after classifying the product .....

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s) 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 Cess has been introduced by the Ministry of Finance vide section 83 of Finance A .....

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t 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 22.06.2010. When a Notification issued also pursuant to Section 5A of the Cent .....

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ing 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. Cess on the said aggregate of duties of excise namely Central Excise and Clean E .....

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re 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 when Tariff rate of 5% was introduced in Central Excise Tariff Act, 1985 in .....

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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., are also paying Education Cess and S.H.E. Cess on basic Excise duty on Coal s .....

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owing 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 exempt only the goods specified in the Tenth Schedule to the Finance Act, 2010 fr .....

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o. 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 cannot exempt E. Cess on basic Central Excise duty specified under First Sche .....

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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 limited to the Tenth Schedule to Finance Act, 2010. An exemption from Educatio .....

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ion 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 following case laws: (i) Hoechst India Limited Vs Collector of Central Excise, Bom .....

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tc 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, dated16.10.2014 4. Amount of Education Cess and S. H. E. Cess in dispute ₹ 15,53, .....

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tion 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 area of clean environment or for any such related purposes. In many countries .....

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he 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 Thus when imposed, Clean Energy Cess was levied for the purposes of financin .....

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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 the intention and purpose of levy of Clean Energy Cess are very different in .....

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ariff 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 established principle of law, with regard to legislation by reference, we are not .....

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9;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 Commissioner of Customs [(2006) 7 SCC 714]. 11, In the instant case, the impugned Sec .....

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h 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 earlier Act, but there is no specific mention of the provisions of the former A .....

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ce, 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 enunciated as of now provides for no exceptions to the principle of legislat .....

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l 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 in the said Tenth Schedule is only for the limited purpose of ensuring that f .....

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he 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 Act, 2010 clearly lays down that Clean Energy Cess shall be in addition to any .....

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t 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 excise does not mean exemption from special excise duty, additional excise dut .....

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'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 payment of special excise duty? The presumption is that when a notification grantin .....

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ring 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 of excise and the Central Government would then have to apply its mind to thi .....

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ut 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 High Court, following the ratio of Modi Rubber case, held as follows. 32. Apar .....

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o. 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 question. This further clarifies that the Excise duty envisaged under the exemp .....

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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 and received the assent of the President, inter alia, Education Cess and Sec .....

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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 clauses 90 to 104, 163, 164, 184 and 188 for Central Excise). 2 Important chang .....

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he 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 notification No.23/2003-Central Excise, dated 31.03.2003 exempt the Customs .....

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ed 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 on excisable goods in general, notifications No.28/2010- Central Excise and N .....

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ess 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 leviable on Coal under Tenth schedule to Finance Act, 2010, hence Education Ce .....

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