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TMI Blog2019 (7) TMI 1477X X X X Extracts X X X X X X X X Extracts X X X X ..... se Act, 1944. Further, it was also proposed to impose a penalty under Rule 15(1) of CCR, 2004 upon the assessee for contravening the provisions of CCR, 2004. 3. After following due process, the Asst. Commissioner confirmed the demand as proposed and appropriated the amount already reversed by them towards this demand. He further imposed a penalty of equal amount under Rule 15 of CCR, 2004 read with Section 11AC of Central Excise Act, 1944. 4. Aggrieved, the assessee appealed to the first appellate authority who set aside the order of the original authority and allowed the assessee's appeal. The reasoning given by the first appellate authority in allowing Cenvat credit of CEC to the assessee, although the same is not eligible for Cenvat credit as per Rule 3 of CCR, 2004, was that in the case of Shree Renuka Sugars [2014 (302) ELT 33 (Kar.)] the Hon'ble High Court of Karnataka allowed the Cenvat credit of the sugar cess holding that the sugar cess was also collected as a duty of excise and is therefore eligible for Cenvat credit under Rule 3. The ratio of this decision of the Hon'ble High Court of Karnataka was followed despite the fact that sugar cess was clearly not covered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 66 of the Finance Act; ixa. the service tax leviable under section 66A of the Finance Act; ixb. the service tax leviable under section 66 of the Finance Act; x. the Education Cess on taxable services leviable under section 91 read with section 95 of the Finance (No.2) Act, 2004 (23 of 2004); and xa. the Secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007); and xi. the additional duty of excise leviable under section 85 of Finance Act, 2005 (18 of 2005) paid on- (i) any input or capital goods received in the factory of manufacture of final product or premises of the provider of output service on or after the 10th day of September, 2004; and (ii) any input service received by the manufacturer of final product or by the provider of output services on or after the 10th day of September, 2004 including the said duties, or tax, or cess paid on any input or input service, as the case may be, used in the manufacture of intermediate products, by a job-worker availing the benefit of exemption specified in the notification of the Government of India in the Ministry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot, by any stretch of imagination, be made applicable to CEC. Therefore, the ratio of the judgment of the Hon'ble High Court of Karnataka in the case of Shree Renuka Sugars (supra) with respect to sugar cess for which the entire Central Excise Act and Rules were made applicable, will not apply to the present case. 8. He further argued that the CEC has been levied by the Parliament for a specific purpose. It is based on the principle "Polluter pays" which is a well established principle in the field of environment and has been emphasized by the Hon'ble Apex Court in several cases related to the environment. This principle states that if any activity is causing pollution, the polluter has to pay for the cleanup. Coal is a cheaper but a polluting form of energy. Therefore, cess has been levied on it so as to increase the cost of such form of energy. The amounts so collected from the CEC are to be used for development of cleaner forms of energy. Thus, it is a case of environment protection and those who are using dirty forms of energy such as coal have to pay for it. If the assessee is allowed Cenvat credit of CEC, it would amount to returning with one hand what has been collected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. I proceed to decide this issue on merits. 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. The Hon'ble High Court of Karnataka gave benefit of credit of sugar cess in respect of Shree Renuka Sugars (supra) expanding the scope of Cenvat Credit Rules by taking a broader view and holding that sugar cess also being duty of excise Cenvat credit may not be denied. 13. It is, however, now held by the Constitutional bench of Hon'ble Apex Court in the case of Dilip Kumar & Co. and others (Civil Appeal No. 3327/2007) that fiscal statutes must be interpreted strictly as per the letter of word and not the spirit of the law, ignoring any amount of hardship and eschewing any equity in taxation. However, in the event of ambiguity in taxation liability statute, the benefit should go to the assessee. From a plain reading of Rule 3 of CCR, 2004, I do not find any ambiguity. If the intention was to allow credit of all forms of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng CCR, 2004) are notified by the Government and are then placed before the Parliament whose Committee of subordinate legislation examines them to see whether they reflect the intent of the Act and get modifications made, if necessary. Thus the legislative power delegated to the Government is again subject to control of the legislature. It is for this reason the rule making power is not delegated to any other arm of State but only to Government which is answerable to the legislature. 17. However, where there is a conflict between the constitutional provisions and the laws made or the parent act and the subordinate legislations vires of such act and rules are tested and decided by the Hon'ble Supreme Court and Hon'ble High Courts under Article 32 and 226 of the Constitution of India. The Tribunals (including this Tribunal) are created under Article 323B of the Constitution of India which was inserted by the 42nd amendment to the Constitution. The Jurisdiction of the Tribunals and their powers have been examined by the Five Member Constitutional Bench of the Supreme Court in the case of L. Chandra Kumar Vs Union of India in Civil Petition No. 481/1980 vide judgment dated 18.03.1997 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Courts under Articles 226/227 and upon the Supreme Court under Article 32 of the Constitution is part of the inviolable basic structure of our Constitution. While this jurisdiction cannot be ousted, other courts and Tribunals may perform a supplemental role in discharging the powers conferred by Articles 226/227 and 32 of the Constitution. The Tribunals created under Article 323A and Article 323B of the Constitution are possessed of the competence to test the constitutional validity of statutory provisions and rules. All decisions of these Tribunals will, however, be subject to scrutiny before a Division Bench of the High Court within whose jurisdiction the concerned Tribunal falls. The Tribunals will, nevertheless, continue to act like Courts of first instance in respect of the areas of law for which they have been constituted. It will not, therefore, be open for litigants to directly approach the High Courts even in cases where they question the vires of statutory legislations (except where the legislation which creates the particular Tribunal is challenged) by overlooking the jurisdiction of the concerned Tribunal. Section 5(6) of the Act is valid and constitutional and is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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