[BEFORE HON'BLE CUSTOM EXCISE & SERVICE TAX APPELLATE TRIBUNAL]

169 , AJC BOSE ROAD ( 7th Floor) Kokata-700014

ON BEHALF OF - M/s. Central Coalfields Limited, Rajrappa Area - Appellant.
In the matter of:
Appeal No.: E/78883/2018
SCN Dated 02/06/2016. (Main SCN: Page 58 to 64, Annex- Page 65 to 199).
Main Allegation Page 64: Excess Amount of Rs.12,30,00,478 collected as Clean
Energy Cess (CEC) and retained (Month wise detail for July 2010 to March 2013
in Annexure A of SCN Page 65 of Appeal Petition- , Quantity of Clean Coal
Cleared enumerated as per Form H & ER-1 and Rate Taken @ Rs. 73.27 MT)
should not be demanded and recovered U/s. 11D.
Period of July 2010 to March 2013
Demand
Impugn Order 78/Central Excise/ Pr. Commr./2018 Dated 19.04.2018
Amount of Demand U/s. 11D (1) for Clean Energy Cess (CEC) of Rs. 7,23,94,806 (alleged to
Confirmed Collected from Customers Rs.12,30,00,478 minus Refunded to Customers Rs.
Demand under 5,06,05,672). for the period July 2010 to March 2013 plus Interest U/s. 11DD of
dispute CE Act 1944.

SUBMISSIONS:
1. Central Coalfields Limited, is a Subsidiary of Coal India Ltd. (an Union Govt. Company). CCL
Rajrappa Area (hereinafter referred as CCL) is holding Central Excise Registration No.
AAAC7476REM013 and is also registered as producer for Coal for Clean Energy Cess under
the same Registration number. It is engaged in extraction of Raw Coal and manufacturing and
clearance of Coking Coal (CETA 27011910) & Other Coal (CETA 27011990). CCL regularly
submitted its monthly Return ER-1 for clearance of its Excisable Goods and Form I for
clearance of goods liable for Clean Energy Cess.

2. Raw Coal (ROM) is extracted from Rajrappa Project mines. After extraction of Raw Coal, it is
sent to Rajrappa Washrey Plant (RWP) for further processing such as washing and sizing.

Page 1 of 7
3. The Washery Plant then gives out four different verities of coal. The different verity is decided
on the basis of Ash Content and Moisture content. Lightest coal is known as Clean Coal (yield
approx. 45%), next layer is WCP (yield Approx 35%), 3rd is slurry and 4th is reject-by Product
(yield of slurry and reject is 22%). All these four (4) different varieties of coal are sold to
customers.

4. Stage of compliance of Clean Energy Cess Payment & Return formalities, during the
period July 2010 to March 2013 by CCL:

As per Rule 6(1) of Clean Energy Cess Rules 2010: Cess on specified goods removed from
the mine during a month shall be paid by 5 th of the second month, following in which the
removable were made.

As per Rule 2(g) of Clean Energy Cess Rules 2010: Removal means 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.

And in Compliance Rule 2(g) & Rule 6(1) of Clean Energy Cess Rules 2010, CCL discharged
complete Clean Energy Cess Liability at the stage of extraction of Coal from Mines itself on
gross extracted quantity of 29,50,080 MT of Raw Coal and discharged specified Clean
Energy Cess Liability @ Rs. 50 Per MT thereon amounting to Rs. 14,76,04,018/-.

CCL also furnished the Gross Extracted Quantity of Raw Coal from Mines and Clean Energy
Cess Payment thereon in its Monthly Return Form I, as prescribed under Rule 11 of Clean
Energy Cess Rules 2010.

Thus complete Clean Energy Cess Liability on Gross Extracted Raw Coal Quantity at the
specified rate of Rs. 50 MT was satisfied by the CCL at the stage of extraction of Raw Coal
from mines itself. Thus all Raw Coal dispatched from Mines to Washery Plant were only
after satisfaction of complete Clean Energy Cess Liability.

Page 2 of 7
 The Department never disputed about any figure of gross extracted raw coal quantity and
satisfaction of Clean Energy Cess Liability @ Rs. 50 Per MT on the gross extracted raw coal
quantity from CCL mines, as were furnished in monthly return Form I, as specified in Clean
Energy Cess Rules 2010.

The CCL also furnished before Adjudicating Authority on 01/03/2017, the Monthly Extracted
Raw Coal Quantity of 29,50,080 MT and payment of Clean Energy Cess Liability @ Rs.
50 Per MT thereon amounting to Rs. 14,76,04,018/, along with all respective monthly
payments challans details.
(Reference Page 203 and 204 of the Appeal Petition)

5. Washery Plant Product(s) of CCL are exempt from Levy of Clean Energy Cess:
Notification No 4/2010 Dated 22nd June 2010 states that :
In exercise of the powers conferred by section 83 of the Finance Act, 2010 (14 of 2010)
read with section 5A of the Central Excise Act, 1944 ( 1 of 1944), the Central
Government, on being satisfied that it is necessary in the public interest so to do, hereby
exempts all goods falling under Central Excise Tariff headings 2701, 2702, 2703 of the
First Schedule to the Central Excise Tariff Act,1985 (5 of 1986), other than raw coal,
raw lignite and raw peat , from the clean energy cess leviable under section 83 of said
Finance Act.
Provided that the said exemption shall be applicable subject to the condition that
applicable clean energy cess has been paid at the stage of raw coal, raw lignite or
raw peat from which the said goods are produced or manufactured.
Thus as per this Notification all goods falling under CETA Heading 2701 is exempt from
levy of Clean Energy Cess, if Clean Energy Cess has been paid at the stage of raw coal
itself on the specified goods removed from the mine.

Therefore all four (4) different varieties of coal washed and resized in Washery Plant
after receiving from CCL Mines, i.e. Clean Coal (yield approx. 45%), WCP (yield
Approx 35%), Slurry and Reject-by Product (yield of slurry and reject is 22%), are exempt
from levy of Clean Energy Cess on its clearance from Washery Plant.

Page 3 of 7
6. Nature of Clean Energy Cess (CEC):
CEC is levied for the purpose of financing and promoting clean energy initiatives, funding
research in the area of clean energy or for any other purpose relating thereto. (Section 83(3) of
Finance Act, 2010.)

CEC has to be paid in Cash as suitable amendment in CENVAT Credit Rules 2004 is being
made to exclude payment of this Cess using Credit. (CBEC Instruction F.No. 354/72/2010-
TRU dated 24.06.2010). Thus CEC has to be paid one time as its credit benefit can not be
passed on to consumers.

Where a producer has paid to the credit of the Central Govt. any amount in excess of the
amount required to be paid towards cess liability for a month, such producer may adjust such
excess amount paid by him against the cess liability for the next month. Provided further that
the producer may, instead, file a refund claim for any excess amount of cess paid, if such
producer fails to adjust the excess amount against the cess liability for the next month.
{ Rule 6(3) of CEC Rules 2010)
Thus in case of CCL for the period July 2010 to March 2013, ultimately any excess CEC
paid over the specified amount of @ Rs. 50 Per MT, is either adjustable in subsequent
month or refundable.

7. SCN has alleged ‘excess collection of Clean Energy Cess against sale on Clean Coal during
the period July 2010 to March 2013 as per presumptive calculation sheet of presumed
recovery of Clean Energy Cess Rs. 12,30,00,478 on 16,78,729 MT of Clean Coal @ Rs. 73.27
per MT, in addition to earlier recovered CEC @ Rs. 50 Per MT.
(Reference: Annexure A of SCN reflected on Page 65 of Appeal Petition.)
And against this SCN, Adjudication Order has confirmed excess recovery of Clean Energy
Cess from customers amounting to Rs. 7,23,94,806/- (Based on Presumptive Calculation in
SCN Rs 12,30,00,478 minus Credit Notes issued to Customers Rs. 5,06,05,672).
(Reference: Order Para reflected on Page 347 of Appeal Petition.)

Page 4 of 7
8. THE SCN has presumed the quantity reflected in form ER-1 for calculation of presumptive
realization of Clean Energy Cess. Form ER-1 is the monthly return for Excisable Goods and
Form I is the monthly report of Clean Energy Cess..
Question arises that when Clean Coal was not liable for Clean Energy Cess in view of
already complete satisfaction of Clean Energy Cess impost of this item at the stage of
mining of raw coal itself , then how Form ER-1 figure can be the basis for calculation of
monthly levy of Clean Energy Cess?.
Thus monthly extracted quantity (based upon ER-1 Return figures) for the levy of Clean
Energy Cess is just an hypothetical attempt to levy of CEC at twice time on that too on
an exempted goods.

9. The SCN and consequential Adjudication Order have presumed Charging & Recovery of
Clean Energy Cess on Clean Coal on 16,78,729 MT of Clean Coal @ Rs. 73.27 per MT in
addition to the earlier charged Clean Energy Cess @ Rs. 50 Per MT ( as recovery from
customers on gross extracted raw coal of 29,50,080 MT on which specified CEC amounting to
Rs. 14,76,04,018 has already been paid @ Rs. 50 MT).
Clean Coal is made out of Raw Coal, which is itself exempt from levy of Clean Energy Cess
under Notification No. 4/2010 CEC dated 22 nd June 2010 in view of complete satisfaction of
Clean Energy Cess @ Rs. 50 Per MT on gross extracted Raw Coal quantity of 29,50,080 MT
during the relevant period. Thus the SCN and consequential Adjudication Order has attempted
to illegal levy and collection of CEC at double moment from the same party.

10. During the period under dispute (i.e. July 2010 to March 2013) all of the Clean Coal were sold
to Steel Authority of India Limited (i.e SAIL) & Rashtriya Ispat Nigam Limited (i.e. RINL)
only - Both the buyers are Union Govt. Companies and administered by Ministry of Steel,
Govt. of India. Fixation of Final Selling Rate of Clean Coal between CCL & its buyers is a
subject matter of several rounds ministerial level discussion between Ministry of Coal &
Ministry of Steel (Govt. of India) and hence usually final price is mutually fixed only after the
year end of supply made and accordingly necessary debit / credit note(s) are being issued to
adjust the differential price against the earlier period supply of clean coal already made.

Page 5 of 7
 This is evident from the fact that Final MOU with SAIL for the fixation of sale price of clean
coal for Financial Year 2010-11 was signed on 04.05.2011 and for Financial Year 2011-12
MOU was signed on 20.07.2012. And accordingly debit note was raised @ Rs. 73.27 per MT
for realization of increased MOU price for the supply made during Financial Year 2010-11
and also credit note was issued for April 2011 to August 2012 based upon the Final MOU of
FY 2011-12.
The SCN presumed this differential MOU price for financial year 2010-11 @ Rs. 73.27 per
MT , as deemed collection of Clean Energy Cess for the period of July 2010 to March 2013.
However, while presuming to the differential rate of price increase @ Rs. 73.27 per MT on the
Clean Coal as Clean energy Cess, the Ld. Adjudicating Authority totally overlooked under
mentioned basic spirit of levy of Clean Energy Cess:
a) Clean Energy Cess is not leviable on exempted goods;
b) Clean Energy Cess rate is fixed on cleared quantity and not on the agreed price between
buyers and sellers.
Thus basis of calculation of differential Clean Energy Cess Rate @ Rs. 73.27 per MT in
addition of @. 50 per MT, on Clean Coal is just an hypothetical presumptions of
department.

11. That the SCN has alleged excess collection of CEC from SAIL & RINL @ Rs. 73.27 Per MT
on Clearance of Clean Coal over and above the specified rate of Rs. 50 per MT. Both parties
are the prestigious Union Govt. Companies. But the investigation could not produced any
substantive evidences in the support of respective enquiries / confirmation from any one of
the both buyers regarding bearing of CEC burden of Rs. 123.27 Per MT ( i.e. Rs. 73.27 Plus
Rs. 50 Per MT) on purchases of clean coal from CCL. Thus the allegation of excess recovery
of CEC from customers and retained by CCL is without making proper investigation of the
facts from the respective customers.

Page 6 of 7
12. The Appellant submit in the enclosed Schedule A - ‘Monthly details of Payment of CEC on
gross Extracted Raw Coal from Mine’ and Monthly details of Hypothetical Presumption of
excess Collection CEC from customers. From the enclosed Schedule A it is apparent that
Monthwise payment of CEC on Extracted Raw Coal is much higher than the alleged
presumptive and hypothetical calculation of Collected CEC from Customers. Thus allegation
of excess collection of CEC from customers is baseless.

13. The appellant relies upon the judgment of Hon’ble Calcutta High Court in case of PARIMAL
RAY Vs COMMISSIONER OF CUSTOMS (PORT) Honble High Court at CALCUTTA W.P. No.
1288 of 2013, decided on 17-2-2015 vide 2015 (318) ELT 379 wherein the Hon’ble High Court
held that when duty was paid on any goods not exigible to duty, said amount could not be
considered as duty, but simply money paid into government accounts and government
became trustee to repay that amount (ref. para 16 of the judgment). The ratio of the this
judgment would squarely apply to the facts and circumstances of the cases on hand, in view
of the clear cut fact on so called proposed levy of CEC on exempted goods. Thus amount
recovered on exempted goods shall have ultimately to be refund to the payee of CEC,
then what shall be the benefit to the govt. exchequer on recovery of CEC on exempted
goods?

PRAYER
The Appellant most humbly pray before your Lordship to set aside the hypothetical and
presumptive Adjudication Order.

With Warm Regards to Hon’ble Lordship!

For, Central Coalfields Limited- Rajarappa Area.

CA BIPIN KUMAR NAWAL KUMAR SINHAL – Asst, Manager (Finance)

Authorised Representative Authorised Representative
Date: 07/06/2023

Page 7 of 7