2026-VIL-430-CESTAT-HYD-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Captive Consumption of Coal, Difference in quantity in ER1 returns and CEC returns - Appellant is engaged in production and sale of coal and was paying Central Excise Duty (CED) on coal and also Clean Energy Cess (CEC) on coal - Department noticed differences in the quantities of coal removed as reflected in ER1 returns versus CEC returns and demanded CED or CEC on the differential quantity - Whether the quantity reflected in CEC return can be taken for discharging CED and vice versa – HELD - While CEC is payable on the entire quantity of raw coal extracted from the mines at the time of removal, except the part sent to the captive power plant, CED is not paid at the time of clearance from the mine to the washeries and is paid subsequently on the washed coal, rejects and slurry. Due to the different statutory provisions governing the manner and time of payment of CED and CEC, as well as the exemptions available, there can be differences in the quantities reflected in the CED and CEC returns - The appellants have tried to explain that while they are not paying CEC on raw coal dispatched to CPP, as the said coal is intended for generation of power, which is further used in mines for raising of coal, except for limited extent of use for lighting the staff quarters, etc., on which they are discharging CEC. However, they are not even discharging CED on captive power plants under assumption that it is meant for captive consumption. The exclusion claimed by the appellant for non-payment of CEC on coal cleared to the captive power plant on the ground that it is used for further raising of coal is not tenable, as there is no direct correlation between the coal cleared to the power plant and the coal raised from the mines. Further, the benefit of exemption from CED under Notification No.67/95-CE is also not applicable as coal is not a dutiable good – The matter is remanded back to the adjudicating authority to re-compute the demand after considering the observations made and the reconciliation of the statements to establish that whatever coal has been produced in the mines, appropriate CEC and CED has been discharged at the time of removal from the mines and any removal without payment of either CEC or CED has to be covered either by way of exemption or in terms of statutory provisions warranting exclusion of said clearance for the purpose of payment of CEC – The principal is to ensure that they discharge payment of both the cess and CED on the entire quantity of coal produced in the mines and appellant cannot claim any exclusion on account of its consumption in the power plant for raising the coal or for captive consumption in the absence of any statutory provisions or notification - The appeals are allowed by way of remand
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