2026-VIL-872-GAU-CE
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CENTRAL EXCISE High Court Cases

Central Excise - Liability for payment of Clean Energy Cess on coal by producer and purchaser - Appellant tea producing companies purchased coal and were demanded to pay Clean Energy Cess on the coal purchased by them - Whether liability for payment of Central Excise Cess on coal can be passed on the purchaser who is the consumer and not the producer of coal - HELD - Section 2(f), 2(h), Section 3 and Section 4 of the Clean Energy Cess Rules, 2010 clearly provides that it is only a producer of raw coal, raw lignite and raw peat who is to pay cess on removal of the specified goods from a mine and not the purchaser. The definition of producer under the rules means any person engaged in the production of specified goods and includes an owner or agent as defined under Section 2 of the Mines Act, 1952 - The appellants herein are all tea producing companies who have purchased coal from the seller and therefore in terms of the above provisions of the Clean Energy Cess Rules, 2010 made pursuant to Section 84 of the Finance Act, 2010, the appellants are not liable to pay any cess on the coal purchased by them. The cess liability cannot be shifted from the producer to the purchaser merely on account of the purchaser using the coal - The impugned orders by the CESTAT are set aside to the extent that appellants have been made liable to pay penalty for release of the confiscated raw coal - The demand for payment of cess by the purchasers of coal is set aside and the liability for cess payment remains only with the producer of coal - The appeals are allowed - Penalty: Whether the appellant (Tea Companies) are liable to pay penalty, due to the confiscation of their purchased coal under Section 34 of the Central Excise Act, 1944 r/w Rule 25 of the Central Excise Rule, 2002 – HELD – The Rule 25 of the Central Excise Rules, 2002 is clearly not applicable to the case of the appellants herein, as it is not the case of the respondents that they come within the meaning of producer, manufacturer, registered person of a ware house or an importer or a registered dealer of the coal purchased by them - The conditions required for paying penalty, for keeping possession of goods which has escaped payment of cess, requires the person in whose possession it is found, to have known or had reason to believe that the said goods were liable to confiscation. There is nothing records to show that the authorities had come to a definite finding that the appellants had the knowledge or had reason to believe, that the coal that they had purchased, were liable to confiscation under the Central Excise Act, 1944 or the Central Excise Rules, 2002 - There was no question of payment of fines/ penalty for the confiscated goods by the appellants-purchasers.
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