Jindal Steel & Power Ltd. vs Commissioner of C. Ex.

This is an appeal under section 35G of the Central Excise Act, 1944 (the Act) against the order of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (the Tribunal) dated 5-5-2014 [2014 (308) E.L.T. 565 (Tribunal)] partly dismissing the application of M/s. Jindal Steel & Power Limited (the Assessee) for exemption to pre-deposit the clean energy cess (the Cess) and the order dated 11-6-2014 by which the Tribunal has rejected the review/recall of the order dated 5-5-2014, however, corrected certain clerical errors.

The facts

Two show cause notices dated 8-9-2011 and 3-9-2012 were issued by the Commissioner, Central Excise, Raipur (the Commissioner) requiring the Assessee to show cause why the Cess under Rule 2(g) of the Clean Energy Cess Rules, 2010 (the Rules) totaling to Rs. 18,72,09,053/- alongwith interest and penalty be not imposed upon it.

After issuance of the notice, the Assessee deposited a sum of Rs. 13,48,38,600/- under protest stating that it was not liable to pay any Cess.

After considering the reply of the Assessee, the Commissioner confirmed the notices on 31-12-2012.

Aggrieved by the order of the Commissioner, the Assessee filed an appeal. In this appeal, it also filed an application for exemption of pre-deposit of tax.

The aforesaid application was partly allowed on 5-5-2014 and the Tribunal stayed the deposit of penalty and further proceedings subject to deposit of a sum of Rs. 5,28,70,453/- alongwith up to date proportionate interest.

The Assessee filed an application for modification of the aforesaid order. This application was rejected on 11-6-2014, however, certain clerical mistakes were corrected. Hence the present appeal.

The Decision

We have heard counsel for the parties. With the consent of counsel for the parties, the tax appeal is being finally decided at this stage.

There is some dispute between the parties, whether, while considering the application to exempt pre-deposit of tax, prima facie case should be looked into or not. Though, many decisions J.N. Chemical (Pvt.) Ltd. Vs. CEGAT, ; Sri Krishna Vs. Union of India (UOI), ; Northern Doors (P) Ltd. Vs. Commissioner of Central Excise, ; ITC Limited Vs. CC (Appeals) and CE and Others, and Benara Valves Ltd. and Others Vs. Commissioner of Central Excise and Another, have taken the view that prima facie case should be looked into while considering the application for exemption to pre-deposit the tax.

The underlying reason seems to be that in case the appeal is likely to be allowed, why should the assessee be saddled with huge amount at that stage.

In the facts and circumstances of the case, it is not necessary for us to go into the question whether prima facie case should be looked into or not. In paragraph 10 of the order, the Tribunal has recorded a finding that,

"� Prima facie the dispute is regarding interpretation of the Rules and either view (contended by the Assessee or by the Revenue) is possible;

� The majority of Cess has already been paid."

In the aforesaid circumstances of the case when majority of Cess has been deposited and either view is possible then the Tribunal should have allowed the application of the Assessee after safeguarding the interest of the Revenue.

In the circumstances of the case, the interest of Revenue may be safeguarded by requiring the Assessee to give security (other than cash or bank guarantee) of the entire amount of the remaining amount of Cess, penalty and interest.

In view of above, if the Assessee deposits the security as aforementioned with the Commissioner within a period of one month from today, then further proceedings in pursuance of adjudication order dated 31-12-2012 shall remain stayed. With the aforesaid observations, this tax appeal is disposed of.