Notifications Exempt EC & SHEC Only on Clean Energy Cess, Not on Excise Duty or CVD: CESTAT Grants Partial Relief for JSW Energy [Read Order]

The Hyderabad Bench ofthe Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has clarified that exemption notifications for Education Cess (EC) and Secondary & Higher Education Cess (SHEC) apply only to the Clean Energy Cess (CEC) and not to excise duty or countervailing duty (CVD) on imported coal. The tribunal granted partial relief.

The matter arose when JSW Energy, engaged in electricity production, imported non‑coking coal through Krishnapatnam Port and paid basic customs duty (BCD), CVD, CEC, and EC/SHEC. Later, the company sought a refund of EC and SHEC, citing Notification Nos. 28/2010‑CE and 29/2010‑CE.

The Department rejected the claim, arguing that the notifications exempted EC and SHEC only in relation to CEC, not excise duty or CVD. The Commissioner (Appeals), however, had allowed the refund, prompting the Department’s appeals before the Tribunal.

During the hearing, the Revenue stressed that excise duty on coal was introduced only from March 1, 2011, and the exemption notifications could not extend to EC/SHEC on excise duty or CVD. The company’s counsel conceded this point but requested verification of whether EC/SHEC had also been levied on CEC, which should be exempt.

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The tribunal held that the exemption notifications apply only to Education Cess (EC) and Secondary & Higher Education Cess (SHEC) levied on Clean Energy Cess (CEC) under the Finance Act, 2010, but not to Central Excise duty on coal under the First Schedule or to Countervailing Duty (CVD) on imports.

The Bench comprising A.K. Jyotishi (Technical Member) and Angad Prasad (Judicial Member) held that a refund is not admissible for EC/SHEC paid on excise duty or CVD. So if EC/SHEC was wrongly collected on CEC, the refund must be recalculated and allowed, and observed that “a plain reading of the notifications indicates they exempt EC & SHEC only while discharging CEC in respect of goods falling under Tenth Schedule.”

Accordingly, the appeals were allowed by way of remand, directing re‑verification of the cess calculations to determine the exact refund due.

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