Excise duty coal tar

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SACHIN (Querist)
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29 April 2013 We are purchasing Coal after paying Tariff rate 6% excise duty + 2% (Edu. Cess) + 1% (S&H Cess) for producing / processing producer gas for the manufacture of our final product i.e. Electricity Generating sets & Turbines etc..
Before processing Coal for producing producer gas, we are using big size Coal for processing & some coal fine are not used for processing producer gas. This is called Coal fine scrap (27060090).
During the process of producer gas, Coal Tar is generated which are called as Coal Tar Scrap (27060010). W.e.f. 01.03.2011, we are paying excise duty @1% + 1% (Edu. Cess) + 1% (S& H Cess), under Notification No.1/2011-CE, dated 01.03.2011 on Coal Tar Scrap & Coal fine scrap.
Now, w.e.f. 17.03.2012, we are paying excise duty@ 2% + 2% (Edu. Cess) + 1% (S&H Cess) on Coal Tar Scrap (27060010) & Coal Fines Scrap (27060090).
In this matter, Central Excise Department is processing hard to pay excise duty 6% as Tariff rate not under Notification No.1/2011-CE, dated 01/03./2011 as amended.
In view of above, kindly give considered opinion on the following points:-
1. Can we pay excise duty under Tariff rate on Coal Tar Scrap (27060010) & Coal Fines Scrap (27060090).
2. Can we take Cenvat credit on Coal for producing producer gas for the manufacture of our final products.
3. Can we pay excise duty under Notification no. 1/2011-CE, dated 01.03.2011 as amended (presently paying excise duty).
4. Refer Circular No.904/24/2009-CX, dated 28.10.2009 in respect of termed as waste or residue or refuse arising during the course of manufacture.

Madhukar N Hiregange

Madhukar N Hiregange (Expert)
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29 April 2013 You can avail the credit as the final product Gas is dutiable at normal rates.

SACHIN

SACHIN (Querist)
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03 May 2013 Thanks sir
pls advise my other point

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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21 July 2024 Based on the details provided regarding your situation with coal tar and coal fine scraps, here are the responses to your points:

1. **Excise Duty Tariff Rate vs. Notification No. 1/2011-CE:**
- The Central Excise Tariff Act, 1985 specifies the rates of excise duty applicable to various goods. For items such as Coal Tar Scrap and Coal Fines Scrap, the applicable tariff rates are determined under this Act.
- Notification No. _____, provides specific exemptions or reduced rates of excise duty for certain goods. To benefit from the rates specified in this notification (like 1% + 1% Edu. Cess + 1% S&H Cess earlier and 2% + 2% Edu. Cess + 1% S&H Cess later), your goods must meet the conditions and eligibility criteria set forth in the notification.
- If the Central Excise Department is contesting that your goods should be taxed at the standard rate of 6% (plus cesses), it implies that they believe your goods do not qualify for the reduced rates or exemptions under Notification

2. **Cenvat Credit on Coal for Producer Gas:**
- Cenvat credit can generally be availed on inputs (including coal) used in the manufacture of final products. Since you are using coal for producing producer gas, which is further used in the manufacture of electricity generating sets and turbines, you should be eligible to avail Cenvat credit on the coal used.
- However, specific conditions and rules under the Cenvat Credit Rules, 2004, need to be followed. This includes proper documentation and compliance with the provisions of the rules regarding availing and utilization of Cenvat credit.

3. **Payment of Excise Duty under Notification No. 1/2011-CE:**
- As mentioned earlier, payment of excise duty under Notification No. 1/2011-CE is contingent upon meeting the conditions and criteria specified in the notification.
- If you are currently paying excise duty under this notification, it implies that you have assessed your goods to be eligible for the reduced rates or exemptions provided therein.
- The challenge from the Central Excise Department suggests a potential dispute over the correct classification or eligibility for the benefits of the notification. This would typically require a detailed review of the specifics of your production process and the nature of the goods produced.

4. **Circular No. ____:**
- Circular No.____ pertains to the treatment of goods termed as waste, residue, or refuse arising during the course of manufacture.
- It provides guidance on whether such goods are to be treated as excisable goods or not, depending on their nature and circumstances.
- For your coal tar scrap and coal fine scrap, this circular could provide insights into how such products are classified and treated under excise laws, especially regarding their excisability and eligibility for duty payment under specific notifications.

In conclusion, your situation involves complex aspects of excise duty classification, notification eligibility, and Cenvat credit availing. It is advisable to consult with a qualified tax professional or excise consultant who can review your specific case details, the notifications, and circulars applicable to ensure compliance and resolution of any disputes with the Central Excise Department. They can provide tailored advice based on the current legal provisions and interpretations.