Excise Duty is leviable on Coal Clearances from Sister Concern Units

Mahanadi Coalfields Limited Vs Commissioner of CGST & Central Excise & Customs (CESTAT Kolkata)

In a recent decision, the CESTAT Kolkata addressed the issue of whether excise duty is leviable on the clearance of coal from sister units. This case involves M/s. Mahanadi Coalfields Limited v. Commissioner of Central Excise & Service Tax, BBSR [Excise Appeal No. 75329 of 2023 dated October 10, 2023]. The tribunal’s ruling sheds light on the applicability of excise duty in such scenarios, with a specific focus on the invocation of an extended period of limitation for issuing a Show Cause Notice.

CESTAT, Kolkata upheld that the imposition of excise duty applies to the clearance of coal from the sister unit, however, the Show Cause Notice (“SCN”) was not adjudicated as demand was issued by invoking extended period of limitation.

Facts:

The Mahanadi Coalfields Limited, (“the Appellant”), is engaged in the business of production and sales of coal and is located in the state of Odisha, having ten units (generally referred to as Area Offices). Representations were made by the Appellant seeking a waiver from the Central Excise Department (“the Respondents”) for various procedural requirements for the movement of goods from one Area Office to another without the issuance of an excise invoice. Effective from April 2015 onwards, the Appellant obtained a single Centralized Registration with the Central Excise Act, 1944 (“the Central Excise Act”) for a company at its Sambalpur Headquarters.

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