Levy of compensation cess— In the instant case, the applicant has filed an application requesting an advance ruling regarding levy of Compensation Cess on coal and coal rejects.

The Applicant in their application has submitted that as per Coal Mining and Delivery Agreement (“CMDA”) dated 16th July, 2008, the Applicant would carry out all Works, as defined therein, from identification of techno commercially viable coal blocks to coal mining and arranging for delivery of coal to RVUNL's Thermal Power Station and that the Applicant is required to establish a Coal Washery and deliver the washed coal of the required specifications to RVUNL. 

Held that— i. Compensation Cess is leviable on the total quantity of raw coal raised/mined and not only on the quantity of washed coal.

ii. Coal rejects supplied by a Coal Washery arising out of raw coal raised / mined, will attract NIL rate of Compensation Cess, only when due Compensation Cess on the total quantity of said raw coal raised / mined stands discharged as also when no Input Tax Credit of the Compensation Cess so paid is availed by any person, in terms of Sr. No. 41A of Notification no. 01/2017- Compensation Cess dated the 28th June, 2017 as amended vide Notification no. 02/2018-Compensation Cess (Rate)dated 26/07/2018, read with corrigendum issued under F.No. 354/255/2018-TRU (Pt-II) dated 2/8/2018, effective from 27th July, 2018.

iii. As the contract/ agreement relating to the proposed subsequent sale of coal rejects downstream along with the transaction details relating to the same is not forthcoming, this authority is not in a position to pass any ruling on the said supply downstream for want of the desired details.