2009 (1) TMI 626 - AT - Central Excise

Summary

Issues:
1. Classification of electricity as excisable goods and its taxability.
2. Classification of iron ore fine and its taxability.
3. Applicability of Rule 6(2) of CENVAT Credit Rules.
4. Time bar on demand.
5. Reversal of credit on services.

Analysis:
1. Classification of Electricity:
The applicant argued that electricity cannot be considered excisable goods as there is no specific rate of duty mentioned for it. They relied on precedents where electricity was not considered excisable. The Department contended that electricity falls under the Central Excise Act and should be treated as excisable goods, citing a Supreme Court ruling denying input credit for electricity used in residential colonies. The Tribunal found the argument that electricity is non-excisable acceptable, but ruled that the credit availed on inputs/services related to electricity should be recoverable.

2. Classification of Iron Ore Fine:
The applicant claimed that iron ore fine does not involve manufacturing and is akin to waste. The Department argued that iron ore fine is a distinct commodity listed in the Excise Tariff and even if not considered a manufactured product, credits taken on iron ore and related services should be reversed. The Tribunal noted that the show cause notice did not address whether iron ore fine is a separate product but emphasized that any credit linked to inputs/services should be disallowed.

3. Applicability of Rule 6(2) of CENVAT Credit Rules:
The Tribunal considered that since electricity and iron ore fine were not deemed excisable goods, the application of Rule 6(2) of CENVAT Credit Rules might not be justified. The applicant had reversed service tax credits on non-excisable goods, indicating a discrepancy in the applicability of certain rules.

4. Time Bar on Demand:
The applicant argued that a substantial portion of the demand was time-barred due to no wilful suppression or misstatement. The Tribunal found this argument prima facie acceptable, acknowledging the time limitation on certain aspects of the demand.

5. Reversal of Credit on Services:
The applicant had reversed credits on services related to non-excisable goods sold by them. The Tribunal directed the deposit of a specific sum and waived the remaining service tax and penalty pending compliance, indicating a conditional stay on recovery until the appeal's disposal.

In conclusion, the Tribunal's decision addressed the classification and taxability of electricity and iron ore fine, the applicability of CENVAT Credit Rules, the time bar on demand, and the reversal of credits on services, providing specific directions for compliance and stay of recovery pending further actions.