2016 (10) TMI 66 - AT - Central Excise

Reversal of cenvat credit - Rule 6(3) of Cenvat Credit Rules, 2004 - electricity generated out of Bagasse - consideration received by appellant for supply of electricity to the State Grid of Electricity - Held that - the issue has been finally decided by the Hon ble Supreme Court in the case of Union of India Vs. DSCL Sugar Ltd. 2015 (10) TMI 566 - SUPREME COURT wherein the Hon ble Supreme Court of India have held that Bagasse is only an agricultural waste and residue and there cannot be any Excise duty on Bagasse. The Hon ble Supreme Court has further ruled that Cenvat credit in respect of electricity was denied only on the premises that Bagasse attracts Excise duty and consequently Rule 6 of Cenvat Credit is applicable and the Hon ble Supreme Court has found such action to be erroneous. Therefore, by following the same the impugned orders are set aside. - Decided in favour of appellant

Summary

Issues involved:
1. Interpretation of Rule 6 of Cenvat Credit Rules, 2004 regarding Bagasse and Electricity.

Detailed analysis:
1. The judgment involved three appeals related to the provision of Rule 6 of Cenvat Credit Rules, 2004 concerning Bagasse and Electricity. The appellants were issued Show Cause Notices contending that Bagasse and electricity generated from it were subject to excise duty under Rule 6(3) of the Rules. The demands were confirmed through Orders-in-Original, and penalties were imposed. Appeals were made to the Commissioner (Appeals) and subsequently to the Tribunal challenging the orders.

2. The main contention in all three cases was that Bagasse should not be subject to Rule 6(3) as it is considered waste or refuse, and electricity, not having a specific rate of excise duty, should not fall under the excisable goods category. The appellant cited a case law where the Supreme Court held that Bagasse is agricultural waste and not subject to excise duty. The Court emphasized that for Rule 6 to apply, the goods must be marketable and manufactured, which Bagasse did not meet the criteria. The Court also clarified the definition of manufacture under the Act and the necessity of the process being specified in the relevant schedule for goods to be considered excisable.

3. The Tribunal, after considering the submissions and the Supreme Court ruling, concluded that the cases were in line with the precedent set by the Court. It was held that Bagasse being waste and not a manufactured product, did not attract excise duty, and therefore Rule 6 of the Cenvat Credit Rules, 2004 was not applicable. As a result, all three appeals were allowed, and the impugned orders were set aside, granting the appellants consequential relief.

This detailed analysis highlights the key arguments, legal interpretations, and the final decision made by the Tribunal based on the issues involved in the judgment.