2015 (10) TMI 338 - AT - Central Excise

Duty demand - Revenue contends that electricity is exempted and therefore they are liable to pay the amount 8% / 10% on value of the electricity under Rule 6 of the Cenvat Credit Rules - Held that - Tribunal in the case of Hi-tech Carbon (2003 (3) TMI 238 - CEGAT, NEW DELHI) has discussed in detail this issue - Following the same - Impugned order is set aside - Decided in faovur of assessee.

Summary

Issues:
Classification of electricity as exempted, liability under Rule 6 of Cenvat Credit Rules.

Analysis:
The case involved the classification of electricity as exempted and the consequent liability under Rule 6 of the Cenvat Credit Rules. The appellants, engaged in Carbon Black manufacturing, used Lean Gas as a by-product for electricity generation. The Revenue contended that the appellants were liable to pay 8% / 10% on the value of electricity. The appellant's advocate cited various decisions to support their case, including Hitech Carbon Vs CCE, Rallis India Ltd Vs UOI, and others. The Revenue's Authorized Representative tried to distinguish the Hi-tech Carbon case, arguing that the Lean Gas was used in exempted goods. However, the Tribunal referred to the Hi-tech Carbon case's detailed discussion, emphasizing that off-gases generated during Carbon Black manufacture were considered by-products. Rule 57D(1) of the Central Excise Rules was crucial, stating that credit shall not be denied if inputs are contained in a by-product. The Tribunal also highlighted that using off gases to generate steam did not amount to using Modvatable inputs in exempted product manufacture. Previous decisions like Aarti Drugs Ltd. v. Commissioner of Central Excise Mumbai-III were referenced, supporting the view that Rule 57CC did not apply to by-products. The Tribunal's analysis aligned with the Bombay and Gujarat High Courts' approval of similar views.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal with consequential relief. The decision was based on the interpretation of relevant rules and precedents, emphasizing that the generation of electricity from Lean Gas did not affect the appellants' liability under Rule 6 of the Cenvat Credit Rules. The case highlighted the importance of understanding the classification of by-products and their impact on excise duty liabilities, ensuring consistency with legal provisions and established judicial interpretations.