2018 (2) TMI 781 - AT - Central Excise

Liability of Central Excise Duty - proviso to Sub-section (1) of Section 11A of the Central Excise Act, 1944 - electricity consumed by the appellant during the period from 2007-08 to 2011-12 - Held that - it was settled principle of law that the electricity consumption cannot be the only factor or basis for determining the duty liability, that too on imaginary basis, especially when Rule 173E mandatorily requires the Commissioner to prescribe/fix norm for electricity consumption first and notify the same to the manufacturers and thereafter ascertain the reasons for deviations, if any, taking also into account the consumption of various inputs, requirements of labour, material, power supply and the conditions for running the plant together with the attendant facts and circumstances - appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against Order-in-Original dated 26/09/2013 passed by Commissioner of Central Excise & Service Tax, Allahabad regarding Central Excise duty liability based on electricity consumption for manufacturing Pipes & Tubes of PVC.

Analysis:
1. Background: The appellants were registered with the Central Excise Department and were manufacturing Pipes & Tubes of PVC. The duty liability was calculated based on electricity consumption from 2007-08 to 2011-12, leading to a demand of ?1,87,80,581/- under Section 11A of the Central Excise Act, 1944.

2. Appellant's Argument: The appellant contested the demand, stating that the duty calculation solely based on electricity consumption was incorrect. They referred to a Supreme Court judgment highlighting that electricity consumption cannot be the sole criterion for determining the quantity of goods manufactured, emphasizing that the demand should be set aside.

3. Revenue's Position: The Revenue supported the Order-in-Original dated 26/09/2013, maintaining the validity of the duty calculation based on electricity consumption.

4. Tribunal's Decision: Upon reviewing the facts and contentions, the Tribunal examined the table from the Show Cause Notice detailing the calculation based on electricity consumption. The Tribunal noted the appellant's reliance on the Supreme Court ruling emphasizing that electricity consumption alone cannot determine duty liability. Referring to the Supreme Court's decision in the case of Commissioner v. R. A. Castings Pvt. Ltd., the Tribunal concluded that electricity consumption cannot be the sole factor for determining duty liability, especially when other factors like inputs, labor, and plant conditions should also be considered. As the Supreme Court ruling covered the issue in the present appeal, the Tribunal set aside the Order-in-Original dated 26/09/2013, allowing the appeal and granting the appellant consequential relief as per law.