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2019 (2) TMI 562 - AT - Central ExciseCENVAT credit - CENVAT credit involved input and input services related to that quantity of electricity sold to outside agencies - common inputs to the manufacture of dutiable goods as well as exempted goods - non-maintenance of separate records - Sub Rule 3(1) of Rule 6 of CENVAT Credit Rules - Held that - Allahabad High Court in the case of Gularia Chini Mills 2013 (7) TMI 159 - ALLAHABAD HIGH COURT has held that in the generation of electricity from bagasse, no other input or input service is used and therefore, the electrical energy is neither excisable under Section 2(d) of Central Excise Act, 1944 nor exempted goods and hence, Rule 6 is not applicable. The demand of 6% of the value of electricity sold to various companies is not sustainable in law - appeal allowed - decided in favor of appellant.
Issues:
Appeal against rejection by Commissioner (A) - Identical issues in six appeals. Analysis: Issue 1: Identical issues in multiple appeals The appellants filed six appeals against orders rejecting their appeals by the Commissioner (A). The issue in all six appeals was identical, leading to a common order for disposal. Issue 2: CENVAT credit on electricity sold The appellants, engaged in manufacturing sugar and molasses, also generated electricity for captive use and sale to outside agencies. The department demanded 6% of the value of electricity sold as CENVAT credit under Rule 6 of CENVAT Credit Rules, 2004. The Original Authority confirmed the demand, which was upheld by the Commissioner (A). Issue 3: Legal arguments The appellants argued that the impugned order was contrary to statutory provisions and judicial precedents. They contended that the Revenue's demand lacked evidence of common inputs or services for dutiable goods and electricity generation. Citing precedents like Jakarya Sugars Ltd. and Gularia Chini Mills, they emphasized the need for evidence to apply Rule 6 of CENVAT Credit Rules. Issue 4: Precedents and applicability of Rule 6 The appellants relied on decisions like Simbhaoli Sugar Ltd. and Ganga Kishan Sahakari Chini Mills Ltd. to support their claim that Rule 6 did not apply without evidence of common inputs. They argued against the Revenue's interpretation and highlighted the option to reverse credit instead of paying 6%. Issue 5: Tribunal's decision The Tribunal considered precedents, including Gularia Chini Mills and Jakarya Sugars Ltd., to conclude that no other input was used in generating electricity from bagasse. Following these decisions, the Tribunal found the demand for 6% of electricity value unsustainable and allowed all six appeals. Conclusion: The Tribunal set aside the impugned orders, allowing the appeals of the appellants based on established legal principles and precedents. The decision was pronounced on 31/01/2019, providing consequential relief to the appellants.
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