2019 (4) TMI 643 - AT - Central Excise

CENVAT credit - clearance of by-product - common inputs and input services used in manufacture of dutiable goods as well as exempted goods - non-maintenance of separate records - demand of 6% of the value of electricity sold to various companies - proviso to sub-rule (1) of Rule 6 of CENVAT Credit Rules, 2004 - Held that - The issue decided in appellant own case M/S. VENKATESHWARA POWER PROJECTS LTD., M/S. THE UGAR SUGAR WORKS LTD., M/S. EID PARRY (INDIA) LTD., M/S. SRI SRIVSGAR SUGAR & AGRO PRODUCTS LTD. VERSUS COMMISSIONER OF CENTRAL GOODS & SERVICE TAX 2018 (11) TMI 913 - CESTAT BANGALORE , where it was held that there cannot be a demand of 6% of the value of exempted electricity sold outside the factory in terms of Rule 6(3) (i) of CCR simply on the ground that the appellant has failed to maintain separate account on receipt of input or input services used in the manufacture of dutiable goods, namely, Sugar and exempted goods, namely, electricity. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availing CENVAT credit on inputs common for taxable and non-taxable goods
- Demand of 6% value of electricity sold outside the factory
- Rejection of appeal by Commissioner (A)

Availing CENVAT credit on inputs common for taxable and non-taxable goods:
The appellant, engaged in sugar and molasses manufacturing, availed CENVAT credit on inputs and services common for both taxable and non-taxable goods without maintaining separate accounts. The issue arose when they did not pay 6% of the value of electricity supplied to a residential colony outside the factory. The original authority confirmed the demand, which was upheld by the Commissioner (A). The appellant contended that the order lacked legal sustenance and cited favorable precedents. The learned AR, however, supported the impugned order, referring to a Mumbai Tribunal decision. The Tribunal found in favor of the appellant, citing previous decisions and holding that the demand was not legally sustainable, thereby allowing the appeal.

Demand of 6% value of electricity sold outside the factory:
A show-cause notice was issued to the appellant for not paying 6% of the value of electricity supplied to a residential colony outside the factory. The original authority confirmed the demand, which was upheld by the Commissioner (A). However, the Tribunal, considering precedents and legal arguments, found the demand unsustainable in law and set it aside, allowing the appellant's appeal.

Rejection of appeal by Commissioner (A):
The Commissioner (A) rejected the appellant's appeal against the demand of 6% value of electricity sold outside the factory. The appellant contended that the order lacked legal sustenance and cited favorable precedents. However, the Tribunal, after considering submissions from both parties and previous decisions, found in favor of the appellant, setting aside the demand and allowing the appeal.