2023 (12) TMI 369 - AT - Central Excise

CENVAT Credit - electricity is an excisable goods or not - demand of an amount equal to 10% of the electricity sold to PSEB and consumed by the appellant in their residential colony meant for their workers - applicability of Rule 6 of CCR - period from April 2006 to February 2009 - HELD THAT - The appellant though had reversed the entire amount of Rs. 14,20,586/- availed on all input services (Manpower supply and Insurance Service) which has been used for generation of electricity but his defence is that in fact he was required to reverse only proportionate credit. The appellant has also furnished calculation chart of proportionate credit required to be reversed alongwith his reply to the show cause notice but the same was not considered by both the authorities. The main ground raised by the appellant before both the authorities regarding the non applicability of Rule 6 of CCR, 2004 has not been considered and not given any findings in the impugned order. There is no finding in the impugned order regarding the stand of the appellant to reverse only proportionate cenvat credit and not the whole cenvat credit on input services. This case needs to be remanded back to the Ld. Commissioner (Appeals) to decide afresh after considering all the pleas/grounds raised by the appellant - Appeal allowed by way of remand.

Summary

Issues:
The judgment involves the applicability of Rule 6 of the Cenvat Credit Rules and the treatment of electricity as an excisable good.

Applicability of Rule 6 of the Cenvat Credit Rules:
The appellant, engaged in the manufacture of Acrylic Fibre, Tow & Tops, had a captive power plant generating electricity from Biomass/Agricultural waste. A show cause notice was issued seeking recovery of an amount equal to 10% of the electricity sold to Punjab State Electricity Board (PSEB) and used in the residential colony. The appellant initially reversed a portion of the credit but the notice demanded a larger sum. The appellant argued that since electricity is not excisable, Rule 6 does not apply. The original authority dropped the demand but imposed interest. The appellant's appeal was rejected by the Ld. Commissioner (Appeals).

Treatment of Electricity as an Excisable Good:
The appellant contended that as electricity is not specified with a rate of duty in the Central Excise Tariff Act, it is not excisable and cannot be considered exempted goods. They argued that Rule 6, applicable to common inputs for dutiable and exempted products, does not apply to electricity. The appellant sought a refund of the excess amount reversed and challenged the imposition of interest. The Tribunal found that the appellant had reversed the entire credit amount but argued they were only required to reverse proportionate credit. The Tribunal noted that the appellant's plea regarding the non-applicability of Rule 6 was not addressed in the impugned order.

Conclusion:
The Tribunal remanded the case to the Ld. Commissioner (Appeals) for a fresh decision, directing consideration of all grounds raised by the appellant. The impugned order was set aside, and the appeal was allowed by way of remand. The Ld. Commissioner (Appeals) was instructed to issue a new order within three months from the receipt of the Tribunal's order.