Excisable Goods or non xcisable goods, Central Excise

[Deepak Jain]

Dear Sir,

I have a query whether Electricity generated through Thermal Plant is an excisable goods or not? If yes then what is the rate of duty on the same. Also send me the link from where i can confirm the same.

Thank you

Regards

Deepak Jain

Posts / Replies

[Naveed S]

Sir,

generation of electricity is not an excisable goods

[Pradeep Khatri]

Dear Deepak,

The Constitution Bench of the Supreme Court in State of A.P. etc. v. National Thermal Power Corpn. Ltd. and Ors. etc. (2002-TIOL-107-SC-CT) holding that electricity though an intangible object is ‘goods’ covered by Entry 54 of List II of Schedule VII to the Constitution of India.

The CEGAT Bench ‘D’ (New Delhi) in M P Electricity Board reported in 1991 (52) ELT 618 = 1990 (10) TMI 184 - CEGAT, NEW DELHI confirmed the levy of Excise Duty on Electricity when electricity was chargeable to excise duty at the rate of 2 paise per KWH under Item No. 11-E CET under Section 3 of Central Excises and Salt Act, 1944.
After analyzing the above decisions pronounced by the Apex Court and other High Courts we are of the view that “In the case of electrical energy, generation or production coincides almost instantaneously with its consumption. Sale, supply and consumption takes place without any hiatus. Electricity is movable property though it is not tangible. It is goods which finds a mention in both Central Excise and Customs Tariff Act under the Tariff item no.2716 00 00 and the description of the same in the tariff is “Electrical Energy”. Electrical Energy is nothing but Electricity”.

Hence it is a settled law that ‘electricity’ is goods and also excisable goods which find a mention in The Central Excise Tariff Act. It is also necessary to mention here that generation and distribution of electricity was chargeable to excise duty for a limited period and currently the same has been withdrawn. Any supply of electricity and money realised from such supply is towards supply of goods, it would tantamount of “trading in goods”.

Regards,

Sameer Malhotra - Consultant

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[Rajagopalan Ranganathan]

Sir,

Electricity is classifiable under sub-heading No.2716 00 00 of First Schedule of Central Excise Tariff Act, 1985. However rate of duty is not indicated against this entry. Therefore it is not chargeable to central excise duty. However, if the same is generated in captive power plant maintained by the manufacturer and used for manufacture of dutiable final products then inputs and capital goods used for generation of electricity are eligible for taking credit of duty paid on such inputs and capital goods under CENVAT Credit Rules, 2004 subject to the conditions stipulated therein

[Naveed S]

Yes, and also please refer case law COMMISSIONER OF CUS. and C. EX., CHHATTISGARH Versus HEG. LTD. 2010 (9) TMI 322 - CHHATTISGARH HIGH COURT, wherein following paras are discussed :-

6. Dealing with other ground of the revenue that various parts, components etc. used for fabrication of CPP and electricity generated from there, are not excisable and therefore, Modvat credit cannot be availed by the assessee…...

10 ...With regard to the arguments advanced by the revenue for denying Modvat credit to the assessee on the ground that various parts, components, etc. used for fabrication of CPP and the electricity generated from there are not excisable, it has been held that there was no such requirement under Rule 57-Q that for credit to be taken on the parts of capital goods, the capital goods itself must be dutiable….

[Deepak Jain]

Thanks every one, My query has been solved.

Thanks and Regards

Deepak Jain