9911796707
TMI Blog2009 (8) TMI 1045X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 4 27/KOP-I/2009 dated 29-4-2009 1/2008 4,86,612 10,000 The brief facts involved in all four appeals are that the appellant, who is engaged in the manufacture of sugar and molasses, had availed Cenvat credit of inputs and input services pertaining to the manufacture of both dutiable and exempted goods without keeping separate accounts and also failed to pay the amount equal to 10% of the price of the exempted product in terms of Rule 6; that the bagasse which was extracted from sugarcane, was burnt in the boiler as a fuel and steam is generated and for generation of steam, the de-mineralized water (DM water in short) is used in the boiler initially and the steam generated in the boiler using DM water, is used in the turbine for generation of electricity; that the electricity generated is used captively for production purposes and further approximately 3.00 MW is sold to M/s. MSDCL under Power Agreement at the applicable rate; that during the scrutiny of the records, the appellant availed Cenvat credit of various inputs/raw materials such as, sulphur, HCL, Costing soda/soda flakes, siskast and thermotax, lubricant oils, etc. and also av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under :- (i) that the re-alignment of Central Excise Tariff Act with Customs Tariff Act is merely a technical change; (ii) that the new items like electrical energy which got covered are live animals like horse, bulls, cows, swine, buffaloes etc. and if the interpretation of the adjudicating authority that as electricity is specifically mentioned in chapter 2716 with effect from 28-2-2005, it has become excisable and non mention of any rate of duty is irrelevant is assumed to be correct, then it leads to another absurd conclusion that the live animals and live plants also have become excisable commodities with effect from 28-2-2005, since they were also not finding the place in the Central Excise Tariff prior to 28-2-2005 and are got specifically covered under Chapters 1, 4, 6 etc. of the Central Excise Tariff Act, 1985 only with effect from 28-2-2005; (iii) that only when a particulars of excisable commodity are declared in the Central Excise Tariff along with rate of duty to be levied, the said product can be treated as excisable and mere mention of the product in the Tariff without mentioning rate of duty against the entry covering the said product, will not ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts, in as much as the inputs like sulphur, flocculants, phosphoric acid, etc. are used for exclusively to manufacture of sugar and molasses and input services like inward transportation of sugarcane, is exclusively used for sugar and molasses and other services like repair and maintenance, technical inspection and certification, insurance, installation and commissioning, commercial and industrial construction services and consulting engineering services are getting protection of Rule 6(5) and hence, the demand of 10% amount on selling price of electricity sold outside is not sustainable; (x) that without prejudice to the above, it is well settled principle by now that when it is impossible to keep separate records of the common inputs used in the exempted as well as dutiable final products, the assessee cannot be asked to pay the amount equal to 10% of selling price of the exempted final product and the department can ask to reverse the actual amount of credit attributable to the portion of the inputs used in or in relation to manufacture of exempted final product and the appellant relies on the Tribunal s decision in the case of Esab India Ltd. v. CCE [2009 (243) E.L.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same as exempted final product, since there is an entry for the same in the Central Excise Tariff under Heading No. 27160000. To the above, he contended that though there is entry for electricity, the same cannot be considered as excisable commodity , since there is no rate of duty mentioned against the said entry and since the column rate of duty is left blank. He has further submitted that even for arguments sake, the electricity which is finding place in the Central Excise Tariff to be considered as excisable commodity , then, live animals which are found mentioned under chapter 1 should also be treated as excisable commodity . However, it is not the intention of the Govt. to demand duty on the live animals, since like electricity, the rate of duty is left blank. Therefore, he has submitted that his client is not liable to pay 10% amount on electricity sold outside. He has further added that the electricity is not fitting under the definition of exempted goods given under Rule 2(d) of the Cenvat Credit Rules. Also the electricity is not final product, since the same is separately acknowledged in the definition of inputs given under Rule 2(k). 3.2 He has further b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basing his arguments, that because the electricity is found mentioned in the Central Excise Tariff and if the same is considered as an excisable commodity, on the same ground, the live animals such as horse, bulls, birds etc. which have also been found mentioned in the Central Excise Tariff with effect from 28-2-2005, have also to be treated as excisable commodities. The appellant further argues that the blank entry cannot be equated to NIL rate of duty as concluded by the adjudicating authorities. The appellant relies on the decision of the Tribunal in the case of CCE v. Ramesh Flowers Pvt. Ltd. - 2009 (236) E.L.T. 366 (T) = 2009 (92) RLT 34 (Tri.-Chennai). Further the appellant claims that even after 28-2-2005, the electricity is remained non-excisable commodity and hence, the provisions of Rule 6 of Cenvat Credit Rules, 2004 are not applicable and the appellant in this regard relies on the decisions mentioned at para 2(v) supra; that the appellant also relies on the decision of the Apex Court in the case of CCE v. Solaris Chemtech Ltd. [2007 (214) E.L.T. 481] wherein it has been held that the electricity is non excisable commodity; that the appellant further submits that bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic definition therein. Consequently, the electricity supplied to the colony would fall outside the Cenvat Scheme. The credit taken on inputs used in production of such electricity is inadmissible . 4.2 From the above, it is clear and categorical that since there is no duty specified in the schedule to the Central Excise Tariff Act for electricity , the same cannot be considered either as excisable goods or as exempted goods. Further it cannot be considered as the final product also. In addition to the above, the appellant also derives support from the decision of the CESTAT, Chennai in the case of CCE, Tirunelveli v. Ramesh Flowers Pvt. Ltd. supra. In the above case, the Department demanded duty on Cut flowers ........of kind suitable for ........ or for ornamental purposes ........ classifying the same under heading No. 33.7 and the Hon ble Tribunal held that the said item would fall under heading No. 06.03/06.04. The Tribunal further held that as equivalent heading in the Central Excise Tariff Act is Chapter 6 which is blank, they are non excisable. In the instant case also, the electrical energy has been found mentioned under chapter heading No. 2716 and under the rate o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es used in or in relation to manufacture of exempted final product. This view is also held by the Apex Court in the case of CCE v. Solaris Chemtech Ltd. [2007 (214) E.L.T. 481] mentioned supra. The Apex Court in the said case at Para 9 has held that in some of the cases, the electricity generated is consumed by the residential colony of the factory s workers families, schools etc. to that extent, Modvat credit will not be admissible . The same view has also been held by the Tribunal Mumbai in the case of Ballarpur Industries Ltd. v. CCE, Nagpur supra. In view of the above, the Department should have, instead of demanding 10% of amount of price on electricity sold to M/s. MSDCL, asked the appellant to reverse the actual credit which have gone in or in relation to the production of electricity as being followed by Belgaum Commissionerate as reported by the appellant. On this ground also, the demands are not sustainable. 7. For imposing equal penalty in the case of Sl. No. 1 of the Table, the adjudicating authorities held that the appellant has deliberately suppressed the facts of using common inputs for manufacture of dutiable and exempted goods with a view to evade Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
