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TMI Blog2014 (2) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... o MSEB is clearly unsustainable in law - appellant would be liable to reverse the credit if any taken on such inputs/input services which have been used in the generation of electricity which have been sold to MSEB. Common inputs on which credit has been availed are (1) Sulphur, (2) HCL. (3) Caustic soda, (4) Lubricant Oil, (5) T-46 (6) Turbo Oil, (7) Boiler Chemicals, (8) Flocculants, (9) Colour Precipitate, (10) Grease and (11) Phosphoric acid. Of these inputs Sulphur, HCI, Caustic Soda, Boiler chemicals, Flocculants, Colour precipitate and Phosphoric acid has nothing to do with the generation of electricity and therefore, there is no need to reverse any credit taken in respect of these inputs. Inward Cane Transportation has nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... city generated, the appellant did not discharge any excise duty liability. Part of the electricity so generated was sold by the appellant to Maharashtra State Electricity Board (MSEB in short). The appellant did not keep any separate records on the inputs/input services used in the manufacture of electricity which was captively consumed and which was sold to MSEB. The department was of the view that since the appellant did not maintain any separate records in respect of consumption of inputs/input services used in the manufacture of electricity captively consumed and electricity sold, they are liable to pay a sum @ 10%/5% of the value of the electricity sold. Accordingly, four show-cause notices were issued for the period from April'05 to A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Allahabad in the case of Gularia Chini Mills Vs. Union of India wherein an identical issue was considered and it was held by the Hon'ble High Court that electricity cannot be treated as exempted goods under Rule 6 of CCR and, therefore, the impugned demands are not sustainable in law. As regards the CENVAT credit demand on inputs, it is contended that these are used for water treatment to avoid damage to the boiler tubes and further lubricants/greases are used for lubrication of part of the machinery. 4. As regards input services, inward transportation of sugar cane is a service used for manufacture of sugar cane and molasses and not for generation of electricity and therefore the appellant is not required to reverse CENVAT credit on al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not covered under Chapter 27 and hence such electrical energy is not excisable goods nor is it exempted goods as defined in Section 2(d) of the Act. It was further held that Rule 6 of the CENVAT Credit Rules, 2004 refers to both dutiable / excisable goods and exempted goods. Only then, it is necessary for the manufacturer to maintain separate accounts. Rule 6 of the said Rules provides that when CENVAT credit is taken on the inputs/input service which are used for manufacture of dutiable as well as exempted final products, then the assessee is required to reverse proportionate credit or pay 5%/10% amount of the value of the exempted final products. As regards electricity which is not excisable goods, the provisions of Rule 6 would not ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (7) Boiler Chemicals, (8) Flocculants, (9) Colour Precipitate, (10) Grease and (11) Phosphoric acid. Of these inputs Sulphur, HCI, Caustic Soda, Boiler chemicals, Flocculants, Colour precipitate and Phosphoric acid has nothing to do with the generation of electricity and therefore, there is no need to reverse any credit taken in respect of these inputs. Similarly in the case of input services, Common input services are 91) i9nward cane Transportation (2) Technical Inspection and Certification, (3) Telephone Services, (4) General Insurances, (5) Maintenance Repairs, (6) Audit Fees and (7) Construction Services. Inward Cane Transportation has nothing to do with electricity generation. Inspection and testing service will apply only when the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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