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TMI Blog2014 (9) TMI 768X X X X Extracts X X X X X X X X Extracts X X X X ..... VAT 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(3) 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% 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 initio apply. Appellant has generated electricity from bagasse. Bagasse on burning generates heat and with the help of heat, steam is generated which is used to rotate turbines as a result of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , dated 23-11-2012 passed by the Commissioner of Central Excise (Appeals), Pune-II. As the issue involved in both the appeals is common, they are taken up together for consideration and disposal. 2. The appellant M/s. Sharad S.S.K. Ltd., Kolhapur is a manufacturer of sugar/molasses. They generate electricity in the factory for further use from bagasse. Since there is no liability of excise duty on the electricity 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 production of electricity which was captively consum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified in the Schedule to the Central Excise Tariff Act, 1985, as being subject to a duty of excise and includes salt. Since no rate of duty is mentioned against the said sub-heading No., electricity is not subject to a duty to excise. Hence they are not excisable goods. The appellant relies on the decision of the Hon ble High Court of Allahabad in the case of Gularia Chini Mills v. Union of India - 2013-TIOL-568-HC-All-CX. = 2014 (34) S.T.R. 175 (All.) 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 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it Rules, 2004 would be applicable in respect of inputs/input services used in the manufacture of electricity. The Hon ble Allahabad High Court held that electrical energy which is mentioned in Chapter 27 of the Central Excise Tariff Act covers only such electrical energy which is generated from mineral fuels, mineral oil and products obtained therefrom and electrical energy produced from bagasse 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 acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity which has been sold to MSEB. Therefore the 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. 6.3 From the records it is seen that the common inputs on which credit has been availed are (1) Sulphur, (2) Caustic soda, (3) Lubricant oil, (4) T-46, (5) Turbo oil, (6) Boiler Chemicals, (7) Flocculants, (8) Colour precipitate, (9) Grease and (10) Phosphoric acid. Of these inputs Sulphur, 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. Simila ..... X X X X Extracts X X X X X X X X Extracts X X X X
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