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TMI Blog2015 (6) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... nput services attributable to generation of electricity sold to M/s. UP Power Corporation Ltd. is sufficient in compliance to provisions of Rule 6 of the Cenvat Credit Rules, 2004, therefore, the appellant is not required to pay 10% of the value of electricity sold to M/s. UP Power Corporation Ltd.- Decided in favour of assessee - E/52882/2014-EX(SM) - Final Order No. A/51791/2015-EX(SM) - Dated:- 8-6-2015 - Shri Ashok Jindal, Member (J) Shri P.K. Mittal, Advocate, for the Appellant. Ms. Ranjana Jha, DR, for the Respondent. ORDER The appellant is in appeal against the impugned order. 2. The facts of the case are that appellant is manufacturer of sugar and molasses. During the course of manufacture of sugarcane is crushed and the left over waste is called bagasse. This bagasse is burnt in the boiler and steam is generated. Out of the steam (electric energy) which is used for operation of manufacturing unit producing sugar and molasses and a part of the so electricity generated is sold to M/s. UP Power Corporation Ltd. A show cause notice was issued to the appellant on 20-1-2012 for the period 1-4-2007 to 31-3-2008 by invoking extended period of limitation al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed with consequential relief. 3. On the other hand ld. AR strongly oppose the contention of the ld. Counsel and reiterated the findings of the impugned order. She also submits that electricity is a tariff item as Chapter 27 of the Central Excise Tariff Act clearly defines electrical energy is classifiable under CTH 2716 00 00. She further submits that same form part of the Customs Tariff Act. She also submits that in the case of Geetanjali Woollens v. CCE - 2007 (218) E.L.T. 152 (CESTAT) this Tribunal has held that electricity is a tariff item and is excisable goods. She further submits that the decision of the Apex Court in the case of CCE, Hyderabad v. Aldec Corporation - 2005 (188) E.L.T. 241 (S.C.) held that goods electricity is both marketable and specified in the said Schedule. Therefore, it satisfies the definition of excisable goods as electricity is exempted excisable goods, therefore, provision of Rule 6 of Cenvat Credit Rules, 2004 are attracted. Consequently, appellant is required to pay 10% value of the exempted electricity sold to M/s. UP Power Corporation Ltd. She also relied on the decision of the Hon ble Apex Court in the case of Maruti Suzuki Ltd. v. CCE, De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013, respectively. In order to become any goods to be an excisable goods , it has to fulfil the following conditions : (1) Goods must be manufactured; (2) Must be specified in the First or Second Schedule of the Central Excise Tariff; (3) It must be subjected to tariff. 24. Admittedly, none of these conditions are attracted in the instant case insofar as electrical energy, which is mentioned in Chapter 27 of the Central Excise Tariff Act, covers only those electrical energy which are generated from mineral fuels, mineral oils and products of their distillation, bituminous, substances, mineral waxes, etc. The electrical energy generated from Bagasse is not covered under Chapter 27. Similarly, Chapter 27 does not cover electrical energy produced by solar power, hydro power, wind power or from bagasse. Therefore, we are of the view that electrical energy is not an excisable goods nor it is exempted goods as defined in Rule 2(d) of the 2004 Rules. 26. Hence, manufacture is referred to both dutiable/excisable goods and exempted goods, which are final products. Only then, it is necessary for the manufacturer to maintain separate accounts. Rule 6 of the Cenvat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the stage of emerging of bagasse which is a waste and which emerges on the crushing of sugarcane. Thus, we have no hesitation to say that electrical energy emerges from the bagasse and sold to U.P. Power Corporation Ltd. does not fall within the ambit of excisable goods. Accordingly, all the writ petitions are liable to be allowed, which is hereby allowed. The orders/show cause notice impugned in the respective writ petitions are hereby quashed. The respondents are directed not to realize any excise duty on electrical energy which was sold to U.P. Power Corporation Ltd. 6. Further, this Tribunal has analyzed the decision of the Hon ble High Court of All in the case of Jawahar SSK Ltd. (supra) wherein this Tribunal observed as under : 6. As regards the question whether the electricity is exempted goods or not, we find that the issue is already settled in favour of the appellant in the case of Gularia Chini Mills [MANU/UP/1052/2013 = (2013) 23 GSTR 161 (All.)]. In the said decision, the issue for consideration was whether electrical energy is excisable goods as defined in section 2(d) of the Central Excise Act and whether rule 6 of the Cenvat Credit Rules, 2004 would be applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices which have been used in the generation of electricity which have been sold to MSEB. 8. From the records it is seen that the common inputs on which credit has been availed of 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, HCL, 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 (1) inward cane transportation, (2) technical inspection and certification, (3) telephone services, (4) general insurances, (5) maintenance and 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 same has been done in respect of equipment used for generation of electricity. So is the case in respect of insurance services, maintenance and repair services. Similarly, in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. In the present case, it is an admitted fact that the 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 which electricity is generated. In view of the above, the impugned demands confirmed against the appellant @ 5% of the value of the electricity supplied to MSEB is clearly unsustainable in law. 5.2 However, since electricity is not excisable goods , the appellant is not eligible to take any Cenvat credit on the inputs/input services used in the generation of such non-excisable electricity sold to MSEB. Cenvat credit is available only when input/input services are used in or in relation to the manufacture of excisable goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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