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2020 (1) TMI 529 - AT - Central ExciseCENVAT credit - waste/by-product - exempt goods - ‘waste gas’, also known as ‘tail gas’ / ‘off gas’, is generated as by-product / waste which being poisonous in nature cannot be flared into the open air for pollution reasons - whether appellant is liable to pay the amount calculated @ 6% of the sale value of electricity sold outside the factory when admittedly the appellant has reversed the proportionate credit of inputs and input services attributable to sale of electricity? HELD THAT:- Hon’ble Allahabad High Court as relied upon by the appellant in the case of GULARIA CHINI MILLS AND OTHERS VERSUS UNION OF INDIA AND OTHERS [2013 (7) TMI 159 - ALLAHABAD HIGH COURT] in which case, the electricity was generated from bagasse which is a waste product. It has been held by the Hon’ble High Court to be not classifiable under chapter 27 of the Central Excise Tariff - The Hon’ble High Court has clearly held that since electrical energy generated from waste i.e. bagasse is not excisable, the same cannot be said to be exempted goods. The waste / tail gas used in generation of electricity also cannot be said to be classifiable under chapter 27 and therefore, since the same is not excisable, the question of being exempt also does not arise - for the purpose of reversal of CENVAT credit, non excisable goods would be considered to be exempted goods and the assessee will be liable to reverse the proportionate credit w.e.f. 1st March, 2015 onwards and not for the prior period - Since admittedly, the reversal has been made by the appellant in adjudication stage, they cannot be penalised by way of demanding the prescribed percentage of sale value of electricity merely because the procedure has not been followed under Rule 6 of the Credit Rules. Time Limitation - HELD THAT:- The Tribunal in the case of M/S COMPARK E SERVICES P. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE & S.T., GHAZIABAD [2019 (5) TMI 1230 - CESTAT ALLAHABAD] has observed that when the assessee is subject to compliance and monitoring with other statutory bodies and the transactions have been disclosed in the financial statements, it cannot be said that there was any suppression. The interpretation that since the return has not been filed or tax has not been paid would be only for reasons of fraud or suppression will render the provisions relating to limitation otiose and infructuous. In the present case, there are no ingredient to show that the appellant has wilfully suppressed any information from the department. Mere fact that they have not followed the procedure under Rule 6 of the Credit Rules to reverse the proportionate credit, that too only w.e.f. 1st March, 2015, cannot lead to the conclusion that they have wilfully suppressed any material information from the department - Moreover, in the instant case, the appellant is not manufacturing any exempted goods but is generating electricity from the waste received during carbon black manufacturing process which is a statutory requirement under the pollution laws. Therefore, in the facts of the case, extended period of limitation is not available to the Department. Since the appellant has already reversed the proportionate credit attributable to sale of electricity for 2015-16 which fact is not in dispute as would be seen from the findings made by the Ld. Commissioner in para no. 4.4 and 4.25 of the impugned order, the appellant cannot be made liable to pay the amount @ 6% of the sale value of electricity under Rule 6(3), which in any case will be highly dis-proportionate to the credit amount actually availed, which is legally not permissible. Appeal allowed - decided in favor of appellant.
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