9911796707
TMI Blog2013 (7) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... as under : The sugar, which is being manufactured, falls under sub-heading No.1701 of 1990 of First Schedule of Central Excise Tariff Act, 1985. The principal raw material of the petitioners' final product, namely, sugar, is the sugarcane, which is purely an agricultural product. During the course of manufacture of sugar, molasses (Sheera) emerges as a by-product, which attracts specific rate of duty under the Tariff Heading 1703 of 1000 of the above Act. Admittedly, the Central Excise Duty on sugar, molasses and industrial alcohol is paid by the petitioners on their clearances from the factory, as per procedure prescribed under the Central Excise Rules, 2002. In the process of manufacture of sugar, sugarcane is crushed, its juice is extracted and 'Bagasse' emerges as residue/waste of the sugarcane, which is said to be neither a manufactured product nor is a final product of the sugar industry. The waste of sugarcane, namely, Bagasse, so generated is mainly used as fuel in the factory for manufacture of final products and surplus, if any, is transferred to the sister concerns of the petitioner. The 'bagasse' is classified under sub-heading 2303 2000 of Central Excise Tariff Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1944 against the impugned order before the Customs Excise & Service Tax Appellate Tribunal, New Delhi but without availing the said remedy, petitioners have rushed to this Court straightaway, which is against the settled norms and as such, the writ petition is liable to be dismissed on the ground of availability of alternative remedy. In contrast, Counsel for the petitioners contends that there is no blanket ban in approaching the High Court and in exceptional circumstances, the writ petition is entertainable. He submits that though a Division Bench of this Court, vide order dated 18th May, 2012 passed in 11791 (M/B) of 2010 and connected writ petitions, while recording the findings that the 'bagasse' is an agricultural waste of sugarcane, though marketable product, but the duty cannot be imposed as it does not involve any manufacturing activity simply by adding an explanation under Section 2(d) of the Central Excise Act, 1944, whereby the definition of 'goods' has been defined will not make bagasse, which, as stated hereinabove, is an agricultural waste to be a dutiable item, but the Chief Commissioner vide Circular dated 3.10.2009 had nullified the judgment and order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Article 226 of the Constitution of India, if it is found necessary for promotion of justice and prevention of injustice. In view of the aforesaid facts and after hearing the parties, the preliminary objection raised by the respondents is not well founded and in our view relegating the petitioner to avail the alternative remedy would not be an efficacious remedy but a futile attempt. As far as merit of the case is concerned, Sri Bharat Ji Agarwal, Senior Advocate, appearing on behalf of the petitioners submits that impugned order of Commissioner, Central Excise in respect of electrical energy generated from bagasse and sold to U.P. Power Corporation Ltd. is arbitrary and without jurisdiction inasmuch as Rule 6 of the CENVAT Credit Rules, 2004 [hereinafter referred to as the "2004 Rules"] is not applicable in respect of 'electricity'. On the strength of the decisions rendered in Collector of Central Excise Vs. Solaris Chemtech Ltd. reported in 2007 (vol.214) ELT, page 481 and Maruti Suzuki Ltd. Vs. Commissioner Central Excise, reported in 2009 (9) SCC 193, he contended that Rule 6 of the 2004 Rules will come into picture when a manufacturer manufactures both the excisable dutiable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d through Circular No. 808/05/2005-CX dated 25.2.2005. Lastly, Sri Agarwal has urged that the department has admitted in its letter dated 30.1.2013 of the Assistant Commissioner, Central Excise that petitioners are not availing CENVAT Credit in boiler and turbine where bagasse is burnt to produce steam and steam runs the turbine to generate electricity. This fact has also been confirmed by the Commissioner, Central Excise vide its letter dated 21.2.2003 received by the peteitioner on 28.2.2013. Therefore, decision of the Supreme Court that electricity is not an excisable goods and Rule 6 of the CENVAT Rules is not applicable is still binding on the authorities and the decision given by the Commissioner, Central Excise is apparently in the teeth of the said decision given by the Supreme Court and the Division Bench of this Court dealing with bagasse. Hence, the writ petition is liable to be allowed. Per contra, Sri Deepak Seth, learned Counsel for the respondents submits that in the impugned adjudication order, it has been held that CENVAT is to be reversed even if electricity is held to be not an "Excisable good". The Hon'ble Supreme Court in the case of Maruti Suzuki (supra) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outside. Thus, there is no illegality in the impugned order and all the writ petitions are liable to be dismissed. Having heard learned Counsel for the petitioners and perused the records, since the question involved in the above captioned writ petitions are that whether electrical energy generated from bagasse and sold to U.P. Power Corporation Ltd. is excisable or not, with the consent of the parties' counsel, they are being taken up together with and decided by a common order. The question whether bagasse which is a waste and not a manufactured produce can be subjected to any duty under the Central Excise Act was considered and decided on 21.7.2010 by the Hon'ble Supreme Court in the case of Balrampur Chini Mills Ltd. in Civil Appeal No. 2791 of 2005 and on the basis of the said judgment, a Division Bench of this Court in which one of us (Hon'ble Rajiv Sharma, J.) is a Member, in a bunch of writ petitions, leading writ petition No. 11791 (M/B) of 2010: Balrampur Chini Mills Ltd. Vs. Union of India and others, decided the writ petitions on 18.5.2012. In the said judgment and order dated 18.5.2012, while considering Rule 6 of CENVAT Credit Rules and various decisions of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or applicability of Rule (2), the following ingredients must exist:- (i) where a manufacturer avails CENVAT credit on any input (as defined in section 2(k) (ii) and manufactures such final products which are chargeable to duty and (iii)also manufactures such final products which are exempted goods." 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 Credit Rules, 2004, (which is pari materia to the erstwhile Rule 57CC) provides that if CENVAT Credit has been taken on the inputs which are used for manufacture of dutiable and exempted final products then the assssee is required to reverse the proportionate credit or pay 10%/5% amount of the value of the exempted final products. Electricity is not excisable goods under Section 2(d) of the Act, hence Rule 6 of the CENVAT Credit Rules, 2004 is not applicable as held by the Apex Court in the case of Solaris Chemtech Ltd. (supra). The above fact has been admitted even in the circular of the Chief Commissioner, Central Excise dated 3.10.2009 that bagasse is not a manufactured fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Government of India Note : This notification intends to take care of the technical changes adopted in the numbering scheme for Central Excise classification through the Central Excise Tariff (Amendment) Act, 2004 (5 of 2005). These amendments do not involve any substantive changes in the existing rules, so the particulars of each rule have not been indicated." Furthermore, during debate in Lok Sabha on the said Central Excise Tariff (Amendment) Bill, 2004, the then Hon'ble Minister of Finance in regard to the purpose of introduction of eight digit classification has stated that "the purpose of the Bill is very limited. On the custom side, we already have an eight-digit classification. It is, therefore, necessary that on the Excise side also we have the same eight digit classification. What we have found is that eight digit classification helps both trade and revenue department to identify a particular product and heading under which it falls. Immediately, the number of disputes comes down very sharply....". A perusal of the 'Note' appended below the Notification dated 24.2.2005 as well as the statement made by the Hon'ble Finance Minister in Parliament, as referred to above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the 'excisable goods' as defined under Section 2(d) of Central Excise Act, 1944. The bagasse, which emerges as a residue of sugarcane, admittedly, is a waste product and this bagasse is used in boiler as a fuel for generation of steam for running the turbine and for boiling the juice for the manufacture of sugar. Turbine generates electrical energy which is used for running the plant and machinery and surplus energy is sold to the U.P. Power Corporation Ltd. Furthermore, bagasse is used as fuel in the factory for manufacture of final product and no specific input is used up to 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 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.
No order as to costs. X X X X Extracts X X X X X X X X Extracts X X X X
|
