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2015 (10) TMI 1835 - CESTAT NEW DELHI

2015 (10) TMI 1835 - CESTAT NEW DELHI - TMI - Reversal of credit for use of inputs in generation of electricity - Imposition of penalty - Rule 15(2) of the Cenvat Credit Rules, 2004 - Captive consumption - Bagasse - Held that:- There was justification for the appellant to entertain the belief that it was outside the purview of Rule 6 and there was no requirement for reversal the cenvat credit. However, once the cenvat credit has been reversed along with interest, there was no requirement for the .....

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nance of separate accounts was entertained by it.

Admittedly, non-reversal of cenvat credit in the present case is not attributable to any fraud, collusion, mis-statement etc., and accordingly, provisions of Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 cannot be invoked for imposition of penalty on the appellant. - there was no justification for invoking the provisions of Rule 15(2) of the rules for imposition of penalty in the imp .....

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he manufacture of Sugar and Molasses. During the course of manufacture of the said final products, 'Bagasse' emerged as a by-product, which is used by the appellant captively for generation of electricity within the factory. Electricity so generated is used in the factory for manufacture of final product and part of the generated electricity is sold to the outside parties for a consideration. During the disputed period, the appellant availed cenvat credit in respect of the input services .....

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of the cenvat credit in terms of Rule 6(3)(A) of the Cenvat Credit Rules, 2004. The cenvat credit attributable to the common input and input services was to the tune of ₹ 7,74,338/-, part of which was reversed by the appellant on 31.01.2011 and 12.02.2013 and the balance credit was reversed along with interest within 15 days from the date of adjudication of the matter. The SCN issued by the Department culminated in the Adjudication Order wherein, penalty of ₹ 7,74,338/- was imposed .....

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d in Rule 6 of the rules will not have any application. Accordingly, the requirement of Rule 6(3)(A) was not complied with at the relevant point of time, which the appellant subsequently complied with and the cenvat credit attributable to the input and input services used for generation of electricity were reversed. With regard to the issue whether electricity/electrical energy is an excisable commodity, the Ld. Advocate has relied upon the decision of this Bench of the Tribunal in the case of D .....

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, the provisions of Rule 15(2) of the Rules have no application to the case in hand, and accordingly, imposition of penalty is not justified. 3. Per contra, the Ld. DR appearing for the Revenue, submits that electricity is an excisable product since finds a place in the Central Excise Tariff. According to the ld. D.R., though there is no mention of any rate of duty for electrical energy, but as per the additional notes appended to the Tariff Act, the said item is to be considered as an excisable .....

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he input and input services have not been reversed on monthly basis and reversed pursuant to the proceedings initiated by the Department, imposition of penalty under Rule 15(2) of the said Rules is justified. The Id. D.R. relied on the decision of this Tribunal in the case of Gitanjali Woolens Pvt Ltd. vs CCE Vadodara-II reported in 2007 (218) ELT 152 (Tri. Ahmd) to substantiate the above stand. With regard to the issue that electricity is an excisable product, the Ld. D.R. has placed reliance o .....

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also find that the Tribunal in the case of DSM Sugar Mills (Supra) has held that the electricity is not excisable goods, and as such, the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004 will have no application for reversal of Cenvat Credit with regard to the common input and input services. In view of above, I am of the opinion that there was justification for the appellant to entertain the belief that it was outside the purview of Rule 6 and there was no requirement for reversal the c .....

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suppression, misstatement etc., cannot be alleged against the appellant, since a genuine belief regarding non-maintenance of separate accounts was entertained by it. I also find that the judgment of Hon'ble Supreme Court in the case of Union of India -Vs.-Rajasthan Spinning & Weaving Mills, reported in 2009 (238) ELT 3 (S.C.) is squarely applicable in the case of the appellant wherein, it has been held that penalty under Section 11AC of the Central Excise Act, 1944 is a punishment for a .....

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"10. The expression ''suppression'" has been used in the proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or "collusion" and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the partie .....

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