TMI Blog2017 (12) TMI 1365X X X X Extracts X X X X X X X X Extracts X X X X ..... ngaged in manufacture of sugar and molasses and is in appeal against order in original dated 24.02.2009, passed by Commissioner of Central Excise, Meerut I. 2. The facts in brief are that in the course of audit for the period March,2007 to December,2007, it was noticed that the appellants have not made the payment of 10% of the amount of sale price of exempted final product, that is electricity sold to U.P. Power Corporation Ltd. nor have made reversal of proportionate CENVAT credit availed on inputs, input services used and consumed in generation of electricity sold, in terms of rule 6(3) of CCR 2004. It was observed that the appellant was availing Cenvat credit on inputs like lubricants, greases, coolant, chemicals, et cetera and input services used and consumed commonly in the manufacture of sugar and molasses which are chargeable to duty as well as in the generation of electricity which is exempted. Besides, use of electricity generated in the plant, same is also being sold to U.P.Power Corporation Ltd. as well as used in residential colony, guest house, bank, canteen, et cetera, that is, being used for non-manufacturing activity. It was noticed that the appellant did not ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be stored, is sold to U.P. Power Corporation Ltd. It is further urged that the interpretation of the revenue on the basis of clause 1 (c) of Additional Notes of General Rules for the interpretation of the First Schedule to hold that as no rate of duty is indicated for electrical energy it is exempted goods. But this interpretation is not sustainable as per specific definition given under Cenvat credit Rules. In the facts and circumstances that electricity is primarily generated for captive consumption and not for sale or clearing outside the factory, the provisions of Rule 6 are not attracted. However, it is not the final product of the appellant and at best it is an intermediate product. It is further contended that electricity having been inserted vide the Finance Act, 2005 under the CET first schedule but till date it is neither chargeable to any duty, nor nil rate of duty as Column 4 meant for rate of duty has been left blank in the tariff entry. Thus, the essential ingredient of chargeable to duty being absent electricity can neither be taken as taxable nor exempted goods. The learned Counsel further relies on the ruling of SMB Bench of this Tribunal in Ex.Appeal No.E/52 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 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. 28. 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 assessee is required to reverse the proportionate credit or pay 10%/5% amount of the value of the exempted final produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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. 8. This Tribunal has also got an opportunity to examine the said issue in the case of Sharad SSK Ltd. (supra) wherein this Tribunal observed as under : 6.1 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 case cited (supra). 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 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 ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f exempted final goods as per Rule 6 of the Cenvat Credit Rules, 2004. 9. As none of the cases relied upon by the ld.A.R. have dealt with the issue of generation of electricity from bagasse, therefore, the said decisions are not applicable to the facts of this case. Further, the facts of the case in hand are similar to the facts of the case of Gularia Chini Mills (supra) wherein the Honble High Court as well as this Tribunal has held that electricity generated from bagasse is not an excisable goods and does not qualify as tariff item as per Chapter 27 of the Central Excise Act, 1984. In these circumstances, the issue is answered in favour of the appellant is not required to pay 10% of the value of the electricity sold to M/s U.P.Power Corporation Ltd. Further, I also find that appellant has already reversed the Cenvat credit attributable to input/input services used in generation of electricity sold to M/s U.P.Power Corporation Ltd. which is an essential requirement of Rule 6 (3) of the Cenvat Credit Rules, 2004 and same has not been dealt by both the lower authorities. In these circumstances, I hold that as the appellant has already reversed the Cenvat Credit on input/input s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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