TMI Blog2020 (1) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product / waste which being poisonous in nature cannot be flared into the open air for pollution reasons. It is therefore mandatory to use such waste / tail gas to generate electricity. Electricity so generated is captively used in further manufacturing process within the factory and only a part of the same is sold to the Grid. Proceedings were initiated and SCN dated 31.08.2016 was issued for raising demand of central excise duty calculated @ 6% on the value of electricity sold, by invoking the provisions of Rule 6(3) of the CENVAT Credit Rules, 2004, on the ground that electricity is exempted goods and that the appellant did not reverse the proportionate CENVAT credit availed on inputs and input service. In the course of adjudication, the Ld. Commissioner after following the due process of law confirmed the demand proposed in the SCN. The appellant is before us against the adjudication Order dated 25.06.2019. 3. Sri Rajeev Agarwal, C.A., appeared for the appellant and Sri S.S.Chattopadhyay, Ld.D.R. appeared for the Revenue. 4. The Ld. C.A. appearing on behalf of the appellant made a detailed arguments in support of this contentions which are as b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T 769 (SC)]. He referred to the certificate issued by the Chartered Engineer which shows the various sources of power which has been completely ignored by the Ld. Commissioner. (iii) He further submitted that the term exempted goods as defined in the Credit Rules has been amended vide Notf. 6/2015-CE(NT), w.e.f. 1st March 2015 to include non-excisable goods . Therefore, no credit is liable to be reversed for the period prior to March 2015. In their case, the proportionate credit has already been reversed for the period 2015-16 covering the normal period of limitation which is the fact on record and not in dispute. (iv) He relied on the decision of the Tribunal in the case of Jai Balaji Industries Ltd vs. CCE, Raipur [2017 (352) ELT 86 (Tri-Del)] wherein it has been held that there is no justification to demand an amount calculated @ 5% / 10% of the sale value of electricity when the assessee has already reversed the proportionate credit attributable to sale of electricity even though the procedure prescribed in Rule 6(3) of the Credit Rules has not been followed by the assessee (i.e. intimation to the department to exercise the option for reversal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghtly made liable to pay CENVAT credit calculated @ 6% of the sale value of electricity as has been prescribed in Rule 6(3) of the Credit Rules. He also submitted that reversal of proportionate credit after the initiation of proceedings will not absolve the appellant from paying the amount prescribed in the Credit Rules. He accordingly submitted that the impugned order passed by the Ld. Commissioner is legal and does not warrant any interference. He prayed that the appeal be rejected being devoid of any merit. 6. Heard both sides and perused the appeal records. 7. The issue to be decided in this case is 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. Before we deal with the main issue whether the appellant is liable to pay the amount as per Rule 6(3) of the Credit Rules, it is important to decide whether the electricity generated from waste gas / tail gas is classifiable under chapter heading 2716 00 00 and whether the same can be said to be exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal in case of Philips Carbon Black (Supra) and Hi Tech Carbon (Supra) as relied by the appellant, electricity generated from waste is not classifiable under chapter heading 2716. Moreover, the submissions made by the appellant before the Ld. Commissioner that no coal gas is produced since no coal is used, has nowhere been disputed in the impugned adjudication order. We find that the very SCN was issued on the wrong footing that coal gas is used for generation of electricity, which has not been dealt by the Ld. Commissioner in his impugned order. The Hon ble Allahabad High Court has categorically observed that Chapter 27 of the Central Excise Tariff does not cover electrical energy produced by solar power, hydro power, wind power or from bagasse i.e. waste, we are of the considered view that 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. 9. We take note of the specific amendment made in the definition of the term exempted goods under the Credit Rules vide Notf. 6/2015-CE(NT), w.e.f. 1st March, 2015, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.01.2016 after noting that the assessee had duly reversed the credit, set aside the demand proposed of the amount calculated @ 8%/10% of the sale value of electricity. It is important to take note that the Revenue had pleaded before the Hon ble High Court of Chhattisgarh that there was no occasion for the Tribunal to record that assessee had reversed the proportionate credit because separate accounts as required under Rule 6 was not maintained. The Hon ble High Court while rejecting the Revenue s contention observed as follows:- 5. The learned counsel for the appellant-revenue argued that there was absolutely no foundation for CESTAT to have stated in paragraph 4 of the impugned order that it is an admitted fact that the respondent had calculated and debited the credits attributable to the electricity sold by it and that such debit was made before issuance of the notice by the original authority. It was also argued that no separate accounts having been maintained and therefore it was impermissible for the respondent to claim any credit for the quantity of electricity sold out to other units. As noticed hereinbefore, the original authority and the first appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gued by the Ld CA that the appellant has always been subject to department audits and the production process of carbon black was well within the knowledge of department. He also contended that the appellant has been subject to regular monitoring by the State Pollution Department, being a manufacturer of carbon black and that they are required to follow the norms of Grid for production and sale of electricity generated within the factory. The same of electricity is being properly accounted and necessary disclosures are made in the audited financial statements for submission with the various statutory bodies. We find that the Tribunal in the case of Compark E Services Pvt Ltd vs. CCE [2019 (24) GSTL 634 (Tri-All)] 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. The relevant observation made by Tribunal is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making any legal provisions as infructuous, has to be avoided On perusal of the impugned adjudication order, we do not find any 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. 11. We also note that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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