TMI Blog2022 (7) TMI 1177X X X X Extracts X X X X X X X X Extracts X X X X ..... tricity generated from bagasse was neither excisable under Section 2(d) of the Central Excise Act, 1944, nor exempted good under rule 2(d) of the Cenvat Credit Rules 2004 and hence, Rule 6 of the said Rules is not applicable. In the present case it could not be pointed out as to whether any process in respect of Bagasse has been specified either in the Section or in the Chapter notice. In the absence thereof this deeming provision cannot be attracted. Otherwise, it is not in dispute that Bagasse is only an agricultural waste and residue, which itself is not the result of any process. Therefore, it cannot be treated as falling within the definition of Section 2(f) of the Act and the absence of manufacture, there cannot be any excise duty. The Tribunal rightly allowed the appeal filed by the assessee and set aside the order of adjudication - the appeal filed by the revenue is dismissed and the substantial questions of law are answered against the revenue. - IA NO. GA/02/2022 IN CEXA NO. 01 OF 2022 - - - Dated:- 21-7-2022 - HON BLE MR. JUSTICE T.S. SIVAGNANAM AND HON BLE MR. JUSTICE BIVAS PATTANAYAK Appearance:- Mr. Bhaskar Prosad Banerjee, Adv. Mr. Abhradip Maity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich Central Excise duty is remitted. In the course of manufacture, waste gas is generated and such waste gas as it cannot be flared into open air as it would cause pollution, it is mandated that the respondent has to generate electricity from the waste gas. The electricity so generated is captively consumed in part and the other part is wheeled out to the grid. Show cause notice dated 31.08.2016 was issued raising a demand of Central Excise Duty to be calculated at 6 % on the value of the electricity sold by invoking Rule 6 (3) of the Cenvat Credit Rules, 2004 on the ground that electricity is exempted goods and the assessee did not reverse the proportionate Cenvat Credit availed on inputs and input services. The assessee contested the show cause notice by submitting elaborate reply both on merits as well as placing reliance on certain decisions of the High Courts. However, the Commissioner did not accept the explanation submitted by the assessee and by order dated 25.06.2019 confirmed the demand. Aggrieved by such order, the respondent had preferred appeal before the Tribunal. The tribunal by the impugned order has allowed the appeal and challenging the same, the revenue is befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that the department is very well aware that the assessee manufactures product from carbon black and they have been subjected to regular departmental audits and also their production is being regularly monitored by the State Pollution Control Board, the sale of electricity is also properly accounted and necessary disclosures are made in the audited financial statements. Therefore, it was submitted that the question of suppression would not arise and the show cause notice could not have been issued and penalty also could not have been imposed. Further it is submitted that the Cenvat availed by the assessee during the period in question i.e. 2010-2011 to 2015-2016 is only Rs. 11.20 lakhs whereas the department has raised the demand for a sum of Rs. 2.33 crores which is not sustainable. Therefore, it was contended that the assessee cannot be fastened with a duty demand which is grossly disproportionate to the credit availed by the assessee. 5. The stand taken by the department before the Tribunal was that the assessee did not follow the procedure for reversal of proportionate credit of inputs and input services for use in generation of electricity sold outside the factory and, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out from the materials which were available on record and we cannot be called upon to substitute our opinion on those facts as the scope of the present appeal is to decide as to whether any substantial question of law arises for consideration. The decision in Tiara Advertising Versus Union of India 2019 (30) G.S.T.L. 474 (Telengana) would also assist the assessee as to what can be done by the authority in the event the assessee fails to follow the procedure under Rule 6(3) of the Cenvat Credit Rules. The Court held as follows: 14. Further, we may reiterate the rule 6(3) of the Cenvat Credit Rules, 2004, merely offers options to an output service provider who does not maintain separate accounts in relation to receipt, consumption and inventory of inputs/ input services used for provision of output services which are chargeable to duty/ tax as well as exempted services. If such options are not exercised by the service provider, the provision does not contemplate that the Service Tax authorities can choose one of the options on behalf of the service provider. As rightly pointed out by Sri S. Ravi, Learned Senior Counsel, if the petitioner did not abide by the provisions of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nergy 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 not 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 or 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008. In the year 2008 there was an amendment in Section 2(d) as well as in Section 2(f) of the Act which defines excisable goods and manufacture respectively. Section 2(d) with the said amendment reads as under: Section 2(d) excisable goods means goods specified in [The First Schedule and the Second Schedule] to the Central Excise Tariff Act, 1985 (5 of 1986) as being subject to a duty of excise and includes salt; Explanation - for the purposes of this clause, goods includes any article, material or substance which is capable of being brought and sold for a consideration and such goods shall be deemed to be marketable. 7. as per the aforesaid explanation, goods would now include any article, material or substance which is capable of bought or sold for consideration and as such goods shall be deemed to be marketable. Thus, it introduces the deeming fiction by which certain kind of goods are treated as marketable and thus excisable. 8. However, before the aforesaid fiction is to be applied, it is necessary that the process should fall within the definition of manufacture as contained in Section 2(f) of the Act. The relevant portion of amended Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
