Excisable goods and statutory liability: stay granted where electricity was not shown prima facie to attract excise duty.

Electricity was treated as not prima facie liable to excise duty, as the Tribunal noted that tax can arise only from a clear statutory provision and that mere inclusion in the Schedule did not establish excisability. On that basis, it found an arguable case that the demand linked to sale of electricity exported to the grid could not be sustained, and therefore dispensed with pre-deposit and stayed execution of the impugned order pending appeal.

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Issues: Whether electricity could be treated as excisable goods for the purpose of sustaining the duty demand and insisting on pre-deposit under the Central Excise law.

Analysis: The demand had been confirmed on the footing that the appellant was liable to pay an amount linked to the sale price of electricity exported to the grid because common inputs and input services had been used. The Tribunal noted the consistent earlier view that electricity is not excisable goods and observed that, although electricity is included in the Schedule to the Act, no excise duty had been levied on it. The Tribunal held, prima facie, that the definition of excisable goods required consideration and that a tax liability can arise only when imposed by a statutory provision. In that background, the Tribunal found an arguable and prima facie case for grant of stay and for dispensing with pre-deposit.

Conclusion: The appellant succeeded in obtaining stay of the impugned order and waiver of pre-deposit pending disposal of the appeal.

Final Conclusion: Interim relief was granted on the footing that electricity was not shown, prima facie, to attract excise duty, and execution of the demand was suspended until the appeal was decided.

Ratio Decidendi: A duty demand cannot be sustained, even prima facie, unless the commodity is shown to fall within excisable goods under the statute and the tax liability is imposed by a clear statutory provision.

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