2019 (6) TMI 1681 - AT - Central Excise

Tribunal rules on Cenvat Credit for electricity generation, affirming admissibility for capital goods and input services.

Commissioner of Central GST & Central Excise, Meerut Versus M/s Nanglamal Sugar Complex

The Tribunal upheld the decision of the Commissioner (Appeals) in favor of the assessee, ruling that Rule 6 of the Cenvat Credit Rules was not applicable ... CENVAT Credit - electricity - common inputs and input services in the manufacture of dutiable final product as also in the generation of electricity, which is a non dutiable product - Rule 6(3) of the Cenvat Credit Rules - HELD THAT:- On appeal against the said order Commissioner (Appeals) by following the Hon’ble Allahabad High Court decision in the case of Gularia Chinni Mills Ltd. [2013 (1) TMI 525 - ALLAHABAD HIGH COURT]as also the Hon’ble Supreme Court decision in the case of DSCL [2015 (10) TMI 566 - SUPREME COURT] held in favour of the assessee - It was held that Since it is not a manufacture, obviously Rule 6 of the Cenvat Rules, 2004, shall have no application as rightly held by the High Court. - Since Bagasse is held not to be result of any manufacture. Revenue in their memo of appeal have not advanced any reasons for non applicability of the said decision of the Hon’ble Allahabad High Court. When the issue stands decided by the jurisdictional High Court as well as the Hon’ble Apex Court, there are no reasons to take a view different than the one taken by Commissioner (Appeals). Revenue’s appeal is rejected. Issues Involved:1. Interpretation of Rule 6(3) of the Cenvat Credit Rules regarding the utilization of common inputs and input services in the manufacture of dutiable and non-dutiable products.2. Applicability of the decision of the Hon'ble Allahabad High Court and the Hon'ble Supreme Court in similar cases to the present appeal.3. Admissibility of CENVAT credit for capital goods, inputs, and input services used for the generation of electricity for captive use within the factory.Analysis:1. The case involved a dispute regarding the utilization of common inputs and input services by the respondents in the manufacture of both dutiable final products and non-dutiable electricity. The Revenue contended that Rule 6(3) of the Cenvat Credit Rules required the payment of a particular percentage of the value of the electricity generated. Proceedings were initiated against the respondents, resulting in a demand confirmation by the Original Adjudicating Authority, along with interest and penalty imposition.2. On appeal, the Commissioner (Appeals) considered the decisions of the Hon'ble Allahabad High Court and the Hon'ble Supreme Court in similar cases, specifically referring to the case of Gularia Chinni Mills Ltd. and DSCL. The Commissioner (Appeals) held in favor of the assessee, stating that the Rule 6 of the Cenvat Credit Rules was not applicable to electricity generated, and any demand raised based on this rule was not sustainable. The Commissioner also emphasized that CENVAT credit for capital goods, inputs, and input services used for the generation of electricity was admissible if captively used within the factory.3. The Revenue failed to provide any reasons for the non-applicability of the decisions of the Hon'ble Allahabad High Court and the Hon'ble Supreme Court. The Tribunal, after considering the precedent decisions and the lack of contrary reasons presented by the Revenue, rejected the Revenue's appeal. The Tribunal upheld the decision of the Commissioner (Appeals) in favor of the assessee, emphasizing the inapplicability of Rule 6 of the Cenvat Credit Rules to electricity generated and the admissibility of CENVAT credit for captive use within the factory.In conclusion, the judgment clarified the interpretation of Rule 6(3) of the Cenvat Credit Rules in the context of utilizing common inputs for dutiable and non-dutiable products, emphasized the importance of precedent decisions in similar cases, and upheld the admissibility of CENVAT credit for electricity generation for captive use within the factory, ultimately ruling in favor of the assessee based on established legal principles and previous judicial decisions.