Rule 6 Cenvat Credit treatment of surplus electricity from bagasse: no 10% reversal, demand, interest, or penalty sustained.

Electricity generated in a factory from bagasse and sold in surplus was treated as outside Rule 6 of the Cenvat Credit Rules, 2004 because such electricity is not excisable goods and does not fall within exempted goods for that purpose. The Tribunal followed its earlier view in the same assessee's case and noted that the appellant had already reversed the credit relatable to inputs and input services used for generating the electricity sold outside. On that basis, the proposed reversal of 10% of the value of the electricity sold was not payable, and the associated demand, interest, and penalty were held unsustainable.

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Issues: Whether electricity generated in the factory and sold in surplus attracts reversal/payment under Rule 6 of the Cenvat Credit Rules, 2004, and whether the demand, interest, and penalty were sustainable.

Analysis: The Tribunal followed its earlier decision in the appellant's own case and the principle that electricity generated from bagasse is not excisable goods and does not fall within the category of exempted goods for the purpose of Rule 6 of the Cenvat Credit Rules, 2004. On the facts, the appellant had already reversed the credit relatable to the inputs and input services used for generating the electricity sold outside, and the controversy was covered by the prior binding view on the same issue.

Conclusion: The appellant was not liable to pay 10% of the value of the electricity sold, and the demand, interest, and penalty were unsustainable.

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