2019 (2) TMI 562 - AT - Central Excise

Tribunal sets aside demand for 6% CENVAT credit on electricity sales

M/s. India Cane Power Ltd., M/s. Gem Sugars Limited, M/s. Naranja Sahakari Karkhane Ltd., The Krishna Sahakari Sakkare Kharkhane Niyamit, M/s. Dyanyogi Shri Shivkumar Swamji Sugars Ltd., M/s. Bilagi Sugar Mill Ltd. Versus The Commissioner Of Central Tax and Central Excise

M/s. India Cane Power Ltd., M/s. Gem Sugars Limited, M/s. Naranja Sahakari Karkhane Ltd., The Krishna Sahakari Sakkare Kharkhane Niyamit, M/s. Dyanyogi ... Issues:Appeal against rejection by Commissioner (A) - Identical issues in six appeals.Analysis:Issue 1: Identical issues in multiple appealsThe appellants filed six appeals against orders rejecting their appeals by the Commissioner (A). The issue in all six appeals was identical, leading to a common order for disposal.Issue 2: CENVAT credit on electricity soldThe appellants, engaged in manufacturing sugar and molasses, also generated electricity for captive use and sale to outside agencies. The department demanded 6% of the value of electricity sold as CENVAT credit under Rule 6 of CENVAT Credit Rules, 2004. The Original Authority confirmed the demand, which was upheld by the Commissioner (A).Issue 3: Legal argumentsThe appellants argued that the impugned order was contrary to statutory provisions and judicial precedents. They contended that the Revenue's demand lacked evidence of common inputs or services for dutiable goods and electricity generation. Citing precedents like Jakarya Sugars Ltd. and Gularia Chini Mills, they emphasized the need for evidence to apply Rule 6 of CENVAT Credit Rules.Issue 4: Precedents and applicability of Rule 6The appellants relied on decisions like Simbhaoli Sugar Ltd. and Ganga Kishan Sahakari Chini Mills Ltd. to support their claim that Rule 6 did not apply without evidence of common inputs. They argued against the Revenue's interpretation and highlighted the option to reverse credit instead of paying 6%.Issue 5: Tribunal's decisionThe Tribunal considered precedents, including Gularia Chini Mills and Jakarya Sugars Ltd., to conclude that no other input was used in generating electricity from bagasse. Following these decisions, the Tribunal found the demand for 6% of electricity value unsustainable and allowed all six appeals.Conclusion:The Tribunal set aside the impugned orders, allowing the appeals of the appellants based on established legal principles and precedents. The decision was pronounced on 31/01/2019, providing consequential relief to the appellants.