Appeal allowed as impugned order set aside for compliance with CENVAT Credit Rules

The appeal was allowed as the impugned order directing the matter back to the original adjudicating authority was set aside. The appellant's compliance with Rule 6(3A) of the CENVAT Credit Rules, 2004, by reversing the proportionate credit for excess electricity sold to outside agencies was deemed sufficient. The presiding member held that goods not manufactured by the appellant would not qualify under Rule 6(1) despite the insertion of Explanation (1). The judgment emphasized the appellant's adherence to statutory requirements and interpretation of legal provisions, leading to the appeal being allowed.

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Issues:
- Appeal against remand order by Commissioner (A)
- Eligibility of CENVAT credit for electricity sold to outside agencies
- Compliance with Rule 6 of CENVAT Credit Rules, 2004
- Interpretation of Explanation (1) to Rule 6(1) of CENVAT Credit Rules, 2004

Analysis:
1. The appeal was filed against the remand order by the Commissioner (A) directing the matter back to the original adjudicating authority. The appellant, engaged in manufacturing sugar, molasses, and ethyl alcohol, availed CENVAT credit under CENVAT Credit Rules, 2004. The issue arose when excess electricity, classified as Electrical Energy, was sold to outside agencies without payment of duty. A show-cause notice was issued demanding payment for the period from January 2016 to March 2016, leading to confirmation of the demand by the original authority and subsequent appeal by the Department.

2. The appellant argued that the impugned order was not legally sustainable, citing the settled issue by the apex court in DSCL Sugar Ltd. case. Despite not being required to reverse the proportionate CENVAT credit, the appellant complied with the Order-in-Original and reversed the credit. The appellant contended that the demand for 6% of the value of electricity was not sustainable, referencing various decisions such as CCE vs. Laila Sugars Pvt. Ltd. and others.

3. The learned authorized representative highlighted that in a previous case for a different period, both authorities accepted the proportionate reversal, which was upheld by the Tribunal. The presiding member, after considering the submissions and material on record, noted that non-excisable goods manufactured by the appellant in the factory would fall under Rule 6(1) of CENVAT Credit Rules, 2004, as per Explanation (1). However, goods not manufactured would not qualify under Rule 6(1) despite the insertion of Explanation (1). The appellant's compliance with Rule 6(3A) by reversing the proportionate credit was deemed sufficient, leading to the setting aside of the impugned order and allowing the appeal of the appellant.

4. The judgment, delivered by Mr. S.S Garg, Judicial Member, on 10/04/2019, concluded that the impugned order was unsustainable, emphasizing the appellant's compliance with statutory requirements and the interpretation of relevant legal provisions.

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