Tribunal: Electricity not excisable goods under Cenvat Credit Rules

The Tribunal allowed the appeal in favor of the appellant, holding that electricity generated at the site should not be considered excisable goods under Rule 6 of the Cenvat Credit Rules, 2004. Despite the 2015 amendment to Rule 6, the Tribunal emphasized that electricity does not attract excise duty and therefore cannot be categorized as exempted goods. The Tribunal rejected the Revenue's argument, concluding that the appellant was entitled to avail Cenvat Credit on common input services used at both the factory and electricity generation site.

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Issues:
- Availment of Cenvat Credit on common input services used in the factory and electricity generation site.
- Interpretation of Rule 6 of the Cenvat Credit Rules, 2004 regarding exempted goods.
- Applicability of Rule 6 post-amendment w.e.f. 01.03.2015.

Analysis:
1. The appellant availed Cenvat Credit on common input services used both in the factory manufacturing excisable goods and at the electricity generation site. The department disallowed the credit, citing non-compliance with Rule 6 of the Cenvat Credit Rules, 2004. The appellant appealed the decision, arguing that electricity generated at the site should not be considered an excisable product under Rule 6. The appellant contended that the electricity is neither excisable nor exempted goods, thus the Rule's requirements do not apply. The appellant calculated and reversed proportionate Cenvat Credit for input services used at the electricity generation site.

2. The Revenue argued that post-amendment to Rule 6 in 2015, electricity cleared from the Windmill Plants should be considered excisable goods, bringing the appellant under the purview of Rule 6. However, the Tribunal analyzed the provisions of Rule 6, emphasizing that it applies when both dutiable and exempted goods are manufactured. Electrical energy, despite being listed in the Tariff Act, does not have a corresponding rate of duty, making it not "Nil" rated goods. The Tribunal referenced a High Court case to support that only goods subject to excise duty are considered excisable goods. Additionally, a previous Tribunal decision and Supreme Court dismissal supported the view that electricity is not excisable goods, further weakening the Revenue's argument.

3. The Tribunal concluded that the impugned order could not be sustained as electricity cannot be categorized as exempted goods. The amendment to Rule 6 in 2015 did not materially affect the appellant's case since the factory did not deal with non-excisable goods. Therefore, the Tribunal found no merit in the Ld. Commissioner (Appeals)'s order and allowed the appeal in favor of the appellant.

This detailed analysis of the judgment highlights the arguments presented by both sides regarding the interpretation of Rule 6 and the applicability of Cenvat Credit on common input services used in different manufacturing locations.

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