Surplus bagasse-based electricity sold externally does not trigger the Rule 6(3) CENVAT payment requirement.

Surplus electricity generated from bagasse during manufacture and wheeled to an outside electricity distribution company is not subject to the payment prescribed under Rule 6(3) of the CENVAT Credit Rules, 2004. The notes state that an identical demand for the relevant period had previously been dropped, that decision was accepted by the departmental committee and became final, and no change in the applicable statutory provisions supported a different treatment. Accordingly, sale of such surplus electricity does not require payment of 6% of its value under Rule 6(3).

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Issues: Whether surplus electricity generated during manufacture and sold to an outside electricity distribution company attracts payment of 6% of its value under Rule 6(3) of the CENVAT Credit Rules, 2004.

Analysis: The identical issue had already been resolved for the relevant period: electricity generated from bagasse and wheeled out to the electricity distribution company was not liable to the amount prescribed under Rule 6(3). The earlier adjudication dropping such demand had been accepted by the departmental committee and had attained finality. No change in the applicable statutory provisions justified a contrary treatment.

Conclusion: Rule 6(3) of the CENVAT Credit Rules, 2004 does not require payment of 6% of the value of surplus electricity sold to the outside electricity distribution company. The issue is decided in favour of the assessee.

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