Excise duty on windmill energy sale to state board of electricity

[Ganeshan Kalyani]

I have read somewhere that energy generated through windmill and its sale to state board of electricity is exempted from Central Excise but i could not get that note. therefore, requesting expert your input in this regard. Secondly whether it will attract VAT or it is exempt in state law also.

[Rajagopalan Ranganathan]

Sir,

Electrical Energy is classifiable under sub-heading No. 2716 00 00 of Central Excise Tariff Act, 1985. However rate of duty leviable on such electrical energy is not indicated in the tariff. Therefore electrical energy generated by whatever mode is not chargeable to central excise duty. As far as VAT is concerned I am not conversant with VAT Law.

[Ganeshan Kalyani]

Thanks for your information Sir

[KASTURI SETHI]

Mr. Ganeshan Kalyani Ji,

Electrical energy generated through windmill is not covered under Chapter 27 of Central Excise Tariff Act. It is neither excisable goods nor exempted. That is why column of rate of duty against Sub-heading No.2716.00.00 no. has been left blank. Chapter 27 covers electrical energy produced from mineral fuels, mineral oil etc. This issue has already been decided by the Hon'ble High Court, Allahabad in the case of Gularia Chinni Mills Vs. UOI reported as 2014(34)STR.175/Allahabad = 2013 (7) TMI 159 - ALLAHABAD HIGH COURT. Pl.see para 26 of the judgement.

[KASTURI SETHI]

The High Court judgement has been affirmed by the Hon'ble Supreme Court in the case of DSCL Sugar Ltd reported as 2015(322)ELT/769/SC = 2015 (10) TMI 566 - SUPREME COURT  interpreting the manufacturing process. This judgement does not touch 'Electrical Energy' but it covers it under manufacturing process. It touches excisability and manufacture of bagasse. However, it is relevant in determining excisability and manufacture of electrical energy.

[Ganeshan Kalyani]

Thanks for your valuable inputs. As always your replies are instant and to the point.

[KASTURI SETHI]

Welcome Sir.

AI Summary

Classification of electrical energy: tariff heading leaves duty rate blank, so windmill generated energy not presently leviable to central excise. Electrical energy is referred to the tariff sub heading for electrical energy but the duty column is blank; consequently, electrical energy generated by any mode, including windmills, is treated in the discussion as not chargeable to central excise. One view holds windmill generated electricity is not covered by Chapter 27 and is neither excisable nor exempt, while cited judicial authorities on manufacture and excisability are identified as relevant to determining taxability. State VAT applicability remains unaddressed in the discussion.