TaxTMI 
TaxTMI 
2009 (8) TMI 1045
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....P-I/2009 dated 29-4-2009 12/2007 4,61,049 10,000 4 27/KOP-I/2009 dated 29-4-2009 1/2008 4,86,612 10,000 The brief facts involved in all four appeals are that the appellant, who is engaged in the manufacture of sugar and molasses, had availed Cenvat credit of inputs and input services pertaining to the manufacture of both dutiable and exempted goods without keeping separate accounts and also failed to pay the amount equal to 10% of the price of the exempted product in terms of Rule 6; that the bagasse which was extracted from sugarcane, was burnt in the boiler as a fuel and steam is generated and for generation of steam, the de-mineralized water (DM water in short) is used in the boiler initially and the steam generated in the boiler using DM water, is used in the turbine for generation of electricity; that the electricity generated is used captively for production purposes and further approximately 3.00 MW is sold to M/s. MSDCL under Power Agreement at the applicable rate; that during the scrutiny of the records, the appellant availed Cenvat credit of various inputs/raw materials such as, sulphur, HCL, Costing soda/soda flakes, siskast and thermotax, lubr....
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.... the appellant are summarized as under :- (i) that the re-alignment of Central Excise Tariff Act with Customs Tariff Act is merely a technical change; (ii) that the new items like electrical energy which got covered are live animals like horse, bulls, cows, swine, buffaloes etc. and if the interpretation of the adjudicating authority that as electricity is specifically mentioned in chapter 2716 with effect from 28-2-2005, it has become excisable and non mention of any rate of duty is irrelevant is assumed to be correct, then it leads to another absurd conclusion that the live animals and live plants also have become excisable commodities with effect from 28-2-2005, since they were also not finding the place in the Central Excise Tariff prior to 28-2-2005 and are got specifically covered under Chapters 1, 4, 6 etc. of the Central Excise Tariff Act, 1985 only with effect from 28-2-2005; (iii) that only when a particulars of excisable commodity are declared in the Central Excise Tariff along with rate of duty to be levied, the said product can be treated as excisable and mere mention of the product in the Tarif....
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....r the appellant relies on the Tribunal decision in the case of Arun Auto Spinning & Manufacturing Co. v. CCE [1990 (48) E.L.T. 543]; (ix) that without prejudice to the above, the impugned SCNs/OIOs do not explain as to how the inputs and input services were used both for dutiable and exempted products, in as much as the inputs like sulphur, flocculants, phosphoric acid, etc. are used for exclusively to manufacture of sugar and molasses and input services like inward transportation of sugarcane, is exclusively used for sugar and molasses and other services like repair and maintenance, technical inspection and certification, insurance, installation and commissioning, commercial and industrial construction services and consulting engineering services are getting protection of Rule 6(5) and hence, the demand of 10% amount on selling price of electricity sold outside is not sustainable; (x) that without prejudice to the above, it is well settled principle by now that when it is impossible to keep separate records of the common inputs used in the exempted as well as dutiable final products, the assessee cannot be asked to pay the amou....
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.... E.L.T. 998, (d) Jindal Vijaynagar Steel Ltd. v. CCE - 2005 (192) E.L.T. 415, (e) Paro Food Products v. CCE - 2005 (184) E.L.T. 50 and (f) U. T. Ltd. v. CCE - 2001 (130) E.L.T. 791; 3. PH was held on 10-8-2009 at 02.45 PM at Kolhapur. Shri V. B. Gaikawad, Advocate, duly authorized by appellant, appeared before me at 02.45 PM. None appeared from Department's side despite intimation. 3.1 During the hearing, in addition to reiterating the submissions made in the appeal memorandum, he has stressed that this is a case where the department wants to demand 10% amount on electricity under Rule 6, treating the same as exempted final product, since there is an entry for the same in the Central Excise Tariff under Heading No. 27160000. To the above, he contended that though there is entry for electricity, the same cannot be considered as 'excisable commodity', since there is no 'rate of duty' mentioned against the said entry and since the column 'rate of duty' is left blank. He has further submitted that even for arguments sake, the electricity which is finding place in the Cen....
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....t of the impugned OIO covered under Sr. No. 1 of the Table above, has not only confirmed the demand along with interest but also imposed equal penalty. In respect of remaining three cases, the adjudicating authority has also confirmed the demands raised in the Demand Notices and imposed penalty of Rs. 10,000/- each on the appellant. Whereas the appellant claims that the electricity cannot be considered as an excisable commodity, since the mention of the same in the Central Excise Tariff with effect from 28-2-2005 is a technical move. The appellant further claims that it is not the intention of the Government to impose duty on the electricity and that is the reason, the entry was left "blank". The appellant is also basing his arguments, that because the electricity is found mentioned in the Central Excise Tariff and if the same is considered as an excisable commodity, on the same ground, the live animals such as horse, bulls, birds etc. which have also been found mentioned in the Central Excise Tariff with effect from 28-2-2005, have also to be treated as excisable commodities. The appellant further argues that the "blank" entry cannot be equated to "NIL" rate of duty as concluded b....
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....me as an excisable commodity and impose duty on it. In this regard, the decision of the Hon'ble Tribunal, Mumbai in the case of Ballarpur Industries Ltd. v. CCE, Nagpur - 2006 (205) E.L.T. 483 (Tri.-Mumbai) is relevant and squarely applicable to the issue on hand. To make the issue transparent, I reproduce the operative portion of the above decision as under :- "In view of the fact that there is no duty specified in the schedule to the Central Excise Tariff Act for electricity, the same cannot be considered either as excisable goods or as exempted goods. At the same time, electricity not being excisable goods cannot also be considered as "final products" for the purpose of Cenvat Credit Rules in view of the specific definition therein. Consequently, the electricity supplied to the colony would fall outside the Cenvat Scheme. The credit taken on inputs used in production of such electricity is inadmissible". 4.2 From the above, it is clear and categorical that since there is no duty specified in the schedule to the Central Excise Tariff Act for 'electricity', the same cannot be considered either as excisable goods or as exempted goods. Further it cannot be considered as ....
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....assessee cannot be asked to pay the amount equal to 10% of selling price of the exempted final product and the department can only ask to reverse the actual amount of credit attributable to the portion of the inputs/input services used in or in relation to manufacture of exempted final product and to support his contention, the appellant relies on the Tribunal's decision in the case of Esab India Ltd. v. CCE [2008 (89) RLT 19]. This is also a valid point raised by the appellant in view of the fact that when it is not possible to keep separate records, the alternate course, to be adopted by the Department, could be asking the assessee to reverse the actual amount of credit attributable on the portion of the inputs/input services used in or in relation to manufacture of exempted final product. This view is also held by the Apex Court in the case of CCE v. Solaris Chemtech Ltd. [2007 (214) E.L.T. 481] mentioned supra. The Apex Court in the said case at Para 9 has held that "in some of the cases, the electricity generated is consumed by the residential colony of the factory's workers' families, schools etc. to that extent, Modvat credit will not be admissible". The same view has also b....