TaxTMI 
TaxTMI 
2013 (7) TMI 159
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....ed order-in-original passed by the Commissioner, Central Excise & Service Tax, Lucknow. 2. Shorn off unnecessary details the facts of the case are as under : The sugar, which is being manufactured, falls under sub-heading No.1701 of 1990 of First Schedule of Central Excise Tariff Act, 1985. The principal raw material of the petitioners' final product, namely, sugar, is the sugarcane, which is purely an agricultural product. During the course of manufacture of sugar, molasses (Sheera) emerges as a by-product, which attracts specific rate of duty under the Tariff Heading 1703 of 1000 of the above Act. Admittedly, the Central Excise Duty on sugar, molasses and industrial alcohol is paid by the petitioners on their clearances from the factory, as per procedure prescribed under the Central Excise Rules, 2002. In the process of manufacture of sugar, sugarcane is crushed, its juice is extracted and 'Bagasse' emerges as residue/waste of the sugarcane, which is said to be neither a manufactured product nor is a final product of the sugar industry. The waste of sugarcane, namely, Bagasse, so generated is mainly used as fuel in the factory for manufacture of final prod....
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.... the demand so raised. 6. Hence these writ petitions. 7. On behalf of the respondents, a preliminary objection has been raised that there is a provisions for filing statutory appeal under Section 35-B of the Central Excise Act, 1944 against the impugned order before the Customs Excise & Service Tax Appellate Tribunal, New Delhi but without availing the said remedy, petitioners have rushed to this Court straightaway, which is against the settled norms and as such, the writ petition is liable to be dismissed on the ground of availability of alternative remedy. 8. In contrast, Counsel for the petitioners contends that there is no blanket ban in approaching the High Court and in exceptional circumstances, the writ petition is entertainable. He submits that though a Division Bench of this Court, vide order dated 18th May, 2012 passed in 11791 (M/B) of 2010 and connected writ petitions, while recording the findings that the 'bagasse' is an agricultural waste of sugarcane, though marketable product, but the duty cannot be imposed as it does not involve any manufacturing activity simply by adding an explanation under Section 2(d) of the Central Excise Act, 1944, whereby th....
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....ohd. Nooh; AIR 1958 SC 86, A.V. Vankateswaram, Collector of Customs vs. Ramchand Sobhraj Wadhwani; AIR 1961 SC 1506, Whirlpool Corporation vs. Registrar of Trade Marks; 1998(8) SCC 1, the rule of alternative remedy does not oust the jurisdiction of this Court under Article 226 of the Constitution of India, if it is found necessary for promotion of justice and prevention of injustice. 11. In view of the aforesaid facts and after hearing the parties, the preliminary objection raised by the respondents is not well founded and in our view relegating the petitioner to avail the alternative remedy would not be an efficacious remedy but a futile attempt. 12. As far as merit of the case is concerned, Sri Bharat Ji Agarwal, Senior Advocate, appearing on behalf of the petitioners submits that impugned order of Commissioner, Central Excise in respect of electrical energy generated from bagasse and sold to U.P. Power Corporation Ltd. is arbitrary and without jurisdiction inasmuch as Rule 6 of the CENVAT Credit Rules, 2004 [hereinafter referred to as the "2004 Rules"] is not applicable in respect of 'electricity'. On the strength of the decisions rendered in Collector of Central E....
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....ral Excise Tariff Amendment Bill, 2004 (Bill No. 47 of 2004) categorically states that the proposed changes does not make any changes in the existing rate of central excise duties and hence the proposed changes do not involve any revenue implications and changes would be merely technical in nature as has been clarified through Circular No. 808/05/2005-CX dated 25.2.2005. 16. Lastly, Sri Agarwal has urged that the department has admitted in its letter dated 30.1.2013 of the Assistant Commissioner, Central Excise that petitioners are not availing CENVAT Credit in boiler and turbine where bagasse is burnt to produce steam and steam runs the turbine to generate electricity. This fact has also been confirmed by the Commissioner, Central Excise vide its letter dated 21.2.2003 received by the peteitioner on 28.2.2013. Therefore, decision of the Supreme Court that electricity is not an excisable goods and Rule 6 of the CENVAT Rules is not applicable is still binding on the authorities and the decision given by the Commissioner, Central Excise is apparently in the teeth of the said decision given by the Supreme Court and the Division Bench of this Court dealing with bagasse. Hence, the w....
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....case. He submits that before this Court the question posed was the treatment needed to be meted out to inputs and input services attributable to bagasse that was sold outside, whereas the question posed before the adjudicating authority is the treatment needed to be meted out to inputs and input services attributable to electricity that was sold outside. Thus, there is no illegality in the impugned order and all the writ petitions are liable to be dismissed. 20. Having heard learned Counsel for the petitioners and perused the records, since the question involved in the above captioned writ petitions are that whether electrical energy generated from bagasse and sold to U.P. Power Corporation Ltd. is excisable or not, with the consent of the parties' counsel, they are being taken up together with and decided by a common order. 21. The question whether bagasse which is a waste and not a manufactured produce can be subjected to any duty under the Central Excise Act was considered and decided on 21.7.2010 by the Hon'ble Supreme Court in the case of Balrampur Chini Mills Ltd. in Civil Appeal No. 2791 of 2005 and on the basis of the said judgment, a Division Bench of this Co....
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.... does not cover electrical energy produced by solar power, hydro power, wind power or from bagasse. Therefore, we are of the view that electrical energy is not an excisable goods nor it is exempted goods as defined in Rule 2 (d) of the 2004 Rules. 25. It is also relevant to mention here that Rule 6 (1) provides that CENVAT Credit shall not allow on such quantity of inputs which is used in the manufacture of exempted goods. For applicability of Rule (2), the following ingredients must exist:- (i) where a manufacturer avails CENVAT credit on any input (as defined in section 2(k) (ii) and manufactures such final products which are chargeable to duty and (iii)also manufactures such final products which are exempted goods." 26. Hence, manufacture is referred to both dutiable/excisable goods and exempted goods, which are final products. Only then, it is necessary for the manufacturer to maintain separate accounts. Rule 6 of the CENVAT Credit Rules, 2004, (which is pari materia to the erstwhile Rule 57CC) provides that if CENVAT Credit has been taken on the inputs which are used for manufacture of dutiable and exempted final products then the assessee is r....
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....ff Act, 1985 (5 of 1986), as the case may be, relating to any goods or class of goods, wherever referred to in the said rules or notifications, the corresponding reference to the Chapter, heading or sub-heading or tariff item, of the First Schedule or the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), as amended by the Central Excise Tariff (Amendment) Act, 2004 (5 of 2005) shall be deemed to have been substituted. No. 4/3/2002-CX.I (Pt.II) Abhay Kumar Srivastav Deputy Secretary to the Government of India Note : This notification intends to take care of the technical changes adopted in the numbering scheme for Central Excise classification through the Central Excise Tariff (Amendment) Act, 2004 (5 of 2005). These amendments do not involve any substantive changes in the existing rules, so the particulars of each rule have not been indicated." Furthermore, during debate in Lok Sabha on the said Central Excise Tariff (Amendment) Bill, 2004, the then Hon'ble Minister of Finance in regard to the purpose of introduction of eight digit classification has stated that "the purpose of the Bill is very limited. On the custom side....