TaxTMI 
TaxTMI 
2015 (6) TMI 1011
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.... of Rule 6(3) of the Cenvat Credit Rules, 2004 on the ground that the electrical energy is excisable and is exempted goods within the meaning of Section 2(d) of the Central Excise Act and hence provision of Rule 6 of Cenvat Credit Rules, 2004 are attracted. It is also a fact on record that appellant themselves reversed a sum of Rs. 21,068/- being input and input services attributable to the electrical energy sold to M/s. UP Power Corporation Ltd. But the show cause notice alleges that the appellant is required to pay an amount equal to 10% of the sale price of the electricity sold to M/s. UP Power Corporation Ltd. as the appellant is not maintaining the separate account of input used in dutiable and exempted final goods as per Rule 6(3) of the Cenvat Credit Rules, 2004. Therefore, the impugned proceedings were initiated against the appellant and by way of the impugned order, the demand of Rs. 45,18,674/- was confirmed along with interest and equivalent amount of penalty was also imposed by invoking extended period of limitation. 3. The ld. Counsel for the appellant appeared and submits that a similar issue came up before the Hon'ble High Court of Allahabad in the case of Gu....
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....o take Cenvat credit to the extent of excess electricity cleared at contractual rates in favour of joint venture/vendors, etc., which is sold at a price. She further submits that the decision of the Allahabad High Court in the case of Gularia Chini Mills (supra) is per incuriam. She further submits that in the case of Orient Paper and Industries Ltd. v. Orissa State Electricity Board - 1989 (42) E.L.T. 552 (Orissa) the Hon'ble High Court of Orissa held that electricity is excisable goods. Therefore, impugned order is to be upheld. 4. Heard the parties. Considered the submissions. 5. In this case the short issue is to be decided by me whether the appellant is required to pay 10% of the value of electrical energy produced from bagasse which is sold to M/s. UP Power Corporation Ltd., or not. 6. When the appellant has already reversed the credit attributable on bagasse which was used in manufacturing of final exempted product as per Rule 6 of the Cenvat Credit Rules, 2004, or not. The contention of the Revenue is that as electricity is excisable goods and exempted from duty, therefore, as per Rule 6(3) of the Cenvat Credit Rules, 2004 the appellant is required t....
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....ate 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 required to reverse the proportionate credit or pay 10%/5% amount of the value of the exempted final products. Electricity is not excisable goods under Section 2(d) of the Act, hence Rule 6 of the Cenvat Credit Rules, 2004 is not applicable as held by the Apex Court in the case of Solaris Chemtech Ltd. (supra). 30. The definition of 'excisable goods' given in Section 2(d) means the goods, which are specified in the First and Second Schedule and which are subjected to duty of excise, can only be treated as excisable goods. A proposition has also been accepted by the Commissioner in its findings. A perusal of Section 2(d) of Central Excise Act shows that the excisable goods are only those goods which are subjected to duty of excise as specified in the First Schedule or Second Schedule of the Central Excise Tariff Act. Since Column of rate of duty is blank, therefore, in view of Section 2 of the Central Excise Tariff ....
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.... Act and whether rule 6 of the Cenvat Credit Rules, 2004 would be applicable in respect of inputs/input services used in the manufacture of electricity. The Hon'ble Allahabad High Court held that electrical energy which is mentioned in Chapter 27 of the Central Excise Tariff Act covers only those electrical energy which are generated from mineral fuels, mineral oil and products obtained therefrom and electrical energy produced from bagasse is not covered under Chapter 27 and hence such electrical energy is not excisable goods nor is it exempted goods as defined in section 2(d) of the Act. It was further held that Rule 6 of the Cenvat Credit Rules, 2004 refers to both dutiable/excisable goods and exempted goods. Only then, it is necessary for the manufacturer to maintain separate accounts. Rule 6 of the said Rules provides that when Cenvat credit is taken on the inputs/input service which are used for manufacture of dutiable as well as exempted final products, then the assessee is required to reverse proportionate credit or pay five per cent./ten per cent amount of the value of the exempted final products. As regards electricity which is not excisable goods, the provisions of Rule 6....
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.... the case in respect of insurance services, maintenance and repair services. Similarly, in respect of construction services also it has to be seen how the same has nexus with generation of electricity. Therefore, reversal of credit is required only in respect of input services which have nexus with generation of electricity. The appellant is at liberty to lead evidence in this regard and if they are able to prove that the inputs and input services have no nexus with electricity generation, the question of reversal of credit taken will not arise at all. The learned counsel has mentioned that they have partly reversed proportionate credit on such inputs/input services used in the manufacture of electricity, which have been sold. This reversal should be verified and if the appellant has reversed the credit taken, then there won't be any further liability. However, if it is found that additional credit is required to be reversed, then the appellant shall be liable to reverse such credit taken alone with interest thereon from the date of taking of the credit till such time the credit is actually reversed. For this limited purpose matter has to go back to the adjudicating for re-computat....
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....envat credit is available only when input/input services are used in or in relation to the manufacture of excisable goods or for providing taxable services. Inasmuch as the appellant has utilized part of the inputs/input services in or in relation to the generation of electricity which has been sold, to that extent the appellant would not be eligible for taking of Cenvat credit on such inputs/input services used in the generation of electricity which has been sold to MSEB. Therefore the appellant would be liable to reverse the credit, if any, taken on such inputs/input services which have been used in the generation of electricity which have been sold to MSEB. 8. Further, the issue before me is that in case the appellant is not maintaining separate account of input/input services used in manufacturing of final dutiable as well as exempted goods and reversed the credit on inputs attributable to exempted final goods then the appellant is required to pay 100% of the value of exempted final goods as per Rule 6 of the Cenvat Credit Rules, 2004. 9. As none of the cases relied upon by the ld. AR have dealt with the issue of generation of electricity from bagasse, therefore....