TaxTMI 
TaxTMI 
2022 (7) TMI 1177
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....s attributable to sale of electricity? (b) Whether the respondent is liable to pay the amount in question as per Rule 6(3) of the Cenvat Credit Rules? (c) Whether the electricity generated from waste gas / tail gas is classifiable under Chapter Heading 27 16 00 00 and whether the same can be said to be 'exempted goods'? (d) Whether the Learned Tribunal erred in not considering that 'waste gas or tail gas' as obtained from process of manufacture as defined in Section 2 (f) of the Central Excise Act, 1944 and that from 'waste gas or tail gas' there was transformation to a new and different article i.e. electricity having a distinct name, character and have commercial identity generated out of process of deliberate skilful manipulation of the inputs or the raw materials? (e) Whether the Learned Tribunal erred in not considering that the appellant has made out a case on the issue for invoking the extended period of limitation on the Respondent regarding suppression of material facts and withholding information from the Department regarding non-reversal of the proportionate credit and that mere statutory requirement under any other law does not exonerate the Respondent from comp....
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....use notice proceeds on a wrong assumption of fact and consequently the question of manufacture of exempted goods does not arise and this submission though made before the adjudicating authority was not considered. Further the assessee contended that the "waste gas" is not an excisable product, where electrical energy generated from waste gas is also not classified under Chapter Heading 2716 00 00 and it is neither excisable nor exempted for the purpose of Rule 6 of the Cenvat Credit rules. Reliance was placed on the decision of the Delhi Tribunal in the case of Hi-Tech Carbon Versus CCE, Allahabad 2003 (161) E.L.T. 407 which was upheld by the High Court of Allahabad in the decision reported in 2018 17 GSTL 398 (Allahabad). Reliance was also placed on the decision in the case of Gularia Chini Mills Versus Union of India 2014 (34) STR 175 (All) wherein it was held that electricity generated from bagasse which is a waste product cannot be classified under Chapter 27 and cannot be stated to be excisable. Further it is the submitted that the said decision was affirmed by the Hon'ble Supreme Court in Union of India Versus DSCL Sugar Limited 2015 (322) E.L.T. 769 (SC). Further it was cont....
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....lt with by the adjudicating authority. Further, the Tribunal took note of the amendment made in the definition of "exempted goods" with effect from 1st March, 2015 to include non-excisable goods. Therefore, the Tribunal held that for the purpose of reversal of Cenvat credit, non-excisable goods would be considered to be exempted goods and the assessee would be liable to reverse the proportionate credit with effect from 1st March, 2015 onwards and not for the prior period. The Tribunal also faulted the adjudicating authority for seeking reversal of the credit in terms of Rule 6 of the Cenvat Credit Rules and to support such contention, several decisions of the coordinate Bench of the Tribunal were referred to. Further, with regard to the aspect regarding limitation for initiating proceedings, the Tribunal agreed with the submissions made on behalf of the assessee and that they being subjected to periodic departmental audit and their manufacturing activities being closely monitored by various Governmental agencies, there cannot be any allegation of suppression and specifically, pointed out that in the adjudication order there is no ingredient brought about to show that the assessee h....
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....ed on these lines, therefore cannot be countenanced. 7. The decision in Gularia Chini Mills Versus Union of India 2014 (34) S.T.R. 175 (All.) which was affirmed by the Hon'ble Supreme Court in 2015 (322) ELT 769 (SC) will also aid the case of the assessee. It was held that bagasse was a "waste" and hence, it was not manufactured of exempted goods and electricity generated from bagasse was neither excisable under Section 2(d) of the Central Excise Act, 1944, nor exempted good under rule 2(d) of the Cenvat Credit Rules 2004 and hence, Rule 6 of the said Rules is not applicable. The relevant paragraphs of the judgment are as hereunder: 24. On perusal of the above judgment and order dated 18th May, 2012, it is clear that Rule6 of 2004 Rules will only apply where a manufacturer manufactures both the excisable dutiable final products and also manufactures excisable exempted goods. Furthermore, for the applicability of rule 6, manufacture of dutiable goods and manufacture of exempted goods are condition precedent. Thus, the law is well settled that bagasse is not manufactured goods but is a waste product, which emerges/ comes into existence in the process of manufacture of sugar. Hence....
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....en used by the petitioner for generation of electricity which was only generated from bagasse. 34. For the discussions made hereinabove, it is clear that Geetanjali Woolens Mill judgment relied upon by the commissioner in the impugned orders have no relevance as Geetanjali Woolens Mill's judgment was in respect of customs duty and was only concerned with the tariff item and not with respect to the 'excisable goods' as defined under Section 2(d) of Central Excise Act, 1944. The bagasse, which emerges as a residue of sugarcane, admittedly, is a waste product and this bagasse is used in boiler as a fuel for generation of steam for running the turbine and for boiling the juice for the manufacture of sugar. Turbine generates electrical energy which is used for running the plant and machinery and surplus energy is sold to the U.P. Power Corporation Ltd. Furthermore, bagasse is used a fuel in the factory for manufacture of final product and no specific input is used up t the stage of emerging of bagasse which is a waste and which emerges on the crushing of sugarcane. Thus, we have no hesitation to say that electrical energy emerges from the bagasse and sold to U.P. Power Corporation Ltd....