2018 (11) TMI 1513 – CESTAT MUMBAI – TMI – CENVAT Credit – waste – electricity sold by the appellant that was being generated from bagasse, a waste product of sugar manufacturing – invocation of Rule 6(3A) of Cenvat Credit Rules 2004 – Held that:- Admittedly electricity, though not found in tangible form, is classifiable under Tariff item no. 27160000 of Central Excise Tariff Act, 1985. But it is a non-excisable goods and the process of generation of electricity though a manufacturing process is dutiable if it is generated from mineral oils, bitumen substance, mineral waxes etc. and electricity generated from bagasse is not covered under Chapter 27 like electricity generated through solar power, hydro power, wind power etc.
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For post amendment period it can be said that the duty demand made against such sale of surplus electricity manufactured through waste product is not sustainable in law – appeal allowed – decided in favor of appellant. – Appeal No. E/86537/2018 – A/87964/201
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Rule 6, the departmental authority held a finding against the appellant during the verification of records that such electricity being non-excisable goods cleared for a consideration from the factory had used common input and input services for which appellant had not maintained separate records for generation of such exempted final product i.e. electricity and it was held to have been liable to pay 6% duty on the value of such exempted goods sold by it. The appellant was put to show-cause, matter was adjudicated upon and upon confirmation of the duty demand in the order-in-original and Order-in-Appeal this appeal has been preferred. 3. In the memo of appeal and during course of hearing of appeal, the ld. Counsel for the appellant submitted that department itself had admitted in the case of Gularia Chini Mills 2014 (34) STR 175 (HC-All) before the Hon ble Allahabad High Court that bagasse were neither input nor input service used for generation of electricity and the same had attained
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0314/17/SMB dated 27.10.2017 in the case of Sahakari Shiromani Vasantrao Kale SSK Ltd. & Ors of CESTAT, Mumbai v) Final order no. A/91564-91580/17/SMB dated 13.12.2017 in the case of Shri Dudhganga Vedganga SSK Ltd. & Ors. of CESTAT, Mumbai vi) Ganga Kishan Sahakari Chini Mills Ltd. 2017 (346) ELT 450 (Tri-Del) 4. In response to such submissions, ld. AR for the department, in filing judicial decision reported in 2016 (46) STR 396(Tri-Mum), 2014 (304) ELT 595(Tri-Mum), 2017 (347) ELT 352(Tri-Del), 2017(354) ELT A24 (Chattisgarh), 2017 (352) ELT 86 (Tri-Del), 2017(356) ELT A48 (Chattisgarh), 2018 (360) ELT A121(SC), justified the finding of the Commissioner (Appeals) and argued that out of common inputs, assessee is liable to reverse credit taken in respect of such inputs or input services used for generation of electricity to the extent duty free electricity is sold. Assessee is not eligible to take any cenvat credit of such inputs and input services having nexus with generation
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