Rachna Gupta ORDER
Dr. Rachna Gupta, Member (J)
1. The appellants in the present case are engaged in the manufacture of Sponge Iron, Ingot, Billet, Silico Manganese etc. They are also availing the Cenvat credit of duty paid on inputs, capital goods and service tax paid on input services in terms of Cenvat Credit Rules, 2004 (herein after referred as CCR, 2004). The department while scrutinizing the ER-1 returns of the appellants noticed that the appellants while manufacturing the above mentioned excisable goods are simultaneously engaged in generation of electricity which was captively used but some part thereof was also sold by them. Electricity was considered to be an exempted goods by the department and the department further observed that during the period from April' 14 to March' 15 the appellants have availed the Cenvat credit of duty paid on input and input services as that of GTA Coal, cargo handling service on Coal, Security Service, Repair & Maintenance service and Manpower Recruitment services. The coal was common input as was used also for generation of electricity, the exempted goods. Thus, the department formed an opinion that appellants were required to pay an amount equal to Cenvat credit in terms of Rule 6(1), 6(2), 6(3A), 6(3D) of CCR, 2004. Accordingly, Show Cause Notice No. 6693 dated 29.06.2016 was served upon the appellants proposing the confirmation and appropriation of the demand for an amount of Rs. 22,96,788/- along with appropriate interest and the proportionate penalty. The said proposal was initially confirmed vide Order-in-Original No. 28/2017 dated 22.09.2017. The appeal thereof has been rejected vide Order-in-Appeal No. BHO-EXCUS-002-APP-035-2018-19 dated 13.04.2018. Being aggrieved of the said order the appellants are before this Tribunal.
2. learned Counsel for the appellants has submitted that electricity produced by the appellants though falls under chapter heading 27160000 of the first schedule to Central Excise Tariff Act, 1985 but no rate of duty has been specified against electricity in the said Tariff Act. Hence, the condition for being excisable goods remains unfulfilled with respect to the electricity. The findings of Commissioner (Appeals) holding electricity as an excisable goods is contrary to the definition of excisable goods in Section 2(d) of Central Excise Act, 1944. It is further mentioned that even the definition of final products in Rule (h) of CCR, 2004, the goods manufactured have to be the excisable goods. The electricity is accordingly, not even the final product. The findings of the Commissioner (Appeals) to that extent are also liable to be set aside. Learned (Counsel) has relied upon the decision of this Tribunal in the case of DSM Sugar Mills Limited Vs. Commissioner of Central Excise, Meerut - I, reported as MANU/CE/0205/2014 : 2014 (304) ELT 582 (Tri.-Del).
2.1 Learned Counsel has further mentioned that 92% of electricity generated by them is being captively used in their sponge iron plant for manufacture of dutiable final products. It is balance 8% of the electricity that is wheeled out to state electricity company for the reason that electricity cannot be stored for future use. However, for the said 8% sale the appellants have suo moto reversed the Cenvat credit taken on the import and input services proportionately used for production of such portion of electricity. As such amount of Rs. 10,19,252/- has already been reversed being the proportionate Cenvat credit about such common imports which were not used in or in relation to manufacture of dutiable final products. Learned Counsel has laid emphasis upon the decision of this Tribunal in the case of Jai Balaj........