Custom, Excise & Service Tax Tribunal
M/S Grasim Industries Limited vs Cce, Indore on 17 July, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. II DATE OF HEARING : 17/07/2015. DATE OF DECISION : 17/07/2015. Excise Appeal No. 52650 of 2014 [Arising out of the Order-in-Original No. 16-18/Commr/Cex/IND/ 2014 dated 10/02/2014 passed by The Commissioner of Customs, Central Excise & Service Tax, Indore.] For Approval and signature : Honble Shri Ashok Jindal, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) 1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? M/s Grasim Industries Limited Appellant Versus CCE, Indore Respondent
Appearance Shri B.L. Narasimhan, Advocate for the appellant.
Shri Pramod Kumar, Authorized Representative (Jt. CDR) for the Respondent.
CORAM: Honble Shri Ashok Jindal, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) Final Order No. 52317/2015 Dated : 17/07/2015 Per. B. Ravichandran :-
The appellant are manufacturers of Viscose Staple Fibre, Sodium Sulphate, Sulphuric Acid, Carbon Di Sulphide, etc. All the goods manufactured and cleared by the appellant are dutiable and are cleared on payment of duty. The present appeal is against order-in-original dated 10/2/14 passed by the Commissioner. The facts of the case in brief are that the appellants are having their captive power plant for generation of electricity. The dispute in present case relates to availment of Cenvat credit of service tax paid on various input services. The Department is of the view that since these services are commonly used in or in relation to the generation of electricity which in turn is used within the factory as well as wheeled outside the factory to the residential colony and to third parties accordingly the Department hold the view that they were required to pay 10% of the value of electricity sold outside the factory in terms of Rule 6 (3) (b) of the Cenvat Credit Rules. Three show cause notices were issued for demanding the amount representing 10% of the value of electricity sold outside. The first notice dated 12/11/2009 covered the period April 2005 to June 2009. The second notice dated 18/3/2010 covered the period of July 2009 to December 2009. The third notice dated 03/2/2011 covered the period of January 2010 to June 2010. These notices were adjudicated by the learned Commissioner vide order dated 10/2/2014. The learned Commissioner confirmed the demand of Rs. 26,12,59,295/- representing 10% of value of electricity cleared during the period April 2005 to September 2008. He imposed equal penalty on the appellant. He dropped the demand for the period October 2008 to June 2010 finding that the appellant have paid amount representing Cenvat credit attributable to input services used in relation to electricity cleared. The appellants challenged the impugned order on various grounds. It was pleaded that they have always taken the stand that electricity is a non-excisable product and it has been held in various decisions by the Tribunal and High Courts that electricity is not exempted goods within the meaning of Rule 2 (d) of Cenvat Credit Rules. The Honble Supreme Court in the case of CCE vs. Solaris Chemtech Limited reported in 2007 (214) E.L.T. 481 (S.C.) held that electricity is not an excisable item. The said judgment of the Honble Supreme Court was followed by Honble Allahabad High Court also in the case of Gularia Chini Mills vs. Union of India reported in 2013 TIOL 557 HC ALL CX. Without prejudice to the above submission, the appellant pleaded that the demand, if any, can only be to the extent of proportionate credit of service tax on various input services attributable to the generation of electricity wheeled outside the factory premises. The amendment made by the Finance Act, 2010 gives a manufacturer an option of reversing credit attributable to input services used in the manufacturer of exempted goods. Further it was contended that for the period 01/4/2008 to June 2009, the appellant have exercised the option under Rule 6 (3) (a) of the Cenvat Credit Rules, 2004 and, hence, demand of 10% value of electricity is not sustainable. The learned Counsel strongly contended that extended period of demand is not invokable in the present case. The demand for the period April 2005 to September 2008 as proposed in the show cause notice dated 12/11/2009 is not legally sustainable. They have been filing monthly returns in form ER-1. During the course of audit in September 2006 the Departmental officers raised the same objection and they have given replies to the same. Further, earlier proceedings were initiated against them by issue of various show cause notices during the period March 1995 to June 1997 on the same issue. The cases were adjudicated vide order dated 17/10/1997 by the Assistant Commissioner disallowing the Modvat credit attributable to the inputs used towards manufacture of steam and electricity which is supplied to other units and residential colony. Thus, the appellants insisted that this is well within the knowledge of the Department that they are generating electricity some portion of which is wheeled outside the factory and they were utilizing common input services towards such generation of electricity. In these set of facts invoking extended period in a case involving technical interpretation of excisability of electricity etc. is not legally sustainable. The learned AR on the other hand submitted that as per the Cenvat credit provisions relevant to the period the appellant should have exercised the option failing which they have to pay 10% of the value of exempted goods. Here the electricity cleared outside the factory is not eligible for input service credit and as such the demand made by the lower authority is sustainable.
2. Heard both the sides and examined appeal records. The point for decision is whether or not the appellant is liable to pay 10% of value of electricity wheeled out of their factory during the relevant period. Another important issue for decision is whether the show cause notice-cum-demand dated 12/11/2009 covering the period of April 2005 to June 2009 is hit by time bar. On perusal of the case details it is clear that the matter regarding the status of electricity whether the same is excisable, exempted is a matter of dispute and has been subject matter of various rulings by CESTAT, Honble High Courts and Honble Supreme Court. In the appellants own case earlier proceedings were initiated on the same grounds and adjudications were done. In 2006 same issue was taken up in audit and there were correspondence discussing the eligibility of Cenvat credit. Hence, we find that the allegation of willful suppression with intention to evade is not sustainable in the present case and the show cause notice-cum-demand issued on 12/11/2009 is hit by time bar beyond the normal period. It is seen from the impugned order that from October 2008 to June 2009 (covered by first show cause notice dated 12/11/2009) and during July 2009 to December 2009 (covered by second show cause notice dated 18/03/2010) and for the period January 2010 to June 2010 (covered by third show cause notice dated 03/02/2011), the appellant have reversed Cenvat credit attributable to input services used in relation to manufacture of electricity cleared outside. In these set of facts, we find that the demand covered by show cause notice dated 12/11/2009 is hit by time bar beyond the normal period and as such we allow the appeal with consequent relief, if any.
(Operative part of the order pronounced in the open court.) (Ashok Jindal) Member (Judicial) (B. Ravichandran) Member (Technical) PK ??
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