Shree Renuka Sugars Ltd vs Commissioner Of Central Excise, ...

[Arising out of Order-in-Appeal No. 55-2012 dated 02/02/2012 passed by CCE(Appeals), Mangalore]

For approval and signature:

HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should 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? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes

SHREE RENUKA SUGARS LTD MOUNOLI, TAL. SAUNDATTI, BELGAUM-DISTT. Appellant(s)

Versus

Commissioner of Central Excise, Customs and Service Tax BELGAUM NULL NO. 71...CLUB ROAD, CENTRAL EXCISE BUILDING, BELGAUM, - 590001 KARNATAKA Respondent(s)

Appearance:

Shri V.B. Gaikwad, Advocate For the Appellant

Shri Pakshi Rajan, Asst. Commissioner(AR) For the Respondent

Date of Hearing: 24/06/2015

Date of Decision: 24/06/2015

CORAM:

HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER

Final Order No. 21430 / 2015

Per : ARCHANA WADHWA

As per the facts on record, appellant is a sugar manufactures and during the course of sugar manufacturing, bagasse comes into existence as waste/by-product. The appellant was availing the credit of service tax paid on GTA service for bringing sugar cane to the factory. The bagasse so-generated by the appellant is further used for manufacture of electricity, a part of which is sold by the appellant to State electricity board.

2. Revenue by entertaining a view that after the introduction of explanation to Section 2(d) of Central Excise Act, bagasse became an excisable item and since the same was exempted and further used in the manufacture of electricity, on which no excise duty was paid by the appellant, they are required to reverse proportionate credit of GTA service so availed by them. Accordingly demand to the tune of around Rs.7,50,737/- stands raised and confirmed by the lower authorities along with confirmation of interest and imposition of penalties.

3. After hearing both the sides, I find that the lower authorities have relied upon the Boards Circular No.904/24/2009-CX dt. 28/10/2009. The said circular stands quashed by the Honble Allahabad High Court in the case of Balrampur Chini Mills Ltd. Vs. UOI [2014(300) ELT 372 (All.)] and it stand held that even after the amendment in Section 2(d), bagasse cannot be held to be an excisable item inasmuch as the same does not pass the test of manufacture, as defined in Section 2(f) of Central Excise Act.

4. The learned advocate has also relied upon the Tribunal decision in the case of Jawahar S.S.S. Ltd. Vs. CCE, Pune-II [2014-TIOL-197-CESTAT-MUM] laying down that the inward cane transportation service, availed by the manufacturer of sugar, cannot be held to be a service utilised for the generation of electricity inasmuch as it has no nexus to the same. Thus there is no requirement to either reverse the CENVAT credit or pay an amount of 10% / 5% of the value of electricity sold to the electricity board.

5. In view of the above decisions, I set aside the impugned order and allow the appeal with consequential relief to the appellant.

(Order pronounced and dictated in open court)

ARCHANA WADHWA JUDICIAL MEMBER Raja.

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