Jurisprudentiol – Monday's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Central Excise

Electricity generated from Bagasse Demand under Rule 6(2)/ 6(3) of the CENVAT Credit Rules, 2004 is not sustainable HC

AFTER the last drop of juice is extracted from sugarcane in a sugar factory, what is left is a waste called Bagasse. There are a number of disputes on this Bagasse as revenue is making relentless efforts to squeeze a few drops of revenue from this waste. After the insertion of explanation in Section 2(d) of the Central Excise Act, 1944 vide Finance Act, 2008, fresh demands were issued under Rule 6 by distinguishing the earlier decisions in the light of amendment to Section 2(d).

However, the High Court of Allahabad in 2013-TIOL-557-HC-ALL-CX held that the demands under Rule 6 do not sustain even for the period after the amendment to Section 2(d). We carried this order recently.

Even after the above judgment, department started yet another dispute by applying the provisions of Rule 6 of the CENVAT Credit to the electricity manufactured from such bagasse. According to the revenue, Electricity is goods falling under Chapter 27 of the Central Excise Tariff and the above judgement of Allahabad High Court is not applicable as in that case, bagasse was sold by the factories and in this case, is captively used for manufacture of Electricity and Electricity was sold by the units.

Income Tax

Whether when assessee purchases ready made property it will be entitled to claim Sec 54 benefits for cost of improvement incurred even after purchase of Unit - YES: ITAT

THE issues before the Bench are - Whether when the assessee purchases a ready made property it will not be entitled to claim Sec 54 benefits for the cost of improvement incurred after purchase of the Unit and Whether it is rational to presume that no capital expenditure can be incurred once the assessee moves into a newly-purchased property for habitation. And the verdict goes in favour of the assessee.

Service Tax

Overburden removal, removal of waste cannot be considered as 'cargo' and service cannot be classified under ‘Cargo Handling Service' - Excise duty on Tippers had been discharged under Chapter 87 by manufacturer of vehicles and if that be so, the appellant cannot claim and seek to change classification from Chapter 87 to Chapter 84 and justify availment of CENVAT credit - Pre-deposit ordered of Rs.2.8 crores: CESTAT

THE appellants were undertaking service of site formation and clearance, excavation and earthmoving and demolition services and was registered with the department w.e.f. 23/07/2007. Investigation revealed that the appellant had undertaken the work of ‘removal of old dump/embankment (OBR) by hiring of equipment such as HEMM, Tippers, Dozers, Drills, Water Sprinklers, including excavators for loading and transportation, dumping, spreading, dozing, water sprinkling and grading at specified places at Gouri 1 and 2 areas of Gouri Mines in Ballarpur area and the appellant was paid a consideration @ 30.80 per cubic meter and the total value of the work was Rs. 16,26,85,600/-. Investigation revealed that the appellant had not filed any statutory ST-3 returns for the services rendered by them and also did not discharge the correct service tax liability. Thereafter, the appellant filed returns in ST-3 for the period October 2006 to September 2009 vide returns dated 26/08/2010 and also enclosed challans for the payment of dues and also challans of the CENVAT credit availed and utilised for the payment of service tax.

See our Columns Monday for the judgements