Taxindiaonline.com
Taxindiaonline.com Taxindiaonline.com TIOL Tube Taxindiainternational.com
 
LOGIN
Forgot Password |  Register  
Sunday , September 25, 2016 | Updated : Sep 24, 23:24 IST
GST   Income Tax    Customs    Excise    Service Tax    FEMA    DGFT    SEZ    Misc    Pitara    Budget   
About Us Contact Us
Taxindiaonline.com Taxindiaonline.com Taxindiainternational.com
 
 
NEWS FLASH
 
ACC clears appointment of Arun Goyal, IAS, 1985 batch of UT Cadre, as Addl Secretary in GST Council Govt seeks suggestions from public to improve India's performance in Olympics and other sports events IGI Airport Customs seizes 77 Iphone worth Rs 46 lakh from pax coming from Hong Kong ACC appoints Vijay Mohan Jain, IRS, as OSD to MoS, Atomic Energy & Space (See 'Service News' in Pitara) ACC appoints ARK Kini, IPS as Secretary (Security) in Cabinet secretariat ACC approves appointment of S Ramesh as New Member of CBEC (See 'Service News' in Pitara) Govt announces setting up agencies for fisheries in coastal States; incentives for marine products under MEIS (See 'Breaking News') Govt would soon come out with a plan for disinvestment of ITDC hotels: Minister (See 'Mixed Buzz') Incorrect simultaneous issuance of dual benefit of Zero duty EPCG and SHIS to exporters under FTP 2009-14 - option providing flexibility to return either benefit (See 'Cir-45' in What's New) Gujarat needs to focus on development of 48 minor ports: Minister (See 'Mixed Buzz') BIRAC Innovator's Meet kick starts with theme - 'Biotech Innovation Ecosystem' (See 'Mixed Buzz') PM approves constitution of Committees for commemoration of birth centenary of Pandit Deendayal Upadhyay GST rate to be decided in October, says FM Amendment in ANF-5A [Application for issue of EPCG Authorisation] incorporating guidelines for certifying a CSP under FTP (See 'PN 33' in What's New) Import duty on Potatoes & Wheat reduced to 10% upto 31.10.2016 & 28.02.2017 respectively; on edible grade Crude Palm oil & Refined Palm Oil reduced to 7.5% and 15% respectively (See 'Cus Notfn 51' in What's New) GST Council to hold its second meeting on September 30, 2016 Welfare mission launched in 145 districts to promote 'Family Planning' (See 'Mixed Buzz') APA caravan continues; crosses 100-Mark (See 'TII Brief' in Taxindiainternational.com) GST Council fixes Rs 20 lakhs as exemption limit for goods & services; Service tax assessees to remain with Centre; FY 2015-16 to be base year for computing compensation (See 'Breaking News') I-T - Whether mere payment of lease rent or interest on borrowed funds, by educational trust, without there being any element of such payments being unreasonable compared to normal rates prevailing, would fall within mischief of section 13(1)(c) - NO: HC (See 'Breaking News') GST Council finalises exemption threshold of Rs 10 lakhs for special 11 States, including hill States + Rs 20 lakhs for others FM says VAT Assessees up to Rs 1.5 Crore turnover to be assessed by States; 11 lakh service tax assessees to remain with CBEC and dual control to be exercised over assessees above Rs 1.5 Crore turnover SC cancels Sahara Chief Subrata Roy's parole India wraps up deal for 36 Rafale fighter planes Heavy response to Gold Bond Scheme - Govt to delay issue date (See 'Mixed Buzz') Major relief for Mumbaikars & Industries; Octroi + LBT to be subsumed in GST, says Maharashtra VAT Commissioner in exclusive interview to TIOL Tube Raw materials imported for ‘servicing’ of aircraft [Hdg 88.02] no longer exempted (See Notifn 50 in 'What's New') First Mega Decision of GST Council - Service Providers & Manufacturers exited from Composition Scheme (See 'The Cob (Web)'Column) Property tax - Whether when Income Tax Department's buildings are owned by Union of India, such property cannot be taxed by a State or a Municipal body - YES: HC (See 'Breaking News')
 
Bookmark and Share
Fly Ash generated in Thermal Power Plant - Applicability of Excise Duty

MAY 09,2011

By Joseph Prabakar, Advocate

UNDER Central Excise, liability to pay Excise Duty would arise, inter alia, on the condition that the product is specifically mentioned in the Central Excise Tariff Act, 1985. Further, the Supreme Court had held that for anything to be termed as ‘goods' the said item should pass the twin test of being called as ‘movable' and ‘marketable'. Also, under Central Excise, any waste generated during a process of manufacture would be liable to Excise Duty.

It is to be noted here that for a long time till Year 2008, the requirement of ‘marketability' was mandatory for levy of Excise Duty on an item. However, definition of the term, ‘excisable goods' under Section 2 (d) of the Central Excise Act, 1944, was amended in Year 2008, to do away with the requirement of ‘marketability' by insertion of the following Explanation in the said definition.

‘Explanation. - For the purposes of this clause, “goods” includes any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable.'

It may be interesting to note that earlier, the Gujarat High Court in the case of Ahmedabad Electricity Co. Ltd. Vs Union of India (2003-TIOL-107-HC-AHM-CX) held that Boiler ash arising while burning coal is not excisable. This decision was upheld by the Supreme Court in Union of India Vs Ahmedabad Electricity Co. Ltd (2003-TIOL-17-SC-CX). Thereafter, the Government vide Circular dated November 18, 2005, accepted the Apex Court decision and clarified that ‘Coal Ash' is not excisable.

Please note that these decisions were rendered when marketability was one of the essential requirements for terming a product as ‘excisable'. Therefore, during the relevant period, the assessee was forced to take an argument that ‘Fly Ash' is not marketable and hence not liable to excise Duty. The decision of the Supreme Court and the Circular issued in Year 2005, have become redundant in view of the fact that the definition of the term ‘excisable goods' under Section 2 (d) of the Central Excise Act, 1944, had been amended in Year 2008.

It may be noted that ‘Ash – Others' is specified under Central Excise Chapter Heading 26 21. Therefore, in the case of Fly Ash, the only requirement for levy of Excise Duty would be ‘movable' which is fulfilled in the instant case. However, it is crucial to note that Fly Ash is generated when Coal is burnt in the process of generating electricity or ‘electrical energy'. Further, please note that ‘Electrical energy' is now specified under Central Excise Chapter Heading 27 16 00 00 and ‘Electrical energy' is exempt from Excise Duty.

In this regard, it may be interesting to note that vide Customs Notification No. 91/2010 dated September 6, 2010, the Government had levied Customs Duty on ‘Electrical energy (falling under Chapter Heading 2716 00 00) removed from a Special Economic Zone into Domestic Tariff Area or non processing areas of Special Economic Zone'. Thus, it is a settled fact that electricity or ‘electrical energy' is excisable goods under Central Excise Tariff Act, 1985.

Now let us examine whether ‘Fly Ash', generated in the course of production of ‘Electrical energy' in a Thermal Power Plant would be subject to payment of Excise Duty. It may be evident that ‘Fly Ash' is generated in the course of manufacture or production of ‘Electrical energy' and apparently, it may seem that Fly Ash may be liable to Excise Duty.

However, it is important to note that vide Central Excise Notification No 89/95 dated May 18, 1995, the Government had exempted waste and scrap arising out of manufacture of exempted products from payment of Excise Duty.

Notification No 89/95 dated May 18, 1995, is reproduced below.

‘Waste, parings and scrap arising during manufacture of exempted goods - Exempted

In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts waste, parings and scrap arising in the course of manufacture of exempted goods and falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), from the whole of the duty of excise leviable thereon which is specified in the said Schedule :

Provided that nothing contained in this notification shall apply to waste, parings and scrap cleared from a factory in which any other excisable goods other than exempted goods are also manufactured.

Explanaton. - For the purpose of this notification, the expression “exempted goods” means excisable goods which are chargeable to “Nil” rate of duty or, are exempted from the whole of the duty of excise leviable thereon by any other notification (not being a notification where exemption from the whole of duty of excise is granted based upon the value or quantity of clearances made in a financial year) issued under sub-rule (1) of rule 8 of the Central Excise Rules, 1944 or sub-section (1) of section 5A of the said Act.'

It is admitted fact that Fly Ash arises in the course of production of electrical energy and further it is not in dispute that electrical energy is exempt goods. Hence, it may be noted that Fly Ash arising in the course of production of electricity in a Thermal Power Plant would be exempt from Excise Duty under Notification No 89/95 dated May 18, 1995.

Now, in Budget 2011, the Government had included ‘Fly Ash' as one of the items in Sl No 27 in Notification No. 1/2011 dated March 1, 2011 and had provided for a concessional rate of duty of 1% upon the condition that the assessee does not avail Cenvat credit. Similarly, Sl No 14 of Notification No. 1/2011 dated March 1, 2011, specifies ‘Fly Ash' and effective rate of duty of 5% has been prescribed for ‘Fly Ash'.

However, it is crucial to note that ‘Fly Ash' arising in the course of generation of electricity in a Thermal Power Plant would continue to be exempt from payment of Excise Duty under Notification No 89/95 dated May 18, 1995, notwithstanding the fact that the Government had notified ‘Fly Ash' under Notification No's. 1 and 2 of 2011 dated March 1, 2011.

(Author is a Chennai based Advocate)


 RECENT DISCUSSION(S) POST YOUR COMMENTS
   
 
Sub: Fly ash excisable

Is electricity excisable? I think no tariff rate [even though entry is there in excise tariff] has been prescribed still and hence electicity continues to be non excisable.

Posted by Md Shamim
 
 
 
 
Download on the App Store
Get it on Google play
TIOL SEARCH
 
Visit IDS
Visit TIOLCorplaws.com
TIOL Subscriptions
 All-In-One Package
 Indirect Tax Package
 Income Tax Package
<< More Packages>>
 
   
             
Income Tax Customs Excise Service Tax FEMA DGFT SEZ Misc Pitara Budget
  • Income-Tax Rules
  • Income-Tax Act
  • Notifications
  • Circulars
  • Instructions
  • SC Cases
  • HC Cases
  • ITAT Cases
  • Advance Ruling
  • Settlement
  • Other Cases
  • Directorate of Income Tax (Systems)
  • Reports
  • Customs Rules
  • Tariff Notfn
  • CVD
  • Non Tariff Notfn
  • Circulars
  • Anti-dumping Notfn
  • Safeguard Duty Notfn
  • SC Cases
  • HC Cases
  • Cestat Cases
  • Advance Ruling
  • Settlement
  • Drawback Cases
  • MISC Circulars
  • CCRs - 2004
  • Central Excise Rules
  • Tariff Notfn
  • Non Tariff Notfn
  • Circulars
  • SC Cases
  • HC Cases
  • Cestat Cases
  • Advance Ruling
  • Cesses Notfications
  • Excise Amendment
  • MISC Circulars
  • 37B Order
  • Settlement
  • Commr.(A) Order
  • Tribunal
  • GST Kitty
  • Notifications
  • Service Tax Rules
  • 37B Order
  • Circulars
  • SC Cases
  • HC Cases
  • Cestat Cases
  • Advance Ruling
  • FAQ
  • Finance Act, 1994
  • Commr. (A) Orders
  • Removal of Difficulty
  • VCES
  • Accounting Head
  • Miscellaneous
  • DIPP Notification
  • FDI Approved
  • Exchange Manual
  • Fema Notifications
  • SC Cases
  • HC Cases
  • RBI Notifications
  • RBI Circulars
  • Act
  • Rules
  • Regulations
  • Master Circulars
  • PMLA Notifications
  • Depository Scheme
  • Press Note
  • Notifications
  • Circulars
  • Public Notices
  • Trade Notice
  • FTDR Amendment 2010
  • Notifications
  • Instructions
  • Act 2005
  • Rules 2006
  • DGEP
  • State Acts
  • State Policy
  • MISC
  • SC Cases
  • HC Cases
  • VAT Cases
  • Miscellaneous
  • Service News
  • Promotion
  • Transfer
  • Deputation Posts
  • Cadre Review
  • Transfer Policy
  • Training Circulars
  • Recruitment Rules
  • Pay Commission
  • Service Cases
  • The Insider
  • MISC
  • Budget Speeches
  • Union Budgets
  • Economic Surveys
  • TRU - D. O. Letter
  • Finance Acts
  • Finance Bill
  • Budget Circular
  • A Taxindiaonline Website. Copyright © 2016 Taxindiaonline.com Pvt.Ltd. All rights reserved. | Powered by 4th Dimension