TIOL Tube
Forgot Password |  Register  
Friday , October 28, 2016 | Updated : Oct 28, 15:38 IST
GST   Income Tax    Customs    Excise    Service Tax    FEMA    DGFT    SEZ    Misc    Pitara    Budget   
About Us Contact Us
Government sanctions about 85000 houses for urban poor in 5 states Government revamps Inter State Council and its Standing Committee GSTN, DGFT & 14 States join hands for sharing of forex realisation data (See 'Mixed Buzz') Difference between Tariff and Non-Tariff Notifications (See 'DDT' Column) VAT - Whether power to seize goods is not dependent upon bona fides of past transaction, but must be exercised in backdrop of seized goods falling within mischief of Sec 48 – Yes: HC (See 'Breaking News') Higher DA for Babus - Serving and Retired (See 'DDT') Cus - For two months, importer cleared goods by availing benefit of notfn 73/2005 & only when probe commenced against other importers they discharged differential duty - Penalty upheld: CESTAT (See 'Breaking News') Transferability of goods imported/procured by debiting duty in SFISscrips – Ministry Clarifies (See 'DDT') CX - Once amount payable under CCR is treated as duty of excise, inputs & capital goods removed without payment of duty shall be liable to confiscation u/r 25(1) of CER, 2002: CESTAT (See 'Breaking News') Will CGST Officers wear Uniform? (See 'DDT') CBDT takes APA tally to 108 (See 'TII Brief' in Cabinet okay release of first dues of DA payments Bangalore CX Commissioner gets addl charge of Bangalore Customs Chennai Customs Commissioner gets addl charge of Trichy Customs Cabinet grants assent for one time relaxation in Horticulture cost norms (See 'Mixed Buzz') Cabinet reviews grades of Posts & Telecommunications Accounts & Finance Service (See 'Mixed Buzz') World Gold Council floats campaign to drive awareness on availability of Indian Gold Coin (See 'Mixed Buzz') EPFO paired with Common Services Centers for ease of EPF members (See 'Mixed Buzz') Prohibition of Benami Property Transactions Act - CBDT notifies jurisdiction of certain officers across India as specified authority (See 'Notification 100' in 'What's New') RBI permits Person resident outside India to transact currency derivative contract + FEMA - Subsidiary allowed to issue shares to its non-resident holding company against preoperative expenses up to the threshold of 5% (See ‘FEMA Notification’ in ‘Fema)’ CBDT fears revenue shortfall; calls for fresh strategies & close monitoring (See 'Mixed Buzz') Income tax - Whether transfer of assessment file from jurisdiction of one AO to another is valid even if there is no agreement between two jurisdictional Commissioners - NO: Supreme Court (See 'Breaking News') GST Tryst with Three Fault lines! (See 'The Cob (Web)' Column) Kerala General Sales Tax Act - sale by brand name holder or trade mark holder to be first sale for purpose of Sec 5(2) - KAIL is brand name owner of 'Sansui': SC (See 'Breaking News') GST - Air conditioners and hawai chappals cannot be taxed at same rate - Jaitley (See 'DDT' Column) I-T - Whether when assessee's explanation about cash deposits in his savings account was concurrently rejected by both Commissioner and Tribunal, it warrants intervention by higher courts - NO: HC (See 'Breaking News') New Zealand keen for early FTA finalisation: PM (See 'Mixed Buzz') Cus - Committee has not applied its mind - Mere accordance of approval to appeal because impugned order is not in favour of Revenue is not proper discharge of duties statutorily assigned: CESTAT (See 'Breaking News') Benami Transaction (Prohibition) Amendment Act, 2016 Comes into Force from 1st November (See 'DDT') ST - Amount charged by club to its members for sale of items such as liquor is not taxable as evidences such as sale bills, balance sheet, CA certificate and VAT statements submitted to Sales Tax Department evidencing such sale are available: CESTAT (See 'Breaking News') Issue of Intimation under section 143(1) of Income-tax Act, 1961 beyond the prescribed time in non-scrutiny cases – CBDT Issues Order (See 'DDT') ACC okays appointment of S Girish Kumar as CMD of HMT Ltd + S K Choudhary as CMD of IRCON CBEC goes for fresh procedure for clearance of imported metal scrap (See 'Cir 48' in What's New) Delhi DRI seizes firearms, Drone and Steroids at Foreign Post Office; Consignment came from France CII says there are major ground-level changes in Investment Climate (See 'Mixed Buzz')
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)

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 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 Pvt.Ltd. All rights reserved. | Powered by 4th Dimension