2006 (8) TMI 490 - AT - Central Excise

Tribunal grants Cenvat Credit for furnace oil supplied to job worker generating electricity

KIRLOSKAR FERROUS INDUSTRIES LTD. Versus COMMISSIONER OF C. EX., BELGAUM

The Tribunal allowed the appeal, overturning the denial of Cenvat Credit on duty paid for furnace oil supplied to a job worker generating electricity ... Cenvat/Modvat - Inputs Issues:- Denial of Cenvat Credit on duty paid on furnace oil supplied to job worker for electricity generation within appellant's premises.- Interpretation of whether job worker's activity disqualifies appellant from availing Cenvat Credit.- Applicability of previous judgments on similar cases to the present scenario.Analysis:1. Denial of Cenvat Credit: The appeal stemmed from the denial of Cenvat Credit on duty paid for furnace oil supplied to a job worker engaged in generating electricity within the appellant's premises. The Revenue contended that since the job worker was unregistered, the appellant could not claim the credit. However, the Tribunal noted that the electricity generated by the job worker was used by the appellant for manufacturing final products, aligning with the definition of input. The Apex Court's ruling in Vikram Cement v. CCE, Indore supported this view, emphasizing that anything used for generating electricity within the factory qualifies as an input for credit purposes.2. Interpretation of Job Worker's Activity: The appellant argued that the job worker, who generated electricity within the appellant's licensed premises, should not be considered a separate unit. The Tribunal agreed, citing precedents such as Sanghi Industries Ltd. v. CCE, Rajkot and Essar Steel Ltd. v. Commissioner of Central Excise, Surat-I, where similar scenarios were upheld for availing Cenvat Credit on inputs used for electricity generation within the factory premises. The Tribunal emphasized that the job worker's lack of separate registration did not disqualify the appellant from claiming the credit.3. Applicability of Previous Judgments: The Tribunal referenced various judgments, including Haldia Petrochemicals Ltd. v. CCE, Haldia and Diamond Cements v. CCE, Bhopal, to support the appellant's case. These rulings established that proximity and interconnection of units within the same premises, even with separate registrations, could be treated as a single factory for credit eligibility. The Tribunal concluded that the cited judgments were applicable to the present case, where electricity generation by the job worker within the appellant's premises aligned with the definition of input for availing Cenvat Credit.4. Final Decision: After careful consideration, the Tribunal found the impugned order denying Cenvat Credit on furnace oil supplied for electricity generation within the appellant's premises to be legally unsound. Citing the consistent application of previous judgments and the alignment of the job worker's activity with the definition of input, the Tribunal set aside the order and allowed the appeal, granting consequential relief as necessary. The decision highlighted the importance of interpreting the concept of input in the context of manufacturing activities carried out within the factory premises.