CENVAT credit denied for fly ash extraction equipment not used as an integrated captive unit with the factory.

CENVAT credit on capital goods used in a fly ash extraction system was treated as inadmissible because the extraction plant was not part of the captive factory unit and the fly ash was not exclusively used by the appellant. The factual findings showed that the equipment remained under the control of the power station, the extracted fly ash was not earmarked solely for the appellant, and surplus quantities could be used by others. On that basis, the arrangement could not be regarded as a captive or integrated unit for credit purposes. The authorities' reliance on decisions supporting denial of credit was upheld, while the appellant's cited precedents were distinguished on facts.

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Issues: Whether CENVAT credit on capital goods used in the fly ash extraction system was admissible when the extraction plant was not part of the captive factory unit and the fly ash was not exclusively used in the appellant's factory.

Analysis: The appeal turned on whether the fly ash extraction arrangement could be treated as an integrated captive unit with the cement factory. The factual findings recorded that the equipment remained under the control of the power station, the extracted fly ash was not exclusively earmarked for the appellant, and surplus quantities could be used by others. In the absence of captive use and exclusive consumption in the appellant's factory, the activity could not be equated with a captive mine or a single integrated unit for the purpose of credit. The precedents relied upon by the appellant were found distinguishable on facts, while the decisions supporting denial of credit were held applicable.

Conclusion: The claim for CENVAT credit was not admissible and the denial of credit was upheld.

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