Cenvat credit on electricity generation denied where power was supplied to a separately registered division treated as distinct from the factory.

Cenvat credit on furnace oil used to generate electricity was admissible only to the extent the electricity was consumed within the factory for manufacture or other permitted use. Because the plastic division was separately registered under the Central Excise regime as a distinct place of business, it could not be treated as part of the same factory merely because it lay within a common compound wall. The statutory definition of factory did not displace the legal effect of that separate registration on the facts. Credit was therefore not admissible for the quantity of electricity supplied to the separately registered division, and the refund or re-credit claim failed.

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Issues: Whether Cenvat credit on furnace oil used for generation of electricity was admissible to the extent electricity was supplied to a separately registered plastic division situated in the same compound, and whether such division could be treated as part of the same factory.

Analysis: The governing principle applied was that credit is available on inputs used for generation of electricity only to the extent the electricity is used within the factory of production for manufacture or other permitted use. The appellant's plastic division had been separately registered under the Central Excise regime as a distinct place of business. Separate registration under the applicable rules required separate licensing for separate places of business, and the appellant could not, after obtaining such registration, contend that the plastic division was nonetheless the same factory merely because it stood within a common boundary wall. The definition of factory in the Act did not override the legal effect of separate registration in the facts of the case.

Conclusion: Cenvat credit was not admissible to the extent electricity was supplied to the separately registered plastic division, and the assessee's claim for refund/re-credit failed.

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