Tribunal grants CENVAT Credit for electricity & steam, clarifies 100% EOU supplies not exempted

The Tribunal allowed the appeal, ruling in favor of the appellant on all issues. It held that the appellant correctly availed CENVAT Credit for inputs used in generating electricity and steam supplied to its sister concern and corporate office. The Tribunal confirmed that the corporate office is within the registered premises and that the extended period for demand is not applicable due to conflicting judicial interpretations. The decision emphasized that procedural errors should not hinder legitimate CENVAT Credit benefits and clarified that supplies to a 100% EOU do not qualify as exempted goods.

---

---

Issues Involved:
1. Admissibility of CENVAT Credit for inputs used in generating electricity and steam supplied to a sister concern and corporate office.
2. Whether the corporate office is situated within the registered premises of the appellant.
3. Applicability of extended period for demand due to conflicting judicial interpretations.

Detailed Analysis:

1. Admissibility of CENVAT Credit:
The appellant held a Central Excise Registration for manufacturing excisable goods and had a captive power plant using cenvatable inputs like furnace oil to generate electricity and steam. Part of this electricity and steam was supplied to its sister concern (a 100% EOU) and corporate office. The adjudicating authority demanded reversal of proportionate CENVAT Credit attributable to the furnace oil used for electricity supplied to the sister concern and corporate office, as per Rule 6(3)(a)(iv) of the CCR, 2004. The appellant argued that the sister concern has no independent legal identity and goods supplied to it cannot be treated as exempted goods under Rule 6(6)(ii) of the CENVAT Credit Rules, 2004. They cited several judgments supporting their claim that CENVAT Credit of inputs used for generating electricity and steam supplied to sister concerns and corporate offices is admissible.

2. Corporate Office Location:
The appellant contended that their corporate office is within the registered premises as per the site plan submitted during registration, and it is involved in manufacturing and business activities. The Tribunal observed that the corporate office is indeed within the registered premises, and this issue had been previously decided in favor of the assessee in similar cases.

3. Applicability of Extended Period:
The appellant argued that the demand was time-barred due to conflicting judicial views on the issue during the relevant period. The Tribunal noted that the issue of admissibility of such credit was under litigation with varying interpretations from different courts. Hence, the extended period for demand was not applicable.

Judgment:
The Tribunal allowed the appeal, holding that:
- The appellant correctly availed CENVAT Credit for inputs used in generating electricity and steam supplied to its sister concern and corporate office.
- The corporate office is within the registered premises.
- The extended period for demand is not invokable due to conflicting judicial interpretations.

The Tribunal emphasized that procedural lapses should not deny substantial benefits of CENVAT Credit when inputs are used for manufacturing goods on which duty is payable. The Tribunal also noted that supplies to a 100% EOU cannot be considered as exempted goods, supporting the appellant's claim. The appeal was allowed, and the demand set aside.

---