Tribunal Upholds Denial of Cenvat Credit on Electricity Inputs

The Tribunal confirmed the denial of Cenvat Credit on inputs related to electricity sold to M/s. Ajmer Vidyut Vitran Nigam Ltd. and upheld the penalty of Rs. 4000.

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Issues: Denial of Cenvat Credit on inputs used in generation of electricity sold to M/s. Ajmer Vidyut Vitran Nigam Ltd.; Entitlement to Cenvat Credit for electricity transferred to sister unit; Imposition of penalty.

In the judgment delivered by Hon'ble Mr. Ashok Jindal, the appellant appealed against the denial of Cenvat Credit on inputs used in generating electricity sold to M/s. Ajmer Vidyut Vitran Nigam Ltd. The lower authorities had denied the credit on the premise that some electricity was sold to the mentioned entity. The Tribunal ruled that the appellant is not entitled to take Cenvat Credit on inputs attributable to the electricity sold to M/s. Ajmer Vidyut Vitran Nigam Ltd. However, the appellant was allowed to take Cenvat Credit for the electricity transferred to their sister unit for manufacturing final products. This decision was based on a previous ruling by the Tribunal in the appellant's own case. The Tribunal noted that the appellant had reversed the credit upon discovering the clearance of electricity to M/s. Ajmer Vidyut Vitran Nigam Ltd. during an investigation, without informing the department. Consequently, a penalty of Rs. 4000 was imposed on the appellant for this non-disclosure.

In conclusion, the Tribunal confirmed the denial of Cenvat Credit on inputs related to electricity sold to M/s. Ajmer Vidyut Vitran Nigam Ltd. and upheld the penalty of Rs. 4000. The appeal was disposed of with these terms. The judgment highlights the importance of compliance with disclosure requirements and the differentiation in Cenvat Credit entitlement based on the destination of the electricity generated.

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