Tribunal allows Cenvat Credit for steam used in canteen & laundry within factory premises

The Tribunal allowed the appeals challenging Orders-in-Appeal regarding availing Cenvat Credit on furnace oil used for steam production, emphasizing that the steam used for non-productive purposes in canteen and laundry within the factory premises can still be considered as being used in relation to manufacturing final products. The Tribunal highlighted the statutory requirements of a canteen and clean uniforms for manufacturing activities, concluding that a proportionate Cenvat Credit on fuel used for steam in non-productive areas should be allowed. The impugned orders were set aside, granting consequential relief and stressing the importance of utility nexus within the factory premises for Cenvat Credit eligibility.

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Issues:
- Availing Cenvat Credit on Central Excise duty paid on furnace oil used for steam production.
- Utilization of steam in canteen and laundry for non-productive purposes.
- Interpretation of the phrase "for any other purposes" in relation to manufacturing activities.

Analysis:
The judgment involves three appeals challenging Orders-in-Appeal related to availing Cenvat Credit on furnace oil used for steam production, specifically focusing on the utilization of steam in canteen and laundry for non-productive purposes. The key issue revolves around whether the steam used for non-productive purposes can be considered as being used in or in relation to the manufacture of final products. The appellant argues that the canteen services and laundry activities are essential for the manufacturing process, citing the statutory mandate for canteens and the necessity of clean uniforms for employees. The departmental representative, however, relies on a High Court judgment to support the contention that the electricity or steam used must have a nexus with the goods manufactured in the factory to be eligible for credit.

Upon considering the submissions and perusing the records, the Tribunal delves into the interpretation of the phrase "for any other purposes" in the context of manufacturing activities. It is established that the Cenvat Credit on furnace oil is eligible as long as the steam is used for manufacturing final products, even if a portion is utilized in non-productive areas like canteen and laundry within the factory premises. The Tribunal emphasizes the statutory requirement of a canteen in the factory and the necessity of clean uniforms for manufacturing activities, aligning with the argument that such uses are related to the manufacturing process.

Drawing parallels with a previous High Court judgment regarding the use of electricity in a factory, the Tribunal concludes that the proportionate Cenvat Credit on the fuel used for steam in non-productive areas within the factory premises should be allowed. In light of the factual matrix and the statutory requirements, the Tribunal sets aside the impugned orders and allows the appeals with consequential relief. The judgment highlights the importance of considering the purpose and nexus of utility within the factory premises when determining the eligibility of Cenvat Credit in such scenarios.

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