CENVAT credit for co-generation plant capital goods required proof that grid power was actually used in sugar manufacture.

CENVAT credit on capital goods used in the co-generation plant could not be decided without first establishing whether electricity drawn from the State Grid was actually received from time to time and used in sugar manufacture. The existing order did not verify that factual link, and the original adjudication also lacked findings on actual utilisation of power in production. The matter was therefore remanded for factual examination on the basis of documents to be produced by the appellant, and for a reasoned fresh order by the original authority.

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Issues: Whether the appellant was entitled to CENVAT credit on capital goods used in the co-generation plant in the absence of a finding on whether the power obtained from the State Grid was used in the manufacture of sugar.

Analysis: The dispute turned on the factual question whether the electricity supplied from the State Grid was in fact received by the appellant from time to time and utilised in the manufacture of sugar. That factual aspect had not been established in the impugned order or in the Order-in-Original. Since the existing findings did not verify the actual use of the power in production, the matter required factual examination on the basis of documents to be produced by the appellant.

Conclusion: The issue was remanded to the original authority for verification of the relevant facts and for passing a reasoned order thereafter.

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