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Issues: Whether Pitch Creosote Mixture cleared to the captive power plant situated within the factory premises was liable to Central Excise duty and whether the product qualified as an input used captively in the manufacture of final products.
Analysis: Pitch Creosote Mixture was an excisable product, but it was cleared within the factory to the power plant for generation of electricity used in the manufacture of final products. The definition of input under Rule 2(g) of the Cenvat Credit Rules, 2002 includes goods used as fuel or for generation of electricity within the factory of production. The legal identity of the electricity generating unit was held to be irrelevant where the goods were used within the factory premises for captive generation of electricity. Support was also drawn from earlier Tribunal decisions recognising such captive use as eligible for the concession available to inputs used in or in relation to manufacture.
Conclusion: The demand of Central Excise duty on the Pitch Creosote Mixture was unsustainable and the duty and penalty were set aside in favour of the assessee.
Ratio Decidendi: Goods used within the factory premises as fuel for generation of electricity captively consumed in manufacture qualify as inputs, and their clearance for such captive use does not attract Central Excise duty merely because the power plant is treated as a separate legal entity.
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