Captive power plant within the same factory does not amount to removal of excisable goods for central excise purposes.

Transfer of a captive power plant within the same factory premises, without creation of a separate excise-licensed unit, does not amount to removal of goods from the factory when the inputs or sulphuric acid supplied to the plant are used to generate electricity captively consumed by the assessee. The note states that the ownership change of the power plant did not alter its character as part of the same factory, so central excise duty was not attracted on the movement of goods to that plant and Cenvat credit could not be denied on that basis. The earlier identical view in the assessee's own matter was followed.

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Issues: Whether clearance of sulphuric acid to the captive power plant transferred to a joint venture amounted to removal of excisable goods from the factory so as to attract central excise duty and denial of Cenvat credit.

Analysis: The transfer of ownership of the captive power plant did not alter the fact that it remained within the same factory premises. No separate excise-licensed premises were carved out for the power plant. The inputs and goods transferred to the power plant were used for generation of electricity, which was captively consumed by the appellant. In these circumstances, the power plant continued to be treated as part of the same factory and the movement of goods to it could not be regarded as removal outside the factory. The earlier decision in the appellant's own case on identical facts had already taken the same view.

Conclusion: The demand of central excise duty was not sustainable and the appeal succeeded.

Final Conclusion: The impugned order was set aside and the appellant obtained full relief on the duty liability arising from transfer of goods to the captive power plant.

Ratio Decidendi: Where a captive power plant continues to function as part of the same factory and the goods supplied to it are used for captively generated electricity, such movement does not constitute removal from the factory for central excise purposes.

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