2018 (1) TMI 347 - AT - Central Excise

Credit eligibility for captive power & water plant inputs denied, but allowed for electricity generation inputs. Revenue appeal rejected.

M/s Sanghi Industries Limited Versus C.C.E & S.T. – Rajkot And (Vice-Versa)

M/s Sanghi Industries Limited Versus C.C.E & S.T. – Rajkot And (Vice-Versa) - TMI Issues:Appeals against orders-in-appeal passed by Commissioner of Central Excise (Appeals-I)- Rajkot regarding eligibility of Cenvat credit on inputs used in captive power plant for generation of electricity and distributed to various units.Analysis:The case involved three appeals, two by the assessee and one by the Revenue, challenging orders-in-appeal passed by the Commissioner of Central Excise (Appeals-I)- Rajkot. The appellant, engaged in manufacturing Clinker and Cements, had installed a Captive Power Plant to generate electricity for various units. Show cause notices were issued for recovery of Cenvat credit amounting to Rs. 30,89,381/- with interest and penalty for availing duty paid on inputs used in the generation of electricity at the captive power plant. The Ld. Commissioner (Appeals) allowed appeals only for clearance of electricity to the Grinding unit but rejected credit availed for other clearances. The appellant appealed the denial of credit for clearances to the jetty, while the Revenue appealed the allowance of credit for clearance of electricity to the Grinding unit.The Tribunal considered the eligibility of Cenvat credit on inputs used in the captive power plant for generating electricity distributed to various units. Referring to a previous case, it was observed that credit is admissible on inputs used in the generation of electricity for clearances to the Grinding Unit and Jetty but disallowed for clearances to the residential colony and DM water plant supplying water to the Gujarat State Water Board. The Tribunal rejected the appeals related to Cenvat credit taken on structural items, electricity supplied to the DM water plant, and electricity supplied to residential colonies. However, the appeal regarding credit of inputs used for generating and supplying electricity to the Grinding unit was allowed. Penalties were not imposed due to the contentious and debatable nature of the issue.In conclusion, the Tribunal held that the appellant was not eligible to avail credit on inputs used in the captive power plant for their residential colony and DM water plant. However, credit availed on inputs used in generating electricity for the Grinding Unit and Jetty was deemed admissible. As a result, the assessee's appeals were allowed, and the Revenue's appeal was rejected. The appeals were disposed of accordingly.